**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-K**


(Mark
      One)




ý
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934




For
      the
      Fiscal Year Ended December
      31, 2007




 ̈
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                1934




For
      the
      transition period from __________________ to __________________




Commission
      file number: 001-33700




**GLOBALOPTIONS
      GROUP, INC**


(Exact
      name of registrant as specified in its charter)





Delaware
            
            30-0342273(State
                or Other Jurisdiction of Incorporation or Organization)
            
            (I.R.S.
                Employer Identification No.)75
                Rockefeller Plaza, 27thFloor
              New
                York, New York
            
            10019(Address
                of Principal Executive Offices)
            
            (Zip
                Code)





Registrant’s
                telephone number, including area code: (212) 445-6262(Former
                name and former address, if changed since last
                report)




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




Title
                of Each Class
            
            Name
                of Each Exchange on Which RegisteredCommon
                Stock, par value $0.001 per share
            
            The
                NASDAQ Stock Market LLC





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
oNo
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 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. x




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      definitions of "large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):




Large
      accelerated filer  o      Accelerated
      filer  o




Non-accelerated
      filer o (Do
      not
      check if a smaller reporting company)   Smaller
      reporting company x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act):  Yes oNo
x




The
      aggregate market value of the registrant's voting and non-voting common stock
      held by non-affiliates of the registrant, based on the closing price of the
      registrant’s common stock on the last business day of the registrant’s most
      recently completed second fiscal quarter ($ 8.00), was $13,436,936. Solely
      for
      the purposes of this calculation, shares held by directors and executive
      officers of the registrant have been excluded. Such exclusion should not be
      deemed a determination or an admission by the registrant that such individuals
      are, in fact, affiliates of the Registrant.




As
      of
      March 26, 2008, there were 9,983,390 shares of the issuer’s common stock
      outstanding.





**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Form
      10-K**


**December
      31, 2007**


**TABLE
      OF CONTENTS**




PART
                I
            1FORWARD-LOOKING
                STATEMENTS
            1ITEM
                1.
            Description
                of Business.
            1ITEM
                1A.
            Risk
                Factors.
            13ITEM
                1B.
            Unresolved
                Staff Comments.
            21ITEM
                2.
            Properties.
            21ITEM
                3.
            Legal
                Proceedings.
            22ITEM
                4.
            Submission
                of Matters to a Vote of Security Holders.
            22PART
                II
            23ITEM
                5.
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuers
                Purchase of EquitySecurities.
            23ITEM
                6.
            Selected
                Financial Data.
            25ITEM
                7.
            Management’s
                Discussion and Analysis of Financial Condition and Results of Operations.
            25ITEM
                7A.
            Quantitative
                and Qualitative Disclosures About Market Risk.
            38ITEM
                8.
            Financial
                Statements and Supplementary Data.
            38ITEM
                9.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure.
            39ITEM
                9A.
            Controls
                and Procedures.
            39ITEM
                9A(T)
            Controls
                and Procedures.
            39ITEM
                9B.
            Other
                Information.
            40PART
                III
            41ITEM
                10.
            Directors,
                Executive Officers, and Corporate Governance.
            41ITEM
                11.
            Executive
                Compensation.
            46ITEM
                12.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                StockholdersMatters.
            54ITEM
                13.
            Certain
                Relationships and Related Transactions, and Directors
                Independence.
            55ITEM
                14.
            Principal
                Accountant Fees and Services.
            57PART
                IV
            58ITEM
                15.
            Exhibits,
                Financial Statement Schedules.
            58EXHIBIT
                21.1EXHIBIT
                23.1EXHIBIT
                31.1EXHIBIT
                31.2EXHIBIT
                32.1EXHIBIT
                32.2










**PART
      I**





FORWARD-LOOKING
      STATEMENTS





This
      Annual Report on Form 10-K contains forward-looking statements (as defined
      in
      Section 27A of the Securities Act and Section 21E of the Exchange Act). To
      the
      extent that any statements made in this Annual Report on Form 10-K contain
      information that is not historical, these statements are essentially
      forward-looking. Forward-looking statements may be identified by the use of
      words such as “expects,” “plans,” “will,” “may,” “anticipates,” “believes,”
“should,” “intends,” “estimates” and other words or phrases of similar meaning.
      Although we believe that the expectations reflected in these forward-looking
      statements are reasonable and achievable, these statements are subject to a
      number of risks and uncertainties discussed under the headings “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition and Results of
      Operations” and elsewhere in this Annual Report on Form 10-K. All
      forward-looking statements attributable to us are expressly qualified by these
      and other factors. We cannot assure you that actual results will be consistent
      with these forward-looking statements.




Information
      regarding market and industry statistics contained in this Annual Report on
      Form
      10-K is included based on information available to us that we believe is
      accurate. Forecasts and other forward-looking information obtained from this
      available information is subject to the same qualifications and the additional
      uncertainties accompanying any estimates of future market size, revenue and
      market acceptance of products and services. The forward-looking statements
      made
      in this Annual Report on Form 10-K relate only to events as of the date on
      which
      the statements are made. We do not undertake any obligation to publicly update
      any forward-looking statements. As a result, you should not place undue reliance
      on these forward-looking statements





**Item
      1. Business**




**GlobalOptions
      Overview**




GlobalOptions
      is an integrated provider of risk mitigation and management services to
      government entities, Fortune 1,000 corporations and high net-worth and
      high-profile individuals. We enable clients to identify, assess and prevent
      natural and man-made threats to the well-being of individuals and the operations
      of governments and corporations. In addition, we assist our clients in
      recovering from the damages or losses resulting from the occurrence of acts
      of
      terror, natural disasters, fraud and other risks. Our vision is to continue
      to build a comprehensive risk mitigation solutions company through both organic
      growth and acquisitions. In pursuit of our strategy, we have acquired and
      integrated eight complementary risk mitigation businesses since August 2005.




We
      believe our reputation, credentials and personal relationships provide us with
      a
      competitive advantage in securing new business opportunities. Our senior
      management team and advisory boards have extensive industry backgrounds and
      include former generals in the military, top government officials and corporate
      officers, intelligence and law enforcement officers, professional investigators
      and legal and crisis communications specialists.




We
      deliver risk mitigation and management services through four business units:
      Preparedness Services; Fraud and SIU Services; Security Consulting and
      Investigations; and International Strategies. The Preparedness Services unit
      develops and implements crisis management and emergency response plans for
      disaster mitigation, continuity of operations and other emergency management
      issues for governments, corporations and individuals. The Fraud and SIU Services
      unit provides investigative surveillance, anti-fraud solutions and business
      intelligence services to the insurance industry, law firms and multinational
      organizations. The Security Consulting and Investigations unit delivers
      specialized security and investigative services, such as security assessments,
      threat analyses and forensic DNA analysis and casework, to governments,
      corporations and individuals. The International Strategies unit provides a
      full
      range of security and risk management services, such as global business
      intelligence, investigations and litigation support, and personal protection,
      to
      foreign and domestic governments, corporations and individuals.


1




**Industry
      Overview**




We
      compete in the global security industry, focused on providing comprehensive
      risk
      mitigation and management services to government entities, Fortune 1,000
      corporations and high net-worth and high-profile individuals throughout the
      world. The risk mitigation industry encompasses a broad range of services
      enabling governments, corporations and individuals to enhance security, reduce
      exposure to overt and covert threats and optimize preparation for and response
      to critical events.




Until
      recently, risk mitigation was defined by the actions taken by organizations
      following the occurrence of a critical incident. Risk mitigation firms were
      traditionally engaged to assess damage once a serious event, loss or security
      breach had occurred. Engagements were typically non-recurring in nature and
      usually involved a service provider offering both assistance with primarily
      reactive measures and high-level analysis of incidents in order to reduce losses
      following an event.




In
      recent
      years, the risk mitigation industry has experienced significant growth,
      primarily driven by the occurrence of natural and man-made disasters, heightened
      regulatory and compliance standards and flaws and gaps in existing risk
      mitigation policies and procedures. The importance of risk mitigation has
      evolved as governments, corporations and individuals are faced with actively
      managing a variety of new elements of risk, including terrorism, litigation,
      fraud, compliance, business continuity, brand protection, cyber attacks,
      industrial espionage and regulatory issues. In response, the focus of risk
      mitigation has shifted to proactively evaluating, identifying, quantifying
      and
      managing elements of risk, in addition to reacting to critical events.




The
      risk
      mitigation industry is highly fragmented, comprised primarily of smaller,
      specialized providers of a particular service. Historically, purchasers of
      risk
      mitigation services have relied upon multiple vendors to satisfy their
      requirements. However, due to the growing importance of risk mitigation, we
      believe governments, corporations and individuals are seeking to address
      proactively all of their risk mitigation needs through a single-solutions
      provider. Despite this trend, there are currently few large, independent
      providers capable of delivering the full range of services sought by clients.
      As
      the risk mitigation market continues to grow, we anticipate the pace of industry
      consolidation will increase.




We
      categorize the risk mitigation industry into four primary service areas:
      investigations and background screening; preparedness and continuity planning;
      security consulting; and litigation and compliance support. There are other
      services, such as security guard services and alarm monitoring, that are
      lower-margin areas of the risk mitigation industry and outside the scope of
      our
      operational focus.




•
              
              *Investigations
                  and background screening*.
                  Investigative services enable insurance companies, law firms and
                  other
                  organizations to combat fraud, substantiate suspicions of criminal
                  acts
                  and, ultimately, provide protection against financial loss and
                  fraudulent
                  activity. Background screening enables governments and corporations
                  to
                  implement effective hiring practices through in-depth analysis
                  of a broad
                  range of criteria of prospective employees, including work history,
                  criminal offenses and drug testing results.
  •
              
              *Preparedness
                  and continuity planning*.
                  Preparedness and continuity planning services enable governments
                  and
                  corporations to effectively prepare for, respond to and recover
                  from
                  natural or man-made disasters. Specifically, these services include
                  the
                  creation of emergency response plans, business continuity planning
                  and
                  recovery services. We believe the funding of preparedness and continuity
                  planning initiatives continues to be a priority for foreign, federal,
                  state and local governments.
  •
              
              *Security
                  consulting*.
                  Security consulting services provide governments, corporations
                  and
                  individuals with increased protection by analyzing and aiding in
                  the
                  implementation of security measures. These services include executive
                  protection, facility security assessments and threat analysis.
  •
              
              *Litigation
                  and compliance support*.
                  In an increasingly stringent regulatory environment, governments
                  and
                  corporations have utilized litigation and compliance support services
                  to
                  ensure compliance with regulations and minimize the threat of litigation.
                  Compliance support services assist organizations in effectively
                  managing
                  compliance with regard to financial reporting, government regulations
                  and
                  SEC requirements. Litigation support services aid in the preparation
                  for
                  legal proceedings and include document review, case preparation,
                  targeted
                  investigations and witness interviewing.




2




Collectively,
      these risk mitigation services enable organizations to protect constituents,
      employees and stockholders as well as optimize preparation for and response
      to
      critical events. We believe these services have become vital to the operational
      effectiveness of organizations worldwide and that they will continue to be
      a
      primary point of emphasis going forward.




**Market
      Opportunity**




As
      a
      result of geo-political events, corporate scandals, natural and man-made
      disasters and increasing litigation costs, we believe proactive risk mitigation
      has become critical for government entities, corporations and individuals.
      Our
      target clients are now actively addressing their security needs, thereby driving
      increased demand for outsourced risk mitigation and management services. The
      emerging trend towards outsourcing these services represents a fundamental
      shift
      in demand and we believe has created a compelling opportunity for market growth
      in the risk assessment and mitigation industry. We believe the following key
      market trends define our opportunity:




*Natural
      Disasters and Emergency Preparedness.* Governments,
      corporations and individuals have increased their focus on disaster preparedness
      and prevention after witnessing the loss of life and financial impact of natural
      disasters and acts of terror, including Hurricane Katrina and the terror attacks
      of September 11, 2001. According to FEMA, in 2006 there were 52 major
      disasters in the U.S., and public assistance for major disasters in the U.S.
      has
      averaged approximately $2.6 billion annually since 1998. While major
      catastrophes capture the attention of a global audience, smaller regional and
      localized disasters can be equally damaging to governments, corporations and
      individuals. We believe most government entities, corporations and individuals
      are not equipped to address communications continuity, coordinate a rapid
      response and handle insurance related issues effectively enough to satisfy
      their
      constituents, employees and stockholders.




*Market
      Inefficiencies Created by Fraud* .
      According to the Insurance Information Institute, the total annual cost of
      insurance fraud, including life and health insurance, is more than $100 billion.
      The Coalition Against Insurance Fraud estimates insurance fraud’s overall impact
      on the consumer to be the equivalent of a hidden tax of approximately $900
      per
      U.S. family on the cost of goods and services. We believe these market
      inefficiencies and the financial strain upon businesses as a result of insurance
      fraud have created a demand for expertise in investigative surveillance,
      business intelligence and other anti-fraud services.




*Regulatory
      Complexity and Increased Litigation* .
      We
      believe heightened focus on regulatory activity and corporate governance
      scrutiny will drive demand for risk mitigation and management services.
      Ineffective compliance management in today’s stringent regulatory environment
      can result in severe civil and criminal penalties for a company and its officers
      and directors. We believe the financial and business risk borne by a company,
      its corporate officers and directors from legislation such as the USA Patriot
      Act, the Federal Information Security Act, the Gramm-Leach-Bliley Act, the
      Health Insurance Portability and Accountability Act and the Sarbanes-Oxley
      Act
      of 2002, increases the need for industry experts to help organizations manage
      regulatory requirements.




*Lack
      of Full Service Provider in a Fragmented Market.* We
      believe the heightened focus on emergency preparedness and response, the
      escalating costs of fraud and the proliferation of regulatory scrutiny have
      created the need for an efficient provider of comprehensive risk mitigation
      and
      management services. Several of the traditional leaders in our industry have
      been acquired or evolved their business model, and we believe niche providers
      that offer limited services on a local scale are unable to meet the full range
      of their clients’ needs, leaving a service gap. We believe the drivers of
      increased risk assessment and mitigation spending are likely to continue into
      the foreseeable future and, as a provider of a comprehensive suite of customized
      services, we should benefit as the market opportunity grows.


3




**Competitive
      Strengths**




We
      are
      committed to providing comprehensive risk mitigation and management services.
      We
      believe the following factors are strengths of our company and provide us with
      key competitive advantages.




*Comprehensive
      Risk Mitigation Solutions.* We
      have
      assembled what we believe to be core services utilized by clients seeking risk
      mitigation solutions. We are therefore able to offer a comprehensive suite
      of
      customized services designed to address each client’s specific needs. Our
      service offerings have been enhanced by developing proprietary systems, such
      as
      GlobalTrakTM, which allows real-time, web-based reporting, communications and
      fraud program management, and acquiring advanced technologies, such as Bode’s
      forensic DNA capabilities. **




*Reputable
      and Resourceful Management and Advisory Boards* .
      Due to
      the critical and sensitive nature of risk mitigation and investigative
      engagements, we believe the ability to provide services and retain clients
      is
      driven largely by reputation and personal relationships. Our senior management
      and advisory boards have exceptional credentials and well-established
      relationships. Their experience and former titles include: a Brigadier General
      in the U.S. Air Force; a Director of FEMA; a New York City Police Commissioner;
      a Director of the  FBI;
      a
      U.S. Secretary of Transportation; a Director of the CIA; and U.S. Ambassadors
      and high-ranking corporate executives. We believe this level of expertise
      provides credibility with clients and access to key decision-makers within
      government and industry.




*Experienced
      Senior Management Team and Professionals* .
      Our
      senior management team and professionals include individuals with vast industry
      experience. These individuals have the operational experience to execute
      sensitive and critical engagements, enabling us to effectively deliver solutions
      to our clients. Our management team has demonstrated the ability to lead the
      integration of acquisitions, retain top talent and drive organic growth from
      the
      combined business units.




*Demonstrated
      Success with Strategic Acquisitions* .
      Since
      August 2005, we have executed and integrated eight strategic acquisitions and
      retained selected key professionals, many as senior management. These
      acquisitions have contributed to our rapid growth in revenues, number of
      professionals, vertical industry coverage, areas of functional expertise,
      geographic presence and brand recognition. We believe our success with these
      acquisitions to be a key competitive advantage when pursuing additional
      acquisitions to broaden and deepen the scope of our services.




**Growth
      Strategy**




Our
      goal
      is to build a company with the risk mitigation industry’s most comprehensive
      solutions offering through a balance of organic growth and acquisitions. We
      intend to grow our business in the following manner:




*Leverage
      Our Relationships and Expertise* .
      Our
      highly trained professionals have deep domain expertise and exceptional
      credentials. Further, our advisory boards are comprised of thought leaders
      in
      their respective fields. Since our industry relies heavily on reputation and
      trust, we believe our senior management team’s and advisory boards’ experience
      and relationships will help us gain access to an increasing number of
      opportunities.




*Cross-sell
      and Integrate Businesses* .
      We
      intend to continue our aggressive efforts to integrate the operations of
      companies we have acquired and will acquire, providing the framework necessary
      for our senior managers to focus on identifying, prospecting and winning new
      opportunities across all business units. We believe our operational expertise
      and comprehensive service offerings enable us to cross-sell over industry
      verticals as well as leverage our existing client base, thereby enhancing our
      ability to execute on our organic growth initiatives.


4




*Selectively
      Acquire Companies* .
      We will
      continue to pursue complementary acquisitions of companies that enable us to
      increase our share of those markets in which we already operate and to enter
      new
      markets and service segments. We believe there are numerous opportunities to
      acquire quality companies because of the fragmented nature of our industry
      and
      that our past acquisitions track record will assist us in executing this
      strategy. We expect these acquisitions to be geographically diverse, provide
      synergies within units and allow for cross-selling opportunities across all
      of
      our business units. We structure our acquisitions to ensure that key selected
      individuals from the acquired company are retained and integrated after the
      transaction is consummated.




*Develop
      New Solutions* .
      We will
      continue to develop and seek solutions to meet unique client and dynamic market
      segment needs by expanding and bundling our product and service offerings.
      As we
      continue to grow both organically and through acquisitions, we expect to meet
      additional needs of our clients. Evidence of this strategy is our recently
      developed enterprise-oriented solution, GlobalTrak, and the DNA technology
      service we offer as a result of our acquisition of Bode.





*Expand
      Internationally* .
      We
      intend to pursue additional opportunities to offer our services outside the
      United States. We believe international markets provide a substantial
      opportunity for growth given the increasing  risks
      that businesses and governments face around the world. We expect that by
      expanding our offerings to other countries we will also enhance our ability
      to
      compete in the United States for the business of global organizations.




**Risk
      Mitigation and Management Services**




GlobalOptions
      is an integrated, comprehensive provider of risk mitigation and management
      services to government entities, Fortune 1,000 corporations and high-net worth
      and high-profile individuals. We deliver risk mitigation and management services
      through four business units: Preparedness Services; Fraud and SIU Services;
      Security Consulting and Investigations; and International Strategies.




***Preparedness
      Services***




The
      Preparedness Services unit develops and implements crisis management and
      emergency response plans for disaster mitigation, continuity of operations
      and
      other emergency management issues for governments, corporations and individuals.
      We offer a full range of services to help our clients better prepare for,
      respond to and recover from disasters. We believe our ability to mobilize
      management, security and communications resources in an expedited manner
      differentiates us from our competitors. Services we provide include:




•
              
              Business
                  continuity plans
  •
              
              Emergency
                  exercises and training programs
  •
              
              Post-disaster
                  crisis communications assistance
  •
              
              Preparedness,
                  response and recovery services
  •
              
              Strategic
                  advisory services
  •
              
              Threat
                  and impact assessments




The
      Preparedness Services unit is comprised of our James Lee Witt Associates, LLC
      (“JLWA”) acquisition and is led by former FEMA Director James Lee Witt. Our
      staff includes seasoned crisis and emergency management leaders with significant
      experience in the public sector. Our Preparedness Services unit has 54 full-time
      employees and is headquartered in Washington, D.C.




For
      the
      year ended December 31, 2007, we completed 68 crisis management and emergency
      response projects with an average revenue of $453,000. Preparedness Services
      accounted for approximately 35% of our revenues for the year ended December
      31,
      2007.


5




Illustrative
      examples of our services include:




•
              
              *State
                  of Louisiana:*Following
                  on the success of our post-Katrina response and recovery contract,
                  the
                  State of Louisiana has awarded us a two-year contract, with the
                  State’s
                  option for a third year, to be the lead provider of relief and
                  recovery
                  efforts related to all Louisiana disasters. Under this new contract,
                  the
                  State of Louisiana has chosen to expand our role to be the State’s lead
                  disaster advisor and recovery manager. We will continue to provide
                  recovery relief in the aftermath of Hurricanes Katrina and Rita,
                  and will
                  also provide these same services for other new and/or pre-existing
                  disasters. In our enhanced role, we will provide programmatic and
                  policy
                  advice on FEMA and will assist with the development and dissemination
                  of
                  Louisiana’s disaster-related policies and procedures.
  •
              
              *New
                  York Power Authority:*In
                  2002, former Governor George Pataki retained JLWA as part of a
                  state-wide
                  assessment of emergency preparedness at New York’s power plants in
                  response to heightened risk of terrorism. JLWA delivered a comprehensive
                  review of emergency preparedness for the area surrounding the Indian
                  Point
                  Energy Center, a three-unit nuclear power plant just 24 miles north
                  of New
                  York City. JLWA’s comprehensive assessment has led to numerous changes by
                  the plant operator and surrounding communities.
  •
              
              *Sprint
                  Nextel:*We
                  work with Sprint Nextel’s corporate and regional emergency response and
                  business continuity teams to review, evaluate, revise and implement
                  internal business continuity plans, rapid response plans and field
                  operations guides. We also provide subject matter expertise on
                  campus
                  safety on Sprint Nextel’s behalf to numerous colleges and universities to
                  facilitate the sale of Sprint Nextel’s products and services. In addition,
                  we participate at Sprint Nextel sponsored events and other industry
                  conferences, often providing key-note speakers, make strategic
                  marketing
                  and sales introductions for Sprint Nextel on the federal, state
                  and local
                  levels, and advise and counsel Sprint Nextel on working with the
                  public
                  sector. We provide introductions to public and private sector leaders
                  in a
                  wide range of organizations, including the National Governors Association,
                  the U.S. Conference of Mayors, NAFEO, an association of historically
                  black
                  colleges and universities, and the U.S. Parole
                  Commission.
 
 •
              
              *California
                  Department of Food and Agriculture (CDFA):*JLWA
                  prepared Continuity of Operations and Continuity of Government
                  plans for
                  the CDFA, a 2,300-employee state agency that protects and promotes
                  California’s $32 billion agriculture industry. JLWA organized
                  emergency planning exercises and developed training programs in
                  the area
                  of food safety and pandemic food poisoning outbreaks for all operational
                  divisions within CDFA, including Agricultural Security and Emergency
                  Response, Plant Health and Pest Prevention Services, Animal Health
                  and
                  Food Safety Services and Grant Programs. These plans provide the
                  blueprint
                  for agriculture and food safety plans to be implemented at the
                  local
                  level.


***Fraud
      and SIU Services***




The
      Fraud
      and SIU Services unit provides investigative surveillance, anti-fraud solutions
      and business intelligence services to the insurance industry, law firms and
      multinational organizations. We provide services to clients both nationally
      and
      regionally through licensed investigators in all 50 states, as well as
      internationally through affiliates that provide assistance to clients overseas.
      Our investigators provide reports and intelligence on subjects such as workman’s
      compensation surveillance, unfair trade practices, political trends, economic
      forecasts, profiles on competitors and satellite reconnaissance. Services we
      provide include:





•
            
            Anti-fraud
                training•
            
            Background
                investigations•
            
            Corporate
                investigations for liability•
            
            Fraud
                reporting•
            
            Insurance
                claims investigations•
            
            On-scene
                accident investigations•
            
            Regulatory
                compliance•
            
            Surveillance


Our
      proprietary GlobalTrak technology enables us to deliver real-time, web-based
      reporting, communications and fraud program management. By automating and
      streamlining investigative processes, GlobalTrak provides our clients with
      more
      expedient and cost-effective service. Our comprehensive software enables
      adjusters, claims representatives, risk managers and SIU departments to securely
      access and download status updates, including case receipt, assignment, work
      schedule, results of investigative activity, investigative reports and streaming
      video and audio. We believe GlobalTrak is a significant competitive
      differentiator and offers our clients a valuable enterprise solution.




6




The
      Fraud
      and SIU Services unit is comprised of the following acquired companies:
      Confidential Business Resources (“CBR”); Hyperion Risk, Inc. (“Hyperion Risk”);
      Secure Source, Inc (“Secure Source”); and Facticon, Inc. (“Facticon”). This unit
      is led by Halsey Fischer, an 18-year industry veteran and former President
      and
      Chief Executive Officer of CBR. Our investigative team includes highly educated
      and trained investigators who utilize extensive public and proprietary databases
      to uncover factual circumstances surrounding sensitive investigations. Our
      experts are capable of handling any type of investigative need globally. Our
      anti-fraud services are national in scope, but local in expertise. Headquartered
      in Nashville, TN, the Fraud and SIU Services unit has 248 full-time and 98
      part-time employees and has offices in southern and northern California,
      Chicago, Dallas, Detroit, Orlando and Philadelphia.





For
      the
      year ended December 31, 2007, we completed 27,246 investigations and anti-fraud
      projects with an average revenue of $900. Fraud and SIU Services accounted
      for
      approximately 28% of our revenues for the year ended December 31, 2007.




Illustrative
      examples of our services include:




•
              
              *Large
                  Freight Railroad:*We
                  serve as the exclusive workman’s compensation investigations provider for
                  one of the largest freight railroads in the U.S. for whom we investigate
                  suspected abuses of benefits claims. We conduct special investigations
                  and
                  provide expert knowledge regarding the railroad industry’s Federal
                  Employer Liability Act, which allows employees to seek significant
                  damages
                  in cases of railroad negligence. In one particular investigation,
                  we
                  provided our client with $1.6 million in savings at a cost of
                  approximately $11,000.
  •
              
              *Operator
                  of over 1,700 Restaurants*:
                  We serve as the primary insurance fraud investigator for the world’s
                  largest casual dining company, with six restaurant chains and over
                  1,700 restaurants nationwide. As part of our engagement, we designed
                  a
                  secure web site using our highly customized, proprietary case management
                  system, GlobalTrak. GlobalTrak allows the client to access real-time
                  investigation status, track spending and view claims results, surveillance
                  videos, reports and investigative documents. The information we
                  have
                  provided has allowed our client to better control claims expenditures
                  and
                  has substantially reduced its total claims cost.
  •
              
              *Large
                  Third-Party Insurance Administrator:*We
                  serve as the exclusive investigations management provider for one
                  of the
                  nation’s largest third-party insurance administrators. Annually, we handle
                  over 150,000 claims from 44 offices across the country. We designed
                  a
                  customized investigator management program under which we manage
                  surveillance services both directly and through a network of independent
                  surveillance subcontractors. We established standards for all surveillance
                  subcontractors and conducted a comprehensive review to select the
                  most
                  qualified subcontractors, resulting in a reduction in the number
                  of
                  independent surveillance subcontractors from 258 to 40 and a standardized
                  rate structure. With these efforts, we have reduced the client’s
                  historical annual investigative expenditures by 23% from $3,000,000
                  to
                  $2,300,000.
  •
              
              *Major
                  Property and Casualty Insurance Carriers:*We
                  provide consulting services to four major property and casualty
                  insurance
                  carriers. Under these engagements, we assist with the complex process
                  of
                  drafting and filing each of their fraud plans. Our consulting services
                  include compiling and reporting fraud statistics to state regulatory
                  bodies and filing documented fraud cases with state fraud bureaus.
  •
              
              *Special
                  Fraud Investigations for Third-Party Insurance Claim
                  Administrator*:
                  We have conducted over 965 special fraud investigations for one
                  of the
                  nation’s largest multi-line property and casualty third-party insurance
                  claim administrators, with 2,800 employees and 102 branch offices
                  throughout the U.S. These investigations resulted in 16 convictions
                  and
                  over $200,000 in restitution to the client in
                  2007.


7


***Security
      Consulting and Investigations***




The
      Security Consulting and Investigations unit delivers specialized security and
      investigative services to governments, corporations and individuals. We provide
      security assessments, anti-terrorism training, threat analyses, fraud prevention
      techniques, special event security, private travel management and the design,
      implementation and management of security systems. Services we provide include:




•
                
                Business
                    intelligence
  •
                
                Executive
                    protection
  •
                
                Facilities
                    and IT security
  •
                
                Forensic
                    DNA analysis and casework
  •
                
                Independent
                    monitoring and regulatory compliance
  •
                
                IT
                    and accounting forensics
  •
                
                Litigation
                    support




Our
      recent acquisition of Bode has expanded our expertise, enabling us to provide
      forensic DNA analysis, highly advanced and proprietary DNA collection products
      and research services to law enforcement agencies, federal and state
      governments, crime laboratories and disaster management organizations. We
      believe the addition of Bode to our suite of service offerings greatly enhances
      our services for our existing clients and will attract new clients.




Our
      Security Consulting and Investigations unit is comprised of the following
      acquired companies: Safir Rosetti, LLC (“Safir”); The Bode Technology Group
      (“Bode”); and SPZ Oakland Corporation, dba On Line Consulting Services, Inc.
      (“On Line Consulting”). This unit is led by Howard Safir, former New York City
      Police Commissioner, and Joseph Rosetti, former Director of Worldwide Security
      at IBM. Our national network of security and investigative personnel have
      extensive backgrounds in the fields of security, investigations, intelligence,
      law enforcement and public safety. Headquartered in New York, NY, we have 175
      full-time and 11 part-time employees in the Security Consulting and
      Investigations unit and have offices in Boston, Washington, D.C., Chicago,
      Dallas, Los Angeles and San Francisco.




For
      the
      year ended December 31, 2007, we completed 1,115 security and investigation
      projects (excluding Bode) with an average revenue of $15,757. For the 10 months
      that we owned Bode during the year ended December 31, 2007, we completed 213,206
      DNA related projects with an average revenue of $58. Security Consulting and
      Investigations (including Bode) accounted for approximately 37% of our revenues
      for the year ended December 31, 2007.




Illustrative
      examples of our services include:




•
            
            *Sports
                Stadiums and Entertainment Complexes:*We
                provided vulnerability assessments, risk mitigation plans, physical
                security recommendations and acted as a public safety liaison to
                some of
                the nation’s largest new sports stadiums and entertainment complexes. We
                designed security and safety systems and procedures to address all
                aspects
                of the threats to the physical infrastructure and operations of these
                large public venues.  •
              
              *Regional
                  Utility Company:*We
                  designed, managed and continue to audit an enterprise wide security
                  system
                  and centralized command center for a major natural gas distributor
                  and
                  electricity generator. The multi-million dollar system includes
                  closed-circuit television, access control, alarm monitoring and
                  other
                  security technology and procedures that enable our client to protect
                  its
                  critical infrastructure.
  •
              
              *School
                  Security*:
                  We provided school security assessments, recommendations and risk
                  mitigation measures for eight separate school districts. We conducted
                  walk-through analyses of over 162 schools in eight districts, with
                  a focus
                  on visitor management systems, pick-up, drop-off and emergency
                  procedures,
                  the duties of school resource officers and the use of security
                  technology.
                  We assisted in the implementation of new security systems and procedures
                  to enhance security in these unique environments. Our solutions
                  help to
                  protect over 30,000 students.
 
 •
              
              *Professional
                  Sports League:*We
                  provide security and emergency preparedness consulting for a major
                  professional sports league, including facility security review,
                  security
                  procedure and policy review, and security system design. We have
                  completed
                  on-site assessments of 11 league arenas, the league’s corporate operations
                  center and the locations of nine overseas promotional events and
                  continue
                  to deliver proactive solutions to improve security for the league’s
                  domestic and international activities.
  •
              
              *Data
                  Center:*We
                  design and implement physical security solutions for a major data
                  center
                  provider to Fortune 1,000 companies in over 25 markets throughout
                  North
                  America and Europe. Our solutions include access control, closed-circuit
                  television and alarm monitoring at over 60 data centers throughout
                  the
                  world.




8




***International
      Strategies***




The
      International Strategies unit provides multidisciplinary, international risk
      management and business solutions. We offer a full range of security and risk
      management services to foreign and domestic governments, corporations and
      individuals. We are experts at managing problems, clarifying decision-support
      situations and protecting or saving value and reputations, or even human lives.
      Services we provide include:




•
              
              Corporate
                  governance compliance
  •
              
              Crisis
                  management
  •
              
              Emerging
                  market services
  •
              
              Facilities
                  security
  •
              
              Global
                  business intelligence
  •
              
              Investigations
                  and litigation support
  •
              
              Personal
                  protection


The
      International Strategies unit was our original core business and is led by
      Thomas Ondeck, a founder of GlobalOptions. Our management team, staff and
      advisory boards are comprised of legal experts, military and intelligence
      veterans, former senior policy makers, private investigators, security
      professionals and public relations experts who have deep relationships and
      extensive database expertise. Our security professionals have experience
      securing everything from pipelines and financial centers to chemical weapons
      factories, corporate headquarters and major sports and entertainment venues.
      Our
      private investigators assist law firms and corporations in managing legal
      battles in the U.S. and abroad. Headquartered and operated in Washington, D.C.,
      we employ nine full-time employees.




International
      Strategies is not a separate reporting segment and as such we attribute its
      revenues to the Fraud and SIU Services unit. We believe the unit has attractive
      prospects as we continue to execute our growth strategy.




Illustrative
      examples of our services include:




•
              
              *International
                  Business Intelligence*:
                  We investigated the backgrounds of five key officers and directors
                  in
                  connection with a potential acquisition in Europe. Through our
                  international investigative network, we reviewed criminal records,
                  civil
                  litigation and bankruptcies. We prepared comprehensive employment
                  histories for each individual, utilizing information obtained in
                  the U.S.,
                  UK, Italy, Germany and Switzerland.
  •
              
              *International
                  Hotel Chain*:
                  We coordinated, for the third largest international hotel chain,
                  an
                  executive protection program providing security for 250 senior
                  executives
                  and shareholders at conferences held in Seville and Barcelona,
                  Spain and
                  Paris, France. We delivered a comprehensive security program,
                  incorporating emergency medical response plans, route reconnaissance
                  and
                  coordination with local law enforcement.
  •
              
              *Nigerian
                  Golf Tournament*:
                  We were retained by the Nigerian government to arrange for professional
                  golfers Colin Montgomerie, Retief Goosen and Nancy Lopez to participate
                  in
                  an exhibition golf tournament held to promote economic development
                  at a
                  new Nigerian resort. We also provided the golfers with personal
                  security
                  and secure transportation during this event.
  •
              
              *Multi*-*National
                  Automobile Manufacturer*:
                  We provided investigation services to a $200 billion multi-national
                  automobile manufacturer, resulting in a substantial reduction in
                  environmental claims expenditures. We reduced the client’s costly claims
                  through conducting background checks and personal interviews and
                  by
                  researching employment histories dating back as much as 50 years.
  •
              
              *Major
                  U*.*S.
                  Financial Institution*:
                  We serve as the private investigations arm for a major U.S. financial
                  services institution in its defense against highly complex fraud
                  complaints. In this role, we also discretely monitor federal and
                  state
                  legislative developments related to the potential impact of these
                  complaints on the client’s business.


9




**Corporate
      History**




GlobalOptions,
      Inc., our wholly-owned operating subsidiary, was initially formed as a limited
      liability company in the state of Delaware in November 1998 and converted into
      a
      Delaware corporation on January 24, 2002. On June 24, 2005, we became
      a public company by completing a reverse merger transaction, in which
      GlobalOptions Acquisition Corp., a Delaware corporation and our newly created,
      wholly owned subsidiary, merged with and into GlobalOptions, Inc. As a result
      of
      the reverse merger, GlobalOptions, Inc. became our wholly owned operating
      subsidiary, with GlobalOptions, Inc.’s former security holders acquiring a
      majority of the outstanding shares of our common stock. At the time of the
      reverse merger, our corporate name was Creative Solutions with Art, Inc., a
      Nevada corporation. Following the reverse merger, we changed our name to
      GlobalOptions Group, Inc. On December 8, 2006, we completed a
      reincorporation merger whereby we changed our state of incorporation from Nevada
      to Delaware.




**History
      of Acquisitions**




Since
      becoming a public company in June 2005, we have actively pursued our acquisition
      strategy.




On
      August 14, 2005, we purchased substantially all of the assets and
      liabilities of CBR, a nationwide investigations firm based in Nashville,
      Tennessee. CBR was the foundation acquisition for our Fraud and SIU Services
      unit. The CBR acquisition provides us with significant capabilities in the
      intelligence gathering, surveillance, investigation, risk reduction and
      litigation exposure reduction fields.




On
      March 10, 2006, we purchased substantially all of the assets and
      liabilities of JLWA, a crisis and emergency consulting management firm based
      in
      Washington, D.C. JLWA is the only business within our Preparedness Services
      unit. The JLWA acquisition bolsters our presence in the public safety, crisis
      and disaster management markets.




On
      May 12, 2006, we acquired substantially all of the business and assets of
      Safir, a security consulting, investigative and intelligence firm headquartered
      in New York City with seven additional offices nationwide. Safir was the
      foundation acquisition for our Security Consulting and Investigations unit.
      The
      Safir acquisition provides us with expertise in corporate and government risk
      management and the protection of critical infrastructure.




On
      May 12, 2006, we acquired substantially all of the business and assets of
      Secure Source, an international risk consulting firm with offices in Washington
      D.C. and Dallas, Texas. The Secure Source acquisition augments our Fraud and
      SIU
      Services unit by providing key capabilities in crisis management, business
      intelligence, due diligence, executive protection and computer forensics.




On
      August 10, 2006, we acquired substantially all of the business and assets
      of Hyperion Risk, a security consulting, investigative and intelligence firm
      based in Orlando, Florida. The Hyperion Risk acquisition provides additional
      investigative services such as surveillance, fraud protection and threat
      assessment to our Fraud and SIU Services unit.




On
      January 9, 2007, we acquired substantially all of the business and assets
      of On Line Consulting, a full-service security and fire alarm consulting and
      design firm headquartered in Oakland, California. The On Line Consulting
      acquisition adds security and communications systems expertise to our Security
      Consulting and Investigations unit.




On
      February 28, 2007, we acquired all of the outstanding common stock of Bode,
      which provides forensic DNA analysis, proprietary DNA collection products and
      related research services to law enforcement agencies, federal and state
      governments, crime laboratories and disaster management organizations. The
      Bode
      acquisition significantly expands the size of our Security Consulting and
      Investigations unit.




On
      February 28, 2007, we acquired substantially all of the business and assets
      of Facticon, a surveillance, investigative and business intelligence firm based
      in Chadds Ford, Pennsylvania. The Facticon acquisition expands our Fraud and
      SIU
      Services unit’s risk mitigation expertise in the insurance, legal, business and
      financial industries.




**Reverse
      Stock Split**





On
      March
      6, 2007, as approved by Stockholders on December 5, 2006, the Company effected
      a
      1 for 8 reverse stock split. All disclosures of shares and prices per share
      of
      common stock have been restated accordingly.





All
      share
      totals and stock, conversion and exercise prices have been proportionally
      adjusted.




10




**Equity
      Restructuring**




On
      July
      25, 2007, we eliminated all of our outstanding Series A Convertible Preferred
      Stock, Series B Convertible Preferred Stock and warrants in an equity
      restructuring (Equity Restructuring).




As
      a
      result of the Equity Restructuring, all formerly outstanding Series A and B
      Convertible Preferred Stock and warrants convertible into 6,625,562 shares
      of
      common stock were restructured into a total of 5,904,556 shares, consisting
      of
      (1) newly-created Series C and D Preferred Stock convertible into 5,273,791
      shares and (2) 630,765 shares of common stock. Each share of Series C and D
      Preferred Stock is convertible into 66.67 shares of common stock. The Series
      C
      Preferred Stock automatically converted into common stock upon consummation
      of
      the October 29, 2007 underwritten public offering (see Underwritten Public
      Offering below).




As
      part
      of the Equity Restructuring, holders of our Series A Preferred Stock and Series
      B Preferred Stock received, in consideration of the cancellation of those shares
      and all of their warrants:




•
              one
                  share of Series C Preferred Stock for each share of their Series
                  A
                  Preferred Stock and Series B Preferred Stock; and
  •
              31.25
                  shares of common stock for each share of their Series A Preferred
                  Stock
                  and Series B Preferred Stock.




In
      addition, all other warrant holders received, in consideration of the
      cancellation of their warrants, 0.2 shares of common stock for each share
      subject to those warrants.




In
      addition, to minimize the impact of concentrated voting power, a limited number
      of holders, whose receipt of common stock in the Equity Restructuring would
      have
      caused them to beneficially own in excess of 4.99% of our outstanding common
      stock, received shares of Series D Preferred Stock in lieu of shares of common
      stock. Similarly, some of these holders received one share of Series D Preferred
      Stock upon the automatic conversion of each share of their Series C Preferred
      Stock upon the consummation of the underwritten public offering. The Series
      D
      Preferred Stock is non-voting, has a nominal $0.001 per share liquidation
      preference and is convertible into common stock to the extent that a holder’s
      beneficial ownership of our common tock falls below the 4.99% threshold.





As
      required by a registration rights agreement with the participants in the Equity
      Restructuring, on October 24, 2007 we registered for resale a total of 5,904,556
      shares of our common stock issued or issuable upon the completion of the Equity
      Restructuring, the automatic conversion of the Series C Preferred Stock and
      the
      conversion of the Series D Preferred Stock. All of the holders who participated
      in the Equity Restructuring agreed to not sell any shares of common stock or
      securities convertible into common stock for a period of 90 days after the
      final
      prospectus related to the underwritten public offering.




**Underwritten
      Public Offering**




On
      October 29, 2007, we completed an underwritten public offering of 4,500,000
      shares of our common stock receiving approximately $20.25 million in gross
      proceeds ($18.2 million in net proceeds). We also registered approximately
      8,000,000 shares of our common stock (including the 5,904,556 shares in
      connection with our Equity Restructuring) for resale by existing stockholders
      under a registration statement.




We
      used a
      portion of the net proceeds from the proposed underwritten public offering
      to
      repay $4.3 million of notes and $38,000 of related accrued interest and have
      been using the balance of the net proceeds for working capital and general
      corporate purposes. We may use a portion of the balance of the net proceeds
      for
      strategic acquisitions and investments.





In
      connection with the underwritten public offering, on October 29, 2007 we entered
      into an agreement with Canaccord Adams Inc. and Morgan Keegan &
Company, Inc., as underwriters, who were paid aggregate fees of $1,418,000.




**Registration
      of Additional Shares for Resale**





On
      February 14, 2008, we registered for resale a total of 1,223,565 shares of
      our
      common stock, 300,000 shares of which were required to be registered pursuant
      to
      the second amendment, dated May 11, 2007, to our asset purchase agreement with
      WSFM, LLC (f/k/a James Lee Witt Associates, LLC) and the remainder of which
      were
      held by our employees, directors, or their affiliates, including certain shares
      purchased in our Underwritten Public Offering.


11





**Clients**




We
      have
      completed engagements for clients globally, including foreign, federal, state
      and local government entities, domestic and foreign Fortune 1,000 corporations,
      and high net-worth and high-profile individuals. We frequently work with clients
      on multiple assignments. As required by the highly confidential nature of our
      work, we keep the identities of our clients strictly confidential.




For
      the
      years ended December 31, 2007, 2006 and 2005, a limited number of clients
      accounted for a substantial percentage of our total revenues. For the year
      ended
      December 31, 2007, our two largest clients accounted for approximately 29%
      and
      9% of our revenues. For the year ended December 31, 2006, our two largest
      clients accounted for approximately 51% and 11% of our revenues. In each of
      these periods, revenues from our largest client, the State of Louisiana, were
      derived from one contract related to Hurricane Katrina. During the years ended
      December 31, 2007 and 2006, revenues from this single contract accounted for
      83%
      and 84% of the revenues generated by our Preparedness Services unit. For the
      year ended December 31, 2005, our two largest clients accounted for
      approximately 27% and 11% of our revenues.




**Sales
      and Marketing**




Our
      business is intensely personal due to the highly confidential nature of the
      engagements and the critical nature of the brands, reputations, competitive
      positions and overall market perceptions that our services support. We believe
      our ability to provide services and retain clients is driven largely by
      reputation and personal relationships. Our senior management team and advisory
      boards have exceptional backgrounds and include former generals in the military,
      top government officials and corporate officers, intelligence and law
      enforcement officers, professional investigators and legal and crisis
      communications specialists, all of whom can leverage relationships with leaders
      in both the corporate and government markets.




We
      believe these relationships give us the opportunity to bring in high-margin,
      well-known clients and our operational experience allows us to successfully
      complete these critical engagements. The success of this strategy is
      demonstrated by the recurring nature of our business with established clients.
      New opportunities typically arise from the ongoing relationships that our
      management personnel have with their client counterparts. As executives move
      to
      different companies or agencies, they often call upon us in their new
      environment.




Our
      sales
      and marketing strategy is to maintain and expand our reputation and track
      record, the quality of the services we deliver and the skills and character
      of
      the people we deploy on client engagements. In doing so, we intend to provide
      the high level of investigative, litigation support, crisis management, risk
      management and protective services demanded by our clients.




**Competition**




The
      market for risk mitigation services is very competitive, highly fragmented
      and
      subject to rapid change. We operate in a number of geographic and service
      markets, all of which are highly competitive. We believe the principal
      competitive factors and key differentiators in this market are reputation,
      relationships, expertise, quality and scope of service and size of institution.
      Therefore, new market entrants as well as existing competitors that have strong
      brand recognition or highly recognized principals in the risk mitigation
      industry likely pose the greatest threat to our business. We believe, however,
      our reputation and breadth and depth of services provide us with key competitive
      strengths and differentiate us from our competitors.




Competitors
      in the risk management and security market include Control Risks Group Limited,
      ArmorGroup International plc, Kroll Inc., Toribos GmbH and Olive Security (UK)
      Ltd. Additionally, many of the national and international accounting and
      consulting firms, along with other companies such as FTI Consulting, Inc.,
      Securitas AB and its subsidiary, Pinkerton Consulting & Investigations,
      Inc., Alvarez & Marsal, LLC, AlixPartners LLC, Crossroads LLC,
      ChoicePoint Inc. and Applied Discovery, Inc., provide investigative, consulting
      and other services which are similar to services we provide.




**Employees**




As
      of
      March 22, 2008 we had 489 full-time and 78 part-time employees. We enjoy good
      employee relations. None of our employees are members of any labor union, and
      we
      are not a party to any collective bargaining agreement.




12




**Government
      Regulation**




Due
      to
      our participation in government contracts, we are subject to audit from time
      to
      time for our compliance with government regulations by various agencies.
      Government agencies may also periodically conduct inquiries or investigations
      that may cover a broad range of our activities. We believe we operate our
      business in material compliance with all applicable federal, state and local
      government regulations and contracts.




We
      hold a
      number of General Services Administration (GSA) Federal Schedules, which enable
      federal and state agencies to buy services and products from us. We are required
      to be in compliance with the Federal Acquisition Regulations (FAR) in providing
      these services and products to our federal and state government clients. We
      are
      subject to audit by the GSA to assure we maintain compliance with these
      requirements.





In
      addition to maintaining our compliance with the FAR and the GSA, some contracts
      we have with state agencies contain additional requirements. While most states
      follow the FAR, in each contract, the state may require additional rules and
      regulations to maintain compliance with each contract. In providing services
      under each contract, we must be in compliance with contract rules and
      regulations before we can invoice under the contract. Before making any payments
      under a contract, a state will review our compliance.




Our
      investigation and surveillance business must be in compliance with each state’s
      licensing requirements for providing these services. In each state that we
      operate our investigation and surveillance business, we maintain the necessary
      licensing requirements to do business.




**Item
      1A. Risk Factors**





*Any
      investment in our common stock involves a high degree of risk. You should
      consider carefully the specific risk factors described below in addition to
      the
      other information contained in this prospectus, including our consolidated
      financial statements and related notes included elsewhere in the prospectus,
      before making a decision to invest in our common stock. If any of these risks
      actually occurs, our business, financial condition, results of operations or
      prospects could be materially and adversely affected. This could cause the
      trading price of our common stock to decline and a loss of all or part of your
      investment.*




**Risks
      Related to Our Business and Industry**




***We
      are an emerging company with a history of operating losses and may not become
      profitable.***




We
      were
      founded in 1998 and are still in the process of developing our four business
      units: Preparedness Services; Fraud and SIU Services; Security Consulting and
      Investigations; and International Strategies. We have incurred significant
      operating losses since inception, including net losses available to common
      stockholders of approximately $27,928,000, $42,259,000 and $4,550,000 for the
      years ended December 31, 2007, 2006 and 2005, respectively. We cannot
      anticipate when or if we will achieve profitability in the future. We may not
      generate sufficient revenues to meet our expenses, operate profitably or utilize
      our net operating losses in the future.




***Our
      arrangements with members of our senior management team, or our failure to
      retain or recruit key personnel, could negatively impact our ability to sell
      our
      products and services and grow our business.***




Our
      success will depend to a significant extent upon the abilities, level of
      service, reputation and relationships of members of our senior management team,
      our Board of Directors and our advisory boards. Some members of our senior
      management team work on a part-time basis and some do not have non-competition
      agreements with us. These arrangements, or any reduction or loss of these
      individuals’ services, could have a material adverse effect upon our business,
      particularly if any of our key personnel sought to compete against us.


13




Our
      future success and growth also largely depends upon our ability to attract,
      motivate and retain additional highly competent technical, management, service
      and operations personnel. Competition for these qualified individuals is highly
      competitive in the risk mitigation industry, and we cannot guarantee that we
      will be successful in attracting and retaining this personnel. Departures and
      additions of key personnel may be disruptive to and detrimentally affect our
      business, operating results and financial condition.




***Because
      a small number of clients account for a substantial portion of our revenues,
      the
      loss of any of these clients, or a decrease in their use of our services, could
      cause our revenues to decline and losses to increase substantially.***




Revenues
      from our services to a limited number of clients have accounted for a
      substantial percentage of our total revenues. For the year ended December 31,
      2007, our two largest clients accounted for approximately 29% and 9% of
      revenues. For the year ended December 31, 2006, our two largest clients
      accounted for approximately 51% and 11% of revenues. For the year ended
      December 31, 2005, our two largest clients accounted for approximately 27%
      and 11% of revenues. In each of these periods, revenues from our largest client,
      the State of Louisiana, were derived from one contract related to Hurricane
      Katrina. During the years ended December 31, 2007 and 2006, revenues from
      this single contract accounted for 83% and 84% of the revenues generated by
      our
      Preparedness Services unit. Our contract with the State of Louisiana, including
      our new contract that was recently awarded to us, is a time and materials
      contract under which the State is not required to purchase a minimum amount
      of
      our services. Therefore, this contract could cease producing revenues at any
      time with little or no notice.




The
      concentration of our clients can cause our revenues and earnings to fluctuate
      from quarter-to-quarter and year-to-year, based on the requirements of our
      clients and the timing of delivery of services. Although the particular clients
      are likely to change from period to period, we believe that large engagements
      by
      a limited number of clients will continue to account for a substantial portion
      of our revenues in any period or year. In any period or year, the unexpected
      loss of or decline in business from a major client, or the failure to generate
      significant revenues from other clients, could have a material adverse effect
      on
      our consolidated financial results.




***The
      integration of acquired companies may be difficult and may result in a failure
      to realize some of their anticipated potential benefits.***




We
      may
      not be able to integrate or manage businesses that we have acquired or may
      acquire. Any difficulty in successfully integrating or managing the operations
      of acquired businesses could have a material adverse effect on our business,
      financial condition, results of operations or liquidity, and could lead to
      a
      failure to realize any anticipated synergies. Our management team also will
      be
      required to dedicate substantial time and effort to the integration of any
      acquisitions. These efforts could divert management’s focus and resources from
      other strategic opportunities and operational matters.




***We
      may have difficulty pursuing our acquisition
      strategy.***




****** A
      key
      part of our growth strategy is to acquire
      complementary businesses. However, we may not be able to identify suitable
      acquisition candidates, obtain the capital necessary to pursue our acquisition
      strategy or complete acquisitions on satisfactory terms or at all. A number
      of
      competitors have also adopted a strategy of expanding and diversifying through
      acquisitions, including National Security Solutions Inc., a newly organized
      blank check company of which Howard Safir, our Chief Executive Officer of our
      Security Consulting and Investigations Unit, and Adam Safir, our Chief Operating
      Officer of our Security Consulting and Investigations Unit, are the Chairman
      of
      the Board and a director, respectively. Messers. Safir and Safir may have
      conflicting interests in presenting acquisition opportunities to National
      Security Solutions Inc. and us. In addition, we will likely experience
      significant competition in our effort to execute our acquisition strategy.
      As a
      result, we may be unable to continue to make acquisitions or may be forced
      to
      complete acquisitions on less favorable terms.




***Our
      business is vulnerable to fluctuations in government spending and subject to
      additional risks as a result of the government contracting process, which often
      involves risks not present in the commercial contracting process.***




Because
      many of our contracts are with government entities, our business is subject
      to a
      number of risks, including global economic developments, wars, political
      instability, election results, changes in the tax and regulatory environments,
      foreign exchange rate volatility and fluctuations in government spending.
      Because many clients are federal, state or municipal government agencies with
      variable and uncertain budgets, the amount of business that we might receive
      from them may vary from year to year, regardless of the perceived quality of
      our
      business.


14




Moreover,
      competitive bidding for government contracts presents a number of risks that
      are
      not typically present in the commercial contracting process, including:




•
              
              the
                  need to devote substantial time and attention of our management
                  team and
                  key personnel to the preparation of bids and proposals for contracts
                  that
                  may not be awarded to us; and
  •
              
              the
                  expenses that we might incur and the delays and revenue loss that
                  we might
                  suffer if our competitors protest or challenge contract awards
                  made to us
                  pursuant to competitive bidding. Such a protest or challenge could
                  result
                  in the resubmission of bids based on modified specifications, or
                  in the
                  termination, reduction or modification of the awarded contract.





If
      we are
      unable to consistently win new government contract awards over an extended
      period, or if we fail to anticipate all of the costs and resources that will
      be
      required to secure such contract awards, our growth strategy and our business,
      financial condition and operating results could be materially adversely
      affected.





***Our
      professional reputation, which is critical to our business, is especially
      vulnerable to circumstances outside our control*** .





We
      depend
      upon our reputation and the individual reputations of our senior management
      team
      and advisory boards to obtain new client engagements. We also obtain a
      substantial number of new engagements from existing clients or through referrals
      from existing clients. Anything that diminishes our reputation or the
      reputations of our senior management team and advisory boards may make it more
      difficult to compete for new engagements or to retain existing clients and,
      therefore, could materially adversely affect our business. For example, a
      national television news story that contained allegations regarding JLWA’s
      performance and billing practices under our contract with the State of Louisiana
      prompted a State auditor to review these allegations. Although we were awarded
      and subsequently executed a renewal contract with the State, the State may
      terminate this new contract without penalty upon limited notice. Any
      circumstances, including those where we are not at fault, and including any
      repercussions from the above events, that might publicly damage our goodwill,
      injure our reputation or damage our business relationships may lead to a broader
      material adverse effect on our business or prospects through loss of business,
      goodwill, clients, agents or employees. In particular, if the State of Louisiana
      were to terminate our contract, it may have a material adverse effect on our
      business.





***Failure
      to achieve and maintain effective internal controls in accordance with Section
      404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect
      on
      our business and operating results. In addition, current and potential
      stockholders could lose confidence in our financial reporting, which could
      cause
      our stock price to decline.***





Effective
      internal controls are necessary for us to provide reliable financial reports
      and
      effectively prevent fraud. If we cannot provide reliable financial reports
      or
      prevent fraud, our business could be harmed.





Commencing
      for the year ending December 31, 2007, we are required to document and test
      our
      internal control procedures in order to satisfy the requirements of Section
      404
      of the Sarbanes-Oxley Act of 2002, which requires annual management assessments
      of the effectiveness of our internal control over financial reporting.
      Furthermore, our registered independent public accounting firm will be required
      to report on our assessment of the effectiveness of our internal control over
      financial reporting and separately report on the effectiveness of our internal
      control over financial reporting beginning with our year ending December 31,
      2008.





Our
      Chief
      Executive Officer and Chief Financial Officer have concluded that the design
      and
      operation of our disclosure controls and procedures were not effective at
      December 31, 2007. We have identified the following matters that would
      constitute a material weakness (as that term is defined under the Public Company
      Accounting Oversight Board Auditing Standard No. 2): our financial closing
      process, a lack of segration of financial responsibilities and the need for
      additional qualified financial accounting personnel. We have taken specific
      actions to remediate the material weakness, including the continued training
      of
      financial personnel with regard to the quarterly closing process and the further
      development of standardized applications within our integrated general software
      applications. We intend to expand our accounting staff and continue to further
      strengthen our controls and procedures regarding the closing process. However,
      there is no assurance that these effort will be adequate to remedy the
      abovementioned deficiencies.




15





In
      addition, if we fail to augment or maintain the adequacy of our internal
      accounting controls, as these standards are modified, supplemented or amended
      from time to time, we may not be able to ensure that we can conclude on an
      ongoing basis that we have effective internal control over financial reporting
      in accordance with Section 404. Failure to achieve and maintain an effective
      internal control environment could cause us to face regulatory action, result
      in
      delays or inaccuracies in reporting financial information or cause investors
      to
      lose confidence in our reported financial information, any of which could cause
      our stock price to decline.




***In
      order to comply with public reporting requirements, we may need to strengthen
      the financial systems and controls of any business we acquire, and the failure
      to do so could adversely affect our ability to provide timely and accurate
      financial statements.***




Immediately
      upon the acquisition of any company, we will be responsible for ensuring that
      the disclosure controls and procedures (as defined in Rule 13a-15(e) under
      the
      Securities Exchange Act of 1934 (Exchange Act)) of any acquired company are
      effectively designed, operated and integrated with our disclosure controls
      and
      procedures. Our management and our independent registered public accounting
      firm
      may be required to test any acquired business’s internal control over financial
      reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our
      testing, or the subsequent testing of internal control by our independent
      registered public accounting firm, may reveal deficiencies in an acquired
      company’s financial systems that are deemed to be material weaknesses with
      respect to our financial systems. The existence of these material weaknesses
      or
      any failure to improve an acquired company’s financial systems could result in
      delays or inaccuracies in reporting financial information, or non-compliance
      with Securities and Exchange Commission (SEC) reporting and other regulatory
      requirements, any of which could subject us to sanctions from the SEC and The
      Nasdaq Stock Market, Inc. and adversely affect our business and stock price.




***Our
      business depends, in part, on the occurrence of unpredictable events.***




Our
      Preparedness Services unit assists governments, corporations and individuals
      in
      connection with, among other things, emergency management issues and natural
      and
      other disaster preparedness and recovery efforts. Our revenues may fluctuate
      significantly depending upon the occurrence, or anticipated occurrence, of
      events of this nature. For example, for the years ended December 31, 2007
      and 2006, 29% and 51% of our revenues, or 61% and 89% of our revenues from
      government contracts, respectively, were generated by one contract with the
      State of Louisiana related to Hurricane Katrina. Accordingly, any decrease
      in
      demand for our services in this area could materially adversely affect our
      results of operations.




***We
      may not be able to manage our growth or meet marketplace demands effectively.***




We
      have
      expanded significantly in the past few years and intend to maintain our focus
      on
      growth. However, our growth will place additional demands on our resources
      and
      we cannot be sure that we will be able to manage our growth effectively. In
      order to successfully manage our growth, we will need to:




•
              
              expand
                  and enhance our administrative infrastructure;
  •
              
              continue
                  to improve our management, financial and information systems and
                  controls;
                  and
  •
              
              recruit,
                  train, manage and retain our employees effectively.




Continued
      growth could place a strain on our management, operations and financial
      resources. In addition, this growth may adversely affect our ability to service
      the demands of our clients or the quality of services we provide. If we are
      unable to meet these demands or our clients’ expectations, our competitors may
      be able to gain a greater market share in the risk mitigation markets generally,
      as well as gain a greater share of our clients’ business. We cannot assure you
      that our infrastructure, operational, financial and management controls,
      reporting systems and procedures, facilities and personnel will be adequate
      to
      support our future operations or to effectively adapt to future growth. Our
      expected addition of personnel and capital investments will increase our fixed
      costs, which will make it more difficult for us to offset any future revenue
      shortfalls with short-term expense reductions. If we cannot manage our growth
      effectively, our business and results of operations may be adversely affected.


16




***We
      may not be able to realize the entire book value of goodwill from acquisitions.***




As
      of
      December 31, 2007, we had approximately $19,768,000 of goodwill, which
      represented approximately 30% of our total assets. All of this goodwill resulted
      from previous acquisitions, and it is possible that future acquisitions will
      result in additional goodwill. We have implemented the provisions of Statement
      of Financial Accounting Standards No. 142, “Goodwill and Other Intangible
      Assets” (SFAS No. 142), which requires that existing goodwill not be
      amortized, but instead be assessed annually for impairment or sooner if
      circumstances indicate a possible impairment. We determined that, at
      December 31, 2007, the amount of goodwill carried by our Fraud and SIU
      Services segment was in excess of fair value by  approximately
      $5,144,000. As a result, we recorded a $5,144,000 impairment charge during
      the
      year ended December 31, 2007. We determined that, at December 31,
      2006, the amount of goodwill carried by our Fraud and SIU Services and Security
      Consulting and Investigations segments was in excess of fair value
      by  approximately
      $1,135,000 and $1,894,000, respectively. As a result, we recorded a $3,029,000
      impairment charge during the year ended December 31, 2006. In the event
      that we again determine the book value of goodwill is further impaired, any
      such
      impairment would be charged to earnings in the period of impairment. Any such
      future impairment of goodwill under SFAS No. 142 could have a material
      adverse effect on our results of operations.




***Competitive
      conditions could adversely affect our business.***




We
      operate in a number of geographic and service markets, all of which are highly
      competitive. There are relatively few barriers preventing companies from
      competing with us and we do not own any patents or other technology that, by
      itself, precludes or inhibits others from entering our markets. As a result,
      new
      market entrants, particularly those who already have recognizable names in
      the
      risk mitigation industry, will likely pose a threat to our business. If we
      are
      unable to respond effectively to our competitors, some of which have greater
      financial resources or name recognition, our business and results of operations
      will be materially adversely affected. In the risk management and security
      market, our competitors include Control Risks Group Limited, ArmorGroup
      International plc, Kroll Inc., Toribos GmbH and Olive Security (UK) Ltd. Many
      of
      the national and international accounting and consulting firms, along with
      other
      companies such as FTI Consulting, Inc., Securitas AB and its subsidiary,
      Pinkerton Consulting & Investigations, Inc., Alvarez & Marsal,
      LLC, AlixPartners LLC, Crossroads LLC, ChoicePoint Inc. and Applied Discovery,
      Inc., provide investigative, consulting and other services which are similar
      to
      services we provide. Some of these firms have indicated an interest in providing
      services on a broader scale similar to ours and may prove to be formidable
      competitors if they elect to devote the necessary resources to these competitive
      businesses. The national and international accounting, consulting and risk
      management firms have significantly larger financial and other resources than
      we
      have, greater name recognition and long-established relationships with their
      clients, which also are likely to be clients or prospective clients of our
      company.




***We
      are a worldwide business and are therefore influenced by factors and regulations
      in many countries.***




We
      undertake our business worldwide. The occurrence of any of the following risks
      relating to the conduct of our business in foreign countries could have a
      material adverse effect on the market for our services, their value to our
      clients or our ability to provide them:




•
              
              changes
                  in, and difficulty in complying with, laws and regulations of the
                  different countries, including authority to trade or perform our
                  existing
                  and future services;
  •
              
              nullification,
                  modification and renegotiation of contracts;
  •
              
              reversal
                  of current policies, including favorable tax policies, encouraging
                  foreign
                  investment or foreign trade, or relating to the use of local agents;
  •
              
              restrictive
                  actions by local governments, including tariffs and limitations
                  on imports
                  and exports; and
  •
              
              difficulty
                  in collecting accounts receivable and longer collection times.




The
      occurrence of any of these risks could materially adversely affect our results
      of operations or financial condition.


17




***Clients
      can terminate engagements with us on short notice or with no notice.***




A
      majority of our engagements are project-based and are generally terminable
      by
      either party on short-term notice. As a result, our clients, including the
      State
      of Louisiana under the contract that it awarded to us in September 2007, are
      not
      obligated to continue using our services at historical levels or at all, and
      may
      cancel their arrangements with us without penalty. Identifying and engaging
      new
      clients can be a lengthy and difficult process. If a significant amount of
      our
      clients cease using our services around the same time, we could experience
      an
      adverse effect on our results of operations.




***Our
      inability to accurately forecast costs of fixed price contracts could result
      in
      lower than expected margins and profitability.***




The
      profitability of fixed price projects is primarily determined by our success
      in
      correctly estimating and thereafter controlling project costs. Costs may in
      fact
      vary substantially as a result of various factors, including underestimating
      costs, need for unforeseen specialized subcontractors, difficulties with new
      technologies and economic, regulatory and other changes that may occur during
      the term of the contract. If for any reason the costs are substantially higher
      than expected, we may incur losses on fixed price contracts and our
      profitability could be adversely affected.




***We
      may need to raise additional funds to consummate an acquisition or continue
      our
      operations.***




An
      unforeseen reduction in our revenues or cash flows, an increase in operating
      expenses or the consummation of an acquisition may require us to raise
      additional funds. To the extent we encounter additional opportunities to raise
      cash, we may sell additional equity or convertible debt securities, which would
      result in further dilution of our stockholders. Stockholders may experience
      substantial dilution due to our current stock price and the amount of financing
      we may need to raise, and any securities we issue may have rights senior to
      our
      common stock. Any future indebtedness may contain covenants that restrict our
      operating flexibility.




We
      have
      limited access to the capital markets. The capital markets have been
      unpredictable in the past, especially for unprofitable companies such as ours.
      In addition, the amount of capital that a company such as ours is able to raise
      often depends on variables that are beyond our control, such as the share price
      of our stock and its trading volume. As a result, efforts to secure financing
      on
      terms attractive to us may not be successful, and we may not be able to secure
      additional financing on any terms.




If
      we are
      able to consummate a financing arrangement, the amount raised may not be
      sufficient to meet our future needs. If adequate funds are not available on
      acceptable terms, or at all, our business, results of operations and financial
      condition may be materially adversely affected.




***Compliance
      with changing corporate governance and public disclosure regulations may result
      in additional expenses.***




Keeping
      abreast of, and in compliance with, changing laws, regulations and standards
      relating to corporate governance and public disclosure, including the
      Sarbanes-Oxley Act of 2002, new SEC regulations and The Nasdaq Stock Market
      LLC’s marketplace rules, require a substantial amount of management attention
      and financial and other resources. We intend to continue to invest all
      reasonably necessary resources to comply with evolving standards, which may
      result in increased general and administrative expenses and divert management
      from revenue-generating activities.




***We
      may become subject to significant legal proceedings.***




We
      are
      subject from time to time to litigation and other adverse claims related to
      our
      businesses, some of which may be substantial. These claims have in the past
      been, and may in the future be, asserted by persons who are screened by us,
      regulatory agencies, clients or other third parties. We are currently defendants
      in a litigation with an entity that brought an action against Facticon prior
      to
      our acquisition of Facticon in February 2007 and subsequently we were added
      as a
      party to this litigation. At March 24, 2008, we believe our maximum liability,
      less amounts we expect to recover from the sellers of Facticon will be limited
      to $ 693,000, but
      there
      can be no assurance that our exposure may not exceed this. Resolution of this
      matter and any other matters in which we are or may become defendants may
      negatively impact our results of operations or cash flows, as well as our
      reputation.




18


***Our
      exposure in a future liability action could exceed our insurance
      coverage*** .




Some
      of
      our service offerings involve high risk activities. We may not be able to
      maintain insurance at levels of risk coverage or policy limits that we deem
      adequate for any of our activities and cannot guarantee that every contract
      contains or will contain limitations on our liability below these policy limits.
      Because of the increasing cost of liability insurance, purchasing sufficient
      amounts of insurance coverage, or additional insurance when needed, could be
      prohibitively expensive. If we are sued for any injury caused by our business
      offerings, our liability could exceed our total assets. Any claims against
      us,
      regardless of their merit or eventual outcome, could have a detrimental effect
      upon our business, operating results and financial condition.





***We
      may be subject to increased regulation regarding the use of personal
      information.***




Some
      of
      the data and services that we provide, including DNA testing conducted by Bode,
      are subject to regulation by various federal, state and local regulatory
      authorities, which may become more stringent in the future. Federal, state
      and
      local laws and regulations in the United States designed to protect the public
      from the misuse of personal information in the marketplace, and adverse
      publicity or potential litigation concerning the commercial use of such
      information, may negatively affect our operations and could result in
      substantial regulatory compliance expense, litigation expense or revenue loss.




***If
      we are unable to manage successfully our relationships with our information
      suppliers, the quality and availability of our services may be harmed.***




We
      obtain
      some of the data used in our services from third-party information suppliers,
      some of which are government entities. If a supplier is no longer able or
      willing to provide us with data, we may need to find alternative sources. There
      is no assurance that we will obtain new agreements with third-party suppliers
      on
      favorable terms, if at all. If we are unable to identify and contract with
      suitable alternative data suppliers and integrate these data sources into our
      service offerings, we could experience service disruptions, increased costs
      and
      reduced quality of our services. Loss of such access or the availability of
      data
      in the future due to increased government regulation or otherwise could have
      a
      material adverse effect on our business, financial condition or results of
      operations.




**Risks
      Related to Our Common Stock**




***Our
      common stock price has fluctuated considerably and stockholders may not be
      able
      to resell their shares at or above the price at which their shares were
      purchased.***




Since
      our
      reverse merger in June 2005, the high and low bid price for our common stock
      has
      been $32.00 and $1.47 per share, respectively. The market price of our common
      stock may fluctuate significantly in response to a number of factors, some
      of
      which are beyond our control, including the following:




•
              
              factors
                  affecting demand for risk mitigation services such as the domestic
                  and
                  global security environment, competition and general economic conditions;
  •
              
              fluctuation
                  in government spending that affects our contracts with government
                  entities; and
  •
              
              changes
                  in the laws and regulations of different countries that affect
                  our ability
                  to perform the services of a and risk mitigation and management
                  services
                  company.




The
      stock
      market in general has experienced extreme price fluctuations. The market prices
      of shares of companies in the security industry have experienced fluctuations
      that often have been unrelated or disproportionate to the operating results
      of
      these companies. Continued market fluctuations could result in extreme
      volatility in the price of our common stock, which could cause a decline in
      the
      value of our common stock. Price volatility might be worse if the trading volume
      of our common stock continues to be low.


19




Our
      common stock has historically been sporadically or thinly traded. While our
      common stock became listed on the Nasdaq Capital Market on September 26, 2007,
      there is no guarantee that our trading volume will increase. As a result, the
      number of persons interested in purchasing our common stock at or near ask
      prices at any given time may be relatively small or non-existent. This situation
      is attributable to a number of factors, including the fact that we went public
      through a “reverse merger” and remain a small company, which is relatively
      unknown to stock analysts, stock brokers, institutional investors and others
      in
      the investment community that generate or influence sales volume, and that
      even
      if we came to the attention of these persons, they may be reluctant to follow
      an
      unproven company such as ours or purchase or recommend the purchase of our
      common stock until we become more financially viable. As a consequence, there
      may be periods of several days or more when trading activity in our shares
      is
      low and a stockholder may be unable to sell his shares of common stock at an
      acceptable price, or at all. We cannot give stockholders any assurance that
      a
      broader or more active public trading market for our common stock will develop
      or be sustained, that current trading levels will be sustained or that we will
      continue to meet the requirements for listing on the Nasdaq Capital Market.




***A
      significant number of our shares recently became eligible for sale, and their
      sale could depress the market price of our common
      stock.***




Sales
      of
      a significant number of shares of our common stock in the public market could
      harm the market price of our common stock.




As
      of
      March 26, 2008, there were approximately 9,983,390 shares of our common stock
      outstanding and, subject to a 4.99% beneficial ownership limitation, an
      additional 3,732,808 shares of our common stock will be issuable upon conversion
      of our Series D Convertible Preferred Stock. In addition, if we undertake any
      additional financings involving securities convertible into shares of our common
      stock, the aggregate number of shares into which those securities are
      convertible will further increase our overhang.




In
      our
      Registration Statement on Form SB-2, filed on August 2, 2007, as amended, which
      was declared effective by the Securities and Exchange Commission on October
      23,
      2007, an aggregate of 7,979,603 shares of our common stock, including the
      5,904,556 shares of common stock issued following the completion of our Equity
      Restructuring, the automatic conversion of the Series C Convertible Preferred
      Stock and the conversion of the Series D Convertible Preferred Stock, were
      registered for resale and are now freely tradable without restriction or further
      registration under the Securities Act of 1933, as amended (the “Securities
      Act”).




In
      our
      Registration Statement on Form S-3, filed on February 1, 2008, which was
      declared effective by the Securities and Exchange Commission on February 14,
      2008, an aggregate of 1,223,565 shares of our common stock were registered
      for
      resale, including certain shares purchased in our Underwritten Public Offering
      by certain members of our management and board of directors, and are now freely
      tradable without restriction or further registration under the Securities
      Act.




As
      these
      shares of our common stock are resold in the public market, the supply of our
      common stock will increase significantly, which could decrease its
      price.




***Our
      executive officers, directors and 10% stockholders have significant voting
      power
      and may vote their shares in a manner that is not in the best interest of other
      stockholders.***




Our
      executive officers, directors and 10% stockholders control approximately 22%
      of
      the voting power represented by our outstanding shares and may increase this
      voting power to 46% of our outstanding shares upon the conversion of all
      outstanding Series D Preferred Stock into common stock. If these stockholders
      act together, they may be able to exert significant control over our management
      and affairs requiring stockholder approval, including approval of significant
      corporate transactions. This concentration of ownership may have the effect
      of
      delaying or preventing a change in control and might adversely affect the market
      price of our common stock. This concentration of ownership may not be in the
      best interests of all our stockholders.




***We
      do not anticipate paying cash dividends for the foreseeable future, and the
      lack
      of dividends may have a negative effect on our stock price.***




We
      have
      never declared or paid any cash dividends or distributions on our common stock
      and our senior credit facility prohibits us from paying dividends. We currently
      intend to retain our future earnings, if any, to support operations and to
      finance our growth strategy and therefore we do not anticipate paying any cash
      dividends on our common stock in the foreseeable future.


20




***Provisions
      in our certificate of incorporation and by-laws may deter third parties from
      acquiring us and could lead to the entrenchment of our Board of Directors.***




Our
      certificate of incorporation and by-laws contain provisions that may make the
      acquisition of our company more difficult without the approval of our Board
      of
      Directors, including the following:




•
              
              we
                  have authorized undesignated preferred stock, the terms of which
                  may be
                  established and shares of which may be issued without stockholder
                  approval;
  •
              
              stockholder
                  action by written consent must be unanimous;
  •
              
              stockholders
                  may only remove directors for cause;
  •
              
              vacancies
                  on the Board of Directors may be filled only by the directors;
                  and
  •
              
              we
                  require advance notice for stockholder proposals.




These
      provisions could also discourage proxy contests and make it more difficult
      for
      you and other stockholders to elect directors of your choosing and cause us
      to
      take other corporate actions that you desire. The anti-takeover defenses in
      our
      certificate of incorporation and by-laws could discourage, delay or prevent
      a
      transaction involving a change in control of our company.





**Item
      1B. Unresolved Staff Comments**




Not
      applicable





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




Our
      operational headquarters is located in Washington, D.C. and our administrative
      headquarters is located in New York, New York. We have additional offices in
      Arkansas, California, Florida, Georgia, Illinois, Massachusetts, Michigan,
      Tennessee, Texas and Virginia. All of our offices are leased and we do not
      consider any specified leased facility to be material to our operations. We
      believe that equally suited facilities are available in several other areas
      throughout the U.S. The following table summarizes information with respect
      to
      our material facilities:







Business
                Unit
            
            Location
            
            Area
              (sq.feet)
            
            Year
                of Lease Expiration*Corporate
                Headquarters:*
            
            
            New
                York, New York
            
            
            4,525
            
            
            2008*Preparedness
                Services:*
            
            
            Washington,
                D.C.
            
            
            15,294
            
            
            2015Little
                Rock, Arkansas
            
            
            4,000
            
            
            2009*Fraud
                and SIU Services:*
            
            
            Orlando,
                Florida
            
            
            7,872
            
            
            2011Brea,
                  California
            
            
            5,020
            
            
            2011Nashville,
                  Tennessee
            
            
            2,942
            
            
            2012*Security
                Consulting and Investigations:*
            
            
            Lorton,
                Virginia
            
            
            38,505
            
            
            2016New
                  York, New York
            
            
            9,179
            
            
            2015Dallas,
                  Texas
            
            
            5,500
            
            
            2012San Francisco, California
            
            
            5,042
            
            
            2012


21


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




From
      time
      to time, we are involved in litigation arising in the ordinary course of
      business. We do not believe that we are involved in any litigation that is
      likely, individually or in the aggregate, to have a material adverse effect
      on
      our consolidated financial condition, results of operations or cash flows.




*Peter
      Anchondo v. Facticon Inc. and GlobalOptions Group, Inc.*




This
      case
      was filed by the Plaintiff originally against Facticon prior to our acquisition
      of assets of Facticon (February 28, 2007) in the U.S. District Court for the
      Central District of California, wherein the Plaintiff, as a class action, is
      alleging that Facticon failed to pay overtime wages. Subsequent to the
      acquisition, we were added as a defendant in said case, under the successor
      liability theory.  Under the terms of an escrow agreement, as amended,
      entered into by and between us and Facticon,  the escrow provides that
      85,700 shares of our common stock and $100,000 in cash funds shall be held
      to
      satisfy this and other pre-acquisition obligations of Facticon. We have put
      Facticon on notice, and the stockholders of Facticon agree, we will not
      distribute any funds or stock as provided under the asset purchase agreement
      until this matter is resolved, and if necessary shall use such stock and cash
      to
      resolve such matter. A Motion for Summary Judgment has been filed for the
      Court to determine whether we are liable under this as a successor liable
      company. On March 7, 2008, the Court issued a ruling denying our Motion for
      Summary Judgment and issued a ruling granting a Summary Judgment in favor for
      the Plaintiffs ruling that we were in fact a successor party to the Plaintiffs
      actions, and this ruling by the Court is in opposition of the Court’s original
      ruling dated March 3, 2008 (the “Preliminary Ruling”), wherein it granted our
      Motion for Summary Judgment. Due to the Court’s apparent error in its final
      ruling being in complete opposition of its Preliminary Ruling, we will file
      a
      Motion for Reconsideration. No assurance can be given that the Court will
      reverse its final ruling. We have established a reserve for such case net of
      amounts expected to be received through the liquidation of Facticon assets
      held
      in escrow, in the amount of $693,000 to offset the risk of damages for this
      matter. Notwithstanding the legal reserve, we will vigorously defend this
      matter.





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





None.


22





**PART
      II**




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




**Market
      for Common Equity**





Our
      common stock is quoted on the Nasdaq Capital Market under the symbol GLOI.
      From
      June 27, 2005 to March 6, 2007, when we effectuated a 1-for-8 reverse
      stock split, our common stock was quoted on the OTC Bulletin Board under the
      symbol GLOI.OB, and from March 7, 2007 to September 25, 2007, our
      common stock was quoted on the OTC Bulletin Board under the symbol GOPG.OB.
      Prior to June 27, 2005, there was no active market for our common stock.
      Based upon information furnished by our transfer agent, as of March 26, 2008,
      we
      had 212 holders of record of our common stock.




The
      following table sets forth the high and low sales prices for our common stock
      for the periods indicated as reported by the OTC Bulletin Board (as adjusted
      for
      the reverse stock split) and NASDAQ, as applicable:





Fiscal
                Year 2006
            
            High
            
            LowFirst
                Quarter
            
            $
            22.24
            
            $
            16.08Second
                Quarter
            
            
            23.20
            
            
            15.20Third
                Quarter
            
            
            20.00
            
            
            12.00Fourth
                Quarter
            
            
            16.40
            
            
            10.24Fiscal
                Year 2007
            
            
            High
            
            
            LowFirst
                Quarter
            
            $
            15.44
            
            $
            8.75Second
                Quarter
            
            
            10.55
            
            
            7.50Third
                Quarter
            
            
            8.30
            
            
            3.02Fourth
                Quarter
            
            
            8.05
            
            
            3.15Fiscal
                Year 2008
            
            
            High
            
            
            LowFirst
                Quarter(1)
            
            $
            4.02
            
            $
            1.47





We
      have
      not declared or paid any cash dividends on our common stock and do not
      anticipate declaring or paying any cash dividends in the foreseeable future.
      Our
      senior credit facility prohibits us from paying dividends. We currently expect
      to retain future earnings, if any, for the development of our business.
      Dividends may be paid on our common stock only if and when declared by our
      Board
      of Directors and paid on an as-converted basis to the holders of our Series
      D
      Convertible Preferred Stock.





(1)
      From
      January 1, 2008 through March 21, 2008.




23


**Securities
      Authorized for Issuance Under Equity Compensation Plans**




The
      following table contains information about our common stock that may be issued
      upon the exercise of options under all of our equity compensation plans as
      of
      December 31, 2007. See “Executive Compensation—Benefit Plans” for a description
      of our stock option and incentive plans.




Plan
                Category
            
            Number of securities
                to be issued upon exercise of outstanding options, warrants and
              rights
              (a)
            
            Weighted average
                exercise price of outstanding
              options
              (b)
            
            Number of securities
                remaining available for future issuance under equity compensation
                plans
                (excluding securities reflected in column (a))
              (c)Equity
                compensation plans approved by security holders(1)
            
            
            1,191,665
            
            $
            13.72
            
            
            879,516Equity
                compensation plans not approved by security holders
            
            
            —
            
            
            —
            
            
            —Total
            
            
            1,191,665
            
            $
            13.72
            
            
            879,516







(1)
            Our
                2005 Stock Option Plan, 2006 Stock Option Plan and 2006 Long-Term
                Incentive Plan were adopted by our stockholders on August 8,
                2005, June 12, 2006 and December 5, 2006, respectively. On
                October 17, 2006, our Board of Directors approved, and stockholders
                later ratified, that the remaining shares reserved, but unissued,
                with
                respect to any awards under the 2005 Stock Option Plan and 2006 Stock
                Option Plan were unreserved and that no new awards were to be issued
                under
                these plans.




**Sale
      of Unregistered Securities**




Pursuant
      to that certain second amendment to asset purchase agreement by and between
      us
      and WSFM, LLC (f/k/a James Lee Witt Associates, LLC), dated May 11, 2007, on
      January 30, 2008, we issued 300,000 shares of our common stock to certain
      designees of WSFM, LLC valued at $2,880,000 as part of the consideration for
      the
      sale of the assets of WSFM, LLC.




Pursuant
      to certain stock purchase agreements dated February 1, 2008, on February 20,
      2008, we issued 1,567 shares of our common stock to Verus International Group,
      Ltd., of which John Oswald, one of our directors, is Chief Executive Officer,
      valued at $15,000, 9,480 shares of our common stock to Athorn, Clark and
      Partners, Inc. valued at $70,000, and an aggregate of 15,937 shares of our
      common stock to designees of Lippert/Heilshorn and Associates, Inc. valued
      at
      $82,500 in connection with services provided to us.




All
      sales
      of securities described herein were deemed to be exempt from registration
      pursuant to Section 4(2) of the Securities Act of 1933, as amended, as
      transactions by an issuer not involving a public offering. The recipients of
      securities in each of these transactions represented their intention to acquire
      the securities for investment only and not with a view to or for sale in
      connection with any distribution thereof and appropriate legends were affixed
      to
      the share certificates and instruments issued in such transactions. All
      recipients either received adequate information about us or had adequate access,
      through their relationship with us, to information about us.




24





**Item
      6. Selected Financial Data**




Not
      applicable.





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




*The
      following discussion of results of operations and financial condition is based
      upon, and should be read in conjunction with, our consolidated financial
      statements and accompanying notes thereto included elsewhere in this Form 10-K.
      This discussion contains forward-looking statements. Actual results could differ
      materially from the results discussed in the forward-looking statements. Please
      see “Forward-Looking Statements” and “Risk Factors” for a discussion of some of
      the uncertainties, risks and assumptions associated with these statements.*




**Overview**




GlobalOptions
      is an integrated provider of risk mitigation and management services to
      government entities, Fortune 1,000 corporations and high net-worth and
      high-profile individuals. We enable clients to identify, assess and prevent
      natural and man-made threats to the well-being of individuals and the operations
      of governments and corporations. In addition, we assist our clients in
      recovering from the damages or losses resulting from the occurrence of acts
      of
      terror, natural disasters, fraud and other risks. Our vision is to continue
      to build a comprehensive risk mitigation solutions company through both organic
      growth and acquisitions. In pursuit of our strategy, we have acquired and
      integrated eight complementary risk mitigation businesses since August 2005
      that
      contributed an aggregate of approximately $84.8, $58.9 and $3.9 million in
      revenues to our business during the years ended December 31, 2007, 2006 and
      2005, respectively.




We
      believe our reputation, credentials and personal relationships provide us with
      a
      competitive advantage in securing new business. Our senior management team
      and
      advisory boards have extensive industry backgrounds and include former generals
      in the military, top government officials and corporate officers, intelligence
      and law enforcement officers, professional investigators and legal and crisis
      communications specialists.




We
      deliver risk mitigation and management services through the following four
      business units:




•
            
            *Preparedness
                Services*develops
                and implements crisis management and emergency response plans for
                disaster
                mitigation, continuity of operations and other emergency management
                issues
                for governments, corporations and individuals. This unit is comprised
                of
                our JLWA acquisition.




•
            
            *Fraud
                and SIU Services*provides investigative surveillance, anti-fraud solutions and business
                intelligence services to the insurance industry, law firms and
                multinational organizations. This unit is comprised of the following
                acquired companies: CBR; Hyperion Risk, Inc. (Hyperion Risk); Secure
                Source, Inc. (Secure Source); and Facticon.




•
            
            *Security
                Consulting and Investigations*delivers specialized security and investigative services, such as
                security
                assessments, threat analyses and forensic DNA analysis and casework,
                to
                governments, corporations and individuals. This unit is comprised
                of the
                following acquired companies: Safir Rosetti, LLC (Safir); Bode; and
                On
                Line Consulting.




•
            
            *International
                Strategies*provides a full range of security and risk management services, such
                as
                global business intelligence, investigations and litigation support,
                and
                personal protection, to foreign and domestic governments, corporations
                and
                individuals. Our International Strategies unit was our original core
                business.




Our
      Preparedness Services, Fraud and SIU Services, and Security Consulting and
      Investigations units represent our three financial reporting segments. Our
      International Strategies business unit, on the basis of its relative
      materiality, is included in our Fraud and SIU Services segment.




25


The
      following table represents the revenue contribution by each of these three
      reporting segments as a percentage of our total revenues:




For
                the Years Ended December 31,Segment
            
            2007
            
            2006
            
            2005Preparedness
                Services
            
            
            35.4
            %
            
            60.7
            %
            
            14.0
            %Fraud
                and SIU Services
            
            
            28.1
            
            
            26.7
            
            
            77.2Security
                Consulting and Investigations
            
            
            36.5
            
            
            12.6
            
            
            8.8Total
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %




**Revenues**




Principally,
      we generate our revenues through providing risk mitigation solutions to our
      clients. For our Preparedness Services and Security Consulting and
      Investigations engagements, we typically invoice on a time and materials basis.
      For most of our Fraud and SIU Services engagements, we invoice on a fixed fee
      basis. We enter into contractual arrangements with most of our clients, on
      both
      an exclusive and non-exclusive basis. The duration of our engagements ranges
      from one week to two or more years. Over half of our revenues are generated
      from
      repeat client relationships that we have had for more than one year. In addition
      to our services, we also generate revenues from the sale of kits and supplies
      principally used by law enforcement to collect DNA materials. Generally, we
      must
      compete in the market for our clients based upon our reputation, service history
      and relationships. There are limited cases within all of our business segments
      that we are considered by our clients to be the sole source provider, based
      principally upon the experience of our personnel or, in the case of Bode and
      certain DNA investigations, our technical expertise. Our clients consist of
      government entities, corporations and high net-worth and high-profile
      individuals. We provide our services domestically through our own employees
      and
      through a network of approved subcontractors to achieve scale, geographic
      coverage or a specialized expertise. Currently, a small portion of our revenues
      is generated by services provided outside the United States.




**Gross
      Profit**




Our
      gross
      profit represents our revenues less the costs of revenues incurred to provide
      services to our clients. The most significant components of our costs of
      revenues are the costs of our direct labor, our third-party consultants and
      our
      reimbursable costs, which principally consist of travel expenses. For the most
      part, our costs of revenues are variable and based upon the type of services
      performed or the amount of revenues generated. Where possible, we structure
      our
      personnel arrangements to compensate our employees and our consultants on the
      basis of work performed. This enables us to maintain a variable cost structure
      and relatively consistent gross margins in our business segments from year
      to
      year. The variability in our gross margins results primarily from changes in
      our
      client mix. For our DNA analysis business, we incur fixed costs for our
      equipment and dedicated personnel.




**Operating
      Expenses**




Our
      selling and marketing expenses primarily include salaries and commissions,
      as
      well as travel and other expenses, incurred by our employees who are involved
      in
      selling and promoting our services. The accrued earnout expenses related to
      the
      acquisition of JLWA are also reflected in our selling and marketing expenses.
      Our general and administrative expenses consist primarily of salaries, bonuses
      and stock-based compensation for our employees not performing work directly
      for
      our clients. Also included in general and administrative expenses are corporate
      support expenses such as legal and professional fees, investor relations, human
      resources, facilities, telecommunication support services, information
      technology, stock option expenses, salaries for members of our senior management
      team and impairment losses recognized on goodwill.




26


**Results
      of Operations**




The
      following is a summary of our operating results as a percentage of our total
      consolidated revenues for the periods indicated:





For the years ended
                December 31,2007
            
            2006
            
            2005Revenues
            
            
            100
            %
            
            100
            %
            
            100
            %Cost
                of revenues
            
            
            56
            
            
            52
            
            
            56Gross
                profit
            
            
            44
            
            
            48
            
            
            44Operating
                expenses:Selling
                and marketing
            
            
            17
            
            
            14
            
            
            6General
                and administrative
            
            
            52
            
            
            41
            
            
            77Impairment
                loss on goodwill and intangibles
            
            
            6
            
            
            5
            
            
            -Total
                operating expenses
            
            
            75
            
            
            60
            
            
            83Loss
                from operations
            
            
            (31
            )
            
            (12
            )
            
            (39
            )Other
                income (expense), net
            
            
            (1
            )
            
            (17
            )
            
            -Net
                loss
            
            
            (32
            )
            
            (29
            )
            
            (39
            )Deemed
                dividends to Series A and B convertible preferred stockholders
            
            
            -
            
            
            (39
            )
            
            (11
            )Net
                loss applicable to common stockholders
            
            
            (32
            )%
            
            (68
            )%
            
            (50
            )%




**Corporate
      Developments**




***Nasdaq
      Capital Market Listing***




Our
      common stock was approved for listing on the Nasdaq Capital Market as of
      September 21, 2007. On September 26, 2007, our common stock commenced trading
      on
      Nasdaq under the symbol “GLOI.”




***2007
      Acquisitions***




In
      January 2007, we acquired On Line Consulting to expand our Security Consulting
      and Investigations unit. The addition of On Line Consulting provides us with
      a
      full-service security and fire alarm consulting and design firm.




In
      February 2007, we acquired Bode to expand our Security Consulting and
      Investigations unit. The addition of Bode gives us the ability to provide
      forensic DNA analysis, proprietary DNA collection products and related research
      services to law enforcement agencies, federal and state governments, crime
      laboratories and disaster management organizations.




In
      February 2007, we acquired Facticon to expand our Fraud and SIU Services unit.
      The addition of Facticon provides us with additional surveillance, investigative
      and business intelligence capabilities.


27




***Equity
      Restructuring***




On
      July
      25, 2007, we eliminated all of our outstanding Series A Convertible Preferred
      Stock, Series B Convertible Preferred Stock and warrants in an equity
      restructuring (Equity Restructuring).




As
      a
      result of the Equity Restructuring, all formerly outstanding Series A and B
      Convertible Preferred Stock and warrants convertible into 6,625,562 shares
      of
      common stock were restructured into a total of 5,904,556 shares, consisting
      of
      (1) newly-created Series C and D Preferred Stock convertible into 5,273,791
      shares and (2) 630,765 shares of common stock. Each share of Series C and D
      Preferred Stock is convertible into 66.67 shares of common stock. The Series
      C
      Preferred Stock automatically converted into common stock upon consummation
      of
      the October 29, 2007 underwritten public offering (see Underwritten Public
      Offering below).




As
      part
      of the Equity Restructuring, holders of our Series A Preferred Stock and Series
      B Preferred Stock received, in consideration of the cancellation of those shares
      and all of their warrants:




•
            one
                share of Series C Preferred Stock for each share of their Series
                A
                Preferred Stock and Series B Preferred Stock; and




•
            31.25
                shares of common stock for each share of their Series A Preferred
                Stock
                and Series B Preferred Stock.




In
      addition, all other warrant holders received, in consideration of the
      cancellation of their warrants, 0.2 shares of common stock for each share
      subject to those warrants.




In
      addition, to minimize the impact of concentrated voting power, a limited number
      of holders, whose receipt of common stock in the Equity Restructuring would
      have
      caused them to beneficially own in excess of 4.99% of our outstanding common
      stock, received shares of Series D Preferred Stock in lieu of shares of common
      stock. Similarly, some of these holders received one share of Series D Preferred
      Stock upon the automatic conversion of each share of their Series C Preferred
      Stock upon the consummation of the underwritten public offering. The Series
      D
      Preferred Stock is non-voting, has a nominal $0.001 per share liquidation
      preference and is convertible into common stock to the extent that a holder’s
      beneficial ownership of our common stock falls below the 4.99% threshold.





As
      required by a registration rights agreement with the participants in the Equity
      Restructuring, on October 24, 2007 we registered for resale a total of 5,904,556
      shares of our common stock issued or issuable upon the completion of the Equity
      Restructuring, the automatic conversion of the Series C Preferred Stock and
      the
      conversion of the Series D Preferred Stock. All of the holders who participated
      in the Equity Restructuring agreed to not sell any shares of common stock or
      securities convertible into common stock for a period of 90 days after the
      final
      prospectus related to the underwritten public offering.




***State
      of Louisiana Contract***




Following
      on the success of our post-Katrina response and recovery contract, in September
      2007, the State of Louisiana awarded us a two-year contract, with the State’s
      option for a third year, to be the lead provider of relief and recovery efforts
      related to all Louisiana disasters. Under this new contract, the State of
      Louisiana has chosen to expand our role to be the State’s lead disaster advisor
      and recovery manager. We will continue to provide recovery relief in the
      aftermath of Hurricanes Katrina and Rita, and will also provide these same
      services for other new and/or pre-existing disasters. In our enhanced role,
      we
      will provide programmatic and policy advice on FEMA and will assist with the
      development and dissemination of Louisiana’s disaster-related policies and
      procedures.




The
      contract renewal process, which coincided with a request by the State to bring
      in more contractors and locally-hired personnel, took more time than expected
      to
      complete. As a result, our 2007 revenues were adversely affected, as a portion
      of the revenues we expected to recognize in 2007 under this contract were
      delayed until 2008.


28




***JLWA
      Note Prepayment***




On
      October 20, 2007, we reached an agreement with the former owners (JLWA
      Sellers) of James Lee Witt Associates, LLC (JLWA) under which the JLWA Sellers
      agreed to the prepayment of the principal and accrued interest on a $4.5 million
      promissory note, originally due on January 15, 2008, that we had issued to
      them in partial payment of the purchase price for our acquisition of JLWA.
      In
      connection with this acceleration, we will make a negotiated prepayment premium
      of $800,000 to compensate the JLWA Sellers for, among other things, foregone
      interest and the cost of accelerated tax payments. We borrowed approximately
      $5.4 million from our line of credit in order to fund these payments immediately
      prior to the completion of the underwritten public offering. In this document,
      we refer to this transaction as the JLWA Note Prepayment.




***Underwritten
      Public Offering***




On
      October 29, 2007, the Company completed an underwritten public offering of
      4,500,000 shares of its common stock receiving approximately $20.25 million
      in
      gross proceeds or $18.2 million in net proceeds. The Company also registered
      approximately 8,000,000 shares of common stock (including the 5,904,556 shares
      in connection with our Equity Restructuring) for resale by existing stockholders
      under a registration statement.




We
      used a
      portion of the net proceeds from the proposed underwritten public offering
      to
      repay $4.3 million of notes and $38,000 of related accrued interest and have
      been using the balance of the net proceeds for working capital and general
      corporate purposes. We may use a portion of the balance of the net proceeds
      for
      strategic acquisitions and investments.




In
      connection with the underwritten public offering, the Company entered into
      an
      October 29, 2007 agreement with Canaccord Adams Inc. and Morgan Keegan
& Company, Inc., as underwriters, who were paid aggregate fees of
      $1,418,000.




***Conversion
      of Series C Convertible Preferred Stock***




Upon
      the
      closing of the underwritten public offering on October 29, 2007, the then
      outstanding 59,400 shares of Series C Convertible Preferred stock automatically
      converted into 1,5141,167 shares of common stock and 36,282.8 shares of Series
      D
      Convertible Preferred Stock, currently convertible into 2,418,975 shares of
      common stock.




***Modification
      to the Line of Credit Agreement***




On
      November 6, 2007, GlobalOptions entered into an amendment to the agreement
      with
      the financial institution that provides the line of credit. The amendment
      increased to $20,000,000 the amount available under the line of credit and
      modified certain liquidity and financial earnings covenants.




***York
      Agreement***




On
      December 17, 2007, we entered into a five-year agreement (the “York Agreement”)
      with York Insurance Services Group (“York ISU”) whereby our Fraud & SIU unit
      will serve as a preferred provider of investigative services for York ISG and
      will perform SIU and surveillance services to assist in exposing potential
      insurance fraud.  Based upon York ISG’s current revenue the York
      Agreement could be worth up to $10 million over five years for us.  In
      connection with the York Agreement, we paid York ISG an inducement fee of
      $850,000 and are required to pay York ISG up to an additional $150,000 if
      certain revenue targets are met.  In addition, we agreed to share with
      York ISG certain revenue generated in excess of threshold amounts.





Also,
      York has agreed not to compete against our Fraud & SIU unit for the duration
      of the York Agreement.





***Registration
      of Additional Shares for Resale***




On
      February 14, 2008, we registered for resale a total of 1,223,565 shares of
      our
      common stock, 300,000 shares of which were required to be registered pursuant
      to
      the second amendment, dated May 11, 2007, to our asset purchase agreement with
      WSFM, LLC (f/k/a James Lee Witt Associates, LLC) and the remainder of which
      were
      held by our employees, directors, or their affiliates, including certain shares
      purchased in our Underwritten Public Offering.


29


**GlobalOptions’
      Year Ended December 31, 2007 Compared to the Year Ended December 31,
      2006**





**Revenues**





We
      had
      overall revenues of $87,131,000 for the year ended December 31, 2007, as
      compared to revenues of $61,924,000 for the year ended December 31, 2006, for
      an
      overall increase of $25,207,000 or 41%. The increase in revenues for the year
      ended December 31, 2007 was primarily attributable to our new client account
      relationships that we obtained through the execution of our acquisition plan.




Preparedness
      Services revenues were $30,823,000 for the year ended December 31, 2007, as
      compared to $37,556,000 for the year ended December 31, 2006. The decrease
      of
      $6,732,000 or 18% was primarily attributable to a decrease in revenue from
      the
      State of Louisiana (principally in the third quarter of 2007), partially offset
      by JLWA’s revenues only being included since its March 10, 2006 acquisition
      date. In the aftermath of Hurricane Katrina, JLWA was retained by the State
      of
      Louisiana to provide advice on the state’s overall response and recovery
      efforts. Subsequently, JLWA was retained to establish and manage the State’s
      relief program related to Hurricanes Katrina and Rita. The State of Louisiana
      represented $25,536,000 for the year ended December 31, 2007, as compared to
      $31,690,000 of revenues for the year ended December 31, 2006. The reduction
      in
      revenue in 2007 of $6,154,000 or 19% for the State of Louisiana was due to
      the
      scope of our work being narrowed and the transfer of certain of our personnel
      to
      the State of Louisiana. Furthermore, the contract renewal process, which
      coincided with a request by the State to bring in more contractors and
      locally-hired personnel, took more time than expected to complete. As a result,
      our 2007 revenues were adversely affected, as a portion of the revenues we
      expected to recognize in 2007 under this contract were delayed until 2008.




Fraud
      and
      SIU Services revenues were $24,493,000 for the year ended December 31, 2007,
      as
      compared to $17,901,000 for the year ended December 31, 2006. The increase
      of
      $6,592,000 or 37% was primarily attributable to the expansion of our client
      base
      through the acquisitions of Hyperion Risk in August 2006 and Facticon on
      February 28, 2007, including the addition of a significant new third party
      administrator client, through whom we generated $1,705,000 of investigation
      related revenue for the year ended December 31, 2007.





Security
      Consulting and Investigations revenues were $31,815,000 for the year ended
      December 31, 2007, as compared to $6,467,000 for the December 31, 2006. The
      increase of $25,348,000 or 392% was attributable to the client base that we
      acquired in connection with the acquisitions of Safir in May 2006 for security
      consulting and investigations, Secure Source in May 2006 for international
      risk
      mitigation and executive protection, On Line Consulting in January 2007 for
      fire
      and other building security, and Bode at the end of February 2007 for data
      banking and DNA investigations.





**Gross
      Profit**





Our
      consolidated gross profit for the years ended December 31, 2007 and 2006 was
      $38,162,000 and $29,681,000, reflecting gross profit margins of 44% and 48%,
      respectively. Preparedness Services gross profit was $13,559,000 or 44% of
      this
      segment’s revenues for the year ended December 31, 2007, as compared to
      $18,710,000 or 50% of this segment’s revenues for the year ended December 31,
      2006. The reduction in gross profit percentage was attributable to certain
      price
      reductions that we provided to Louisiana in order to competitively position
      ourselves for the 2007 contract renewal. Fraud and SIU Services gross profit
      was
      $11,117,000 or 45% of this segment’s revenues for the year ended December 31,
      2007, as compared to $8,340,000 or 47% of this segment’s revenues for the year
      ended December 31, 2006 due to changes in customer programs. Security Consulting
      and Investigations gross profit was $13,486,000 or 42% of this segment’s
      revenues for the year ended December 31, 2007, as compared to $2,631,000 or
      41%
      of this segment’s revenues for the year ended December 31,
      2006.


30


**Operating
      Expenses**





Selling
      and marketing expenses were $14,821,000 or 17% of revenues for the year ended
      December 31, 2007, as compared to $8,635,000 or 14% of revenues for the year
      ended December 31, 2006. The increase of approximately $6,186,000 or 72% is
      primarily attributable to the increase in the JLWA acquisition earnout expense
      of $2,517,000, from $5,228,000 for the year ended December 31, 2006 to
      $7,745,000 for the year ended December 31, 2007. The substantial increase in
      earnout expense is due to the acceleration of earnout expense of $6,330,000
      incurred in connection with the May 11, 2007 JLWA Modification Agreement.
      General and administrative expenses were $44,908,000 or 51% of revenues for
      the
      year ended December 31, 2007, as compared to $25,354,000 or 41% of revenues
      for
      the year ended December 31, 2006. The increase of $19,080,000 or 75% is
      attributable to increased personnel, our 2007 and 2006 acquisitions, legal,
      accounting and other professional fees incurred in order to fulfill our
      responsibilities as a public company, costs incurred for our equity
      restructuring and costs incurred for due diligence related to the execution
      of
      our acquisition plan.





**Other
      Income (Expense), Net**





Interest
      expense was $813,000 for the year ended December 31 2007, as compared to
      $653,000 for the year ended December 31, 2006. The increase of $160,000 or
      25%
      was attributable to higher balances on the Company’s line of credit as well as
      an increase in debt related to acquisitions during 2007.





Other
      expenses of $700,000 for the year ended December 31, 2007 is attributable to
      a
      prepayment premium of $800,000 incurred in connection with the accelerated
      payment of a $4.5 million promissory note due to the JLWA sellers, offset by
      a
      gain resulting from a lease settlement.





We
      also
      incurred costs in conjunction with notes payable issued on March 10,
      2006, May 12, 2006 and June 28, 2006. These costs were
      capitalized to deferred financing costs, amortized over the term of the related
      debt and are presented as other income (expense), net. Additionally, in
      accordance with Emerging Issues Task Force Issue No. 00-27 “Application of Issue
      98-5 to Certain Convertible Instruments,” the notes issued on June 28, 2006
      were considered to have a beneficial conversion premium feature. For the year
      ended December 31, 2006, we recorded a debt discount of $6,922,000 related
      to
      this conversion premium and we recorded a debt discount of $600,000 as the
      value
      of the beneficial conversion feature related to the 8% promissory note issued
      in
      conjunction with the acquisition of Safir on May 12, 2006.





The
      aggregate of $2,695,000 of deferred financing costs, as well as the aggregate
      of
      $7,523,000 of deferred debt discounts, were amortized through June 29,
      2006, the date the notes were exchanged for our Series B Convertible Preferred
      Stock.





**Deemed
      Dividends to Series B Convertible Preferred Stockholders**





At
      June 29, 2006, the date of issuance of our Series B Convertible Preferred
      Stock and related warrants, the fixed conversion price of the Series B
      Convertible Preferred Stock of $16.00 represented a discount to the market
      value
      of our common stock of $17.60 per share. In accordance with EITF 00-27 and
      EITF
      98-5, we determined the relative fair value of the Series B Convertible
      Preferred Stock and warrants and allocated the proceeds received on a relative
      fair value basis. Based upon this calculation, the effective conversion price
      of
      the Series B Convertible Preferred Stock was determined to be $10.24 per common
      share, resulting in a beneficial conversion feature for a deemed dividend of
      $24,413,000 for the year ended December 31, 2006.




**GlobalOptions’
      Year Ended December 31, 2006 Compared to Year Ended December 31, 2005**




**Revenues**




We
      had
      overall revenues of $61,924,000 for the year ended December 31, 2006, as
      compared to revenues of $9,028,000 for the year ended December 31, 2005,
      for an overall increase of $52,896,000 or approximately 586%. The increase
      in
      revenues for the year ended December 31, 2006 is primarily attributable to
      our new client account relationships that we obtained through the execution
      of
      our acquisition plan.


31




Preparedness
      Services revenues were approximately $37,556,000 for the year ended
      December 31, 2006, as compared to $1,261,000 for the year ended
      December 31, 2005. The increase of $36,295,000 is primarily attributable to
      the JLWA operations, which we acquired on March 10, 2006. The State of
      Louisiana represented $31,690,000 of revenues for the year ended
      December 31, 2006.




Fraud
      and
      SIU Services revenues were approximately $16,550,000 for the year ended
      December 31, 2006, as compared to $6,969,000 for the year ended
      December 31, 2005. The increase of $9,581,000 is primarily attributable to
      the expansion of our client base through the acquisitions of CBR in August
      2005
      and Hyperion Risk in August 2006, including the addition of a significant
      third-party insurance administrator client, through whom we generated $6,637,000
      and $2,403,000 of investigation related revenues during the years ended
      December 31, 2006 and 2005, respectively.




Security
      Consulting and Investigations revenues were approximately $7,818,000 for the
      year ended December 31, 2006, as compared to $798,000 for the year ended
      December 31, 2005. The increase of $7,020,000 is primarily attributable to
      the diverse client base that we acquired in connection with the acquisition
      of
      Safir in May 2006.




**Gross
      Profit**




Our
      consolidated gross profit for the years ended December 31, 2006 and
      December 31, 2005 was $29,681,000 and $3,954,000, reflecting gross profit
      margins of 48% and 44%, respectively. Preparedness Services gross profit was
      $18,424,000 or 49% of this segment’s revenues for the year ended
      December 31, 2006, as compared to $357,000 or 28% of this segment’s
      revenues for the year ended December 31, 2005. The increase in our
      Preparedness Services segment’s gross margin was due to the inclusion since
      March 10, 2006 of JLWA, through which we acquired the higher margin State
      of Louisiana Hurricane Katrina contract. Fraud and SIU Services gross profit
      was
      $7,600,000 or 46% of this segment’s revenues for the year ended
      December 31, 2006, as compared to $3,137,000 or 45% of this segment’s
      revenues for the year ended December 31, 2005. Security Consulting and
      Investigations gross profit was $3,657,000 or 47% of this segment’s revenues for
      the year ended December 31, 2006, as compared to $460,000 or 58% of this
      segment’s revenues for the year ended December 31, 2005.




**Operating
      Expenses**




Selling
      and marketing expenses were $8,635,000 or 14% of revenues for the year ended
      December 31, 2006, as compared to $540,000 or 6% of revenues for the year
      ended December 31, 2005. This increase of $8,095,000 is primarily
      attributable to the JLWA acquisition earnout obligation from March 11, 2006
      through December 31, 2006 of approximately $5,228,000, as well as the
      selling and marketing expenses incurred in support of the client base we
      acquired in connection with our five acquisitions in 2006 and 2005. General
      and
      administrative expenses were $25,354,000 or 41% of revenues for the year ended
      December 31, 2006, as compared to $6,937,000 or 77% of revenues for the
      year ended December 31, 2005. This increase of $18,417,000 is attributable
      to increased personnel, our 2006 and 2005 acquisitions, legal, accounting and
      other professional fees incurred in order to fulfill our responsibilities as
      a
      public company and costs incurred for due diligence related to the execution
      of
      our acquisition plan. The decrease in general and administrative expenses as
      a
      percentage of our revenues is attributable to our increased efficiency as our
      corporate costs, such as the costs of public company reporting, were spread
      over
      a larger revenue base.




**Other
      Income (Expense), Net**




Interest
      expense was $653,000 for the year ended December 31, 2006, as compared to
      $65,000 for the year ended December 31, 2005. The increase of $588,000 or
      905% is attributable to additional debt incurred in connection with our
      acquisitions of JLWA, Safir and Secure Source.




We
      also
      incurred costs in conjunction with notes payable issued on March 10,
      2006, May 12, 2006 and June 28, 2006. These costs were
      capitalized to deferred financing costs, amortized over the term of the related
      debt and are presented as other income (expense), net. Additionally, in
      accordance with EITF 00-27, the notes issued on June 28, 2006 were
      considered to have a beneficial conversion premium feature. We recorded a debt
      discount of $6,922,602 related to this conversion premium. In addition, we
      recorded a debt discount of $600,000 as the value of the beneficial conversion
      feature related to the 8% promissory note issued in conjunction with the
      acquisition of Safir on May 12, 2006.




The
      aggregate of $2,695,000 of deferred financing costs, as well as the aggregate
      $7,523,000 of deferred debt discounts, were amortized through June 29,
      2006, the date the notes were exchanged for our Series B Convertible Preferred
      Stock.


32




**Deemed
      Dividends to Series A and B Convertible Preferred Stockholders**




At
      June
      24, 2005 and September 22, 2005, the dates of issuance of our Series A
      Convertible Preferred Stock and related warrants, the fixed conversion price
      of
      the Series A Convertible Preferred Stock of $16.00 represented a discount to
      the
      market value of our common stock, which was at a quoted market price of $16.80
      and $24.00 per share, respectively. In accordance with EITF 00-27 and EITF
      98-5,
      we determined the relative fair value of the Series A Convertible Preferred
      Stock and warrants and allocated the proceeds received on a relative fair value
      basis. Based upon this calculation, at June 24, 2005 and September 22, 2005,
      the
      effective conversion price of the Series A Convertible Preferred Stock was
      determined to be $15.04 and $9.44, respectively, per common share, resulting
      in
      a beneficial conversion feature for a deemed dividend in the aggregate amount
      of
      $979,750 for the year ended December 31, 2005.




At
      June 29, 2006, the date of issuance of our Series B Convertible Preferred
      Stock and related warrants, the fixed conversion price of the Series B
      Convertible Preferred Stock of $16.00 represented a discount to the market
      value
      of our common stock of $17.60 per share. In accordance with EITF 00-27 and
      EITF
      98-5, we determined the relative fair value of the Series B Convertible
      Preferred Stock and warrants and allocated the proceeds received on a relative
      fair value basis. Based upon this calculation, the effective conversion price
      of
      the Series B Convertible Preferred Stock was determined to be $10.24 per common
      share, resulting in a beneficial conversion feature for a deemed dividend of
      $24,413,000 for the year ended December 31, 2006.





**Liquidity
      and Capital Resources**





We
      had a
      cash and cash equivalent balance of $4,426,000 as of December 31,
      2007.





Cash
      used
      in operating activities was approximately $5,467,000 and $2,316,000 for the
      years ended December 31, 2007 and 2006, respectively. The use of funds in
      operations is primarily due to our net losses in 2007 and 2006, reduced by
      charges for non-cash items included in the operating losses, the use of funds
      in
      financing accounts receivable, offset by JLWA earnout accruals. For the years
      ended December 31, 2007 and 2006, our net losses were $27,928,000 and
      $17,846,000, respectively. For the years ended December 31, 2007 and 2006,
      the
      non-cash charges included amounts for depreciation and amortization of
      $3,917,000 and $2,110,000, charges for stock-based compensation of $3,330,000
      and $3,110,000, charges for amortization of debt discounts of approximately
      $0
      and $7,523,000, charges for amortization of deferred financing costs of $0
      and
      $2,695,000, and bad debt provisions of $1,699,000 and $654,000, respectively.
      In
      addition, for the year ended December 31, 2007 and 2006, cash was impacted
      by
      working capital requirements, primarily to fund an increase in accounts
      receivable of $723,000 and $11,051,000, offset by increases in amounts due
      for
      the JLWA earnout of $7,732,000 and $5,228,000, respectively.





Cash
      used
      in investing activities for the year ended December 31, 2007 was $17,635,000,
      of
      which $15,195,000 related to our acquisitions of On Line Consulting, Bode and
      Facticon. Cash used in investing activities for the year ended December 31,
      2006
      was $10,251,000, of which $9,899,000 related to our acquisitions of JLWA, Safir
      and Hyperion Risk.





On
      January 9, 2007, we purchased substantially all of the business and assets
      of On Line Consulting to expand our Security Consulting and Investigations
      segment. Consideration for this transaction totaled $2,896,000 consisting of
      $988,000 of cash paid, 84,375 shares of common stock valued for purposes of
      the
      acquisition at $16.00 per share for a total value of $1,350,000 and the issuance
      of promissory notes for $417,000 due January 9, 2008 and $141,000 due
      January 9, 2009. Of the total cash paid, $750,000 was paid at closing,
      $224,000 was paid on March 23, 2007 and $14,000 was paid on August 29, 2007.





On
      February 28, 2007, we acquired all of the outstanding stock of Bode to
      expand our Security Consulting and Investigations segment. Consideration for
      this transaction totaled $13.2 million in cash, with $12.5 million paid at
      closing and purchase price adjustments of $0.7 million paid on October 1, 2007.




On
      February 28, 2007, we acquired substantially all of the business and assets
      of Facticon to expand our Fraud and SIU Services segment. Consideration for
      this
      transaction totaled $2,800,000, consisting of $1,300,000 in cash, $100,000
      in a
      note payable to the seller and 87,500 shares of common stock valued for purposes
      of the acquisition at $16.00 per share. We are currently defendants in a
      litigation with an entity that brought an action against Facticon prior to
      our
      acquisition of Facticon in February 2007 and subsequently we were added as
      a
      party to this litigation. As of March 22, 2008, cash of $100,000 and the 87,500
      shares of stock are held in escrow pending the resolution of
      this litigation.  At March 24, 2008, we believe our maximum liability,
      less amounts we expect to recover from the sellers of Facticon will be limited
      to $ 693,000.




33


Financing
      activities provided net funds of $5,994,000 and $33,572,000 for the years ended
      December 31, 2007 and 2006, respectively. Cash provided for the year ended
      December 31, 2007 is primarily due to the proceeds from issuance of common
      stock
      of $18,177,000, less repayment of notes payable of $12,231,000. The net cash
      provided for the year ended December 31, 2006 is primarily due to proceeds
      from
      convertible notes payable of $45,050,000 less repayment of notes payable of
      approximately $9,001,000.





On
      May 11, 2007, we entered into the JLWA Modification Agreement with the JLWA
      Sellers. Under the modification, we agreed to make additional payments in the
      form of cash, promissory notes and common stock to the JLWA Sellers in exchange
      for eliminating the earnout provisions of the asset purchase agreement, which
      provided for a maximum additional payout of $15,400,000. The additional payments
      under the JLWA Modification Agreement consisted of (i) a cash payment of
      $2,000,000, which was paid on May 14, 2007, (ii) a promissory note in
      the principal amount of $4,500,000, accruing interest at 5.65% per annum,
      due on January 15, 2008, subject to a 5% penalty fee if not paid on that
      due date, (iii) 300,000 shares of common stock, which were issued and
      subsequently registered on February 14, 2008, and (iv) a promissory note in
      the principal amount of $4,300,000, accruing interest at 11.0% per annum,
      due on August 11, 2008. The JLWA Sellers could request acceleration of the
      $4,300,000 promissory note upon the consummation of a Qualified Public Offering
      or any other qualified capital raise and they did request acceleration. On
      October 20, 2007, we reached an agreement with the JLWA Sellers under which
      the JLWA Sellers agreed to the prepayment of the principal and accrued interest
      on the $4.5 million promissory note, originally due on January 15, 2008. In
      connection with this acceleration, on October 29, 2007, the Company paid a
      negotiated prepayment premium of $800,000 to compensate the JLWA Sellers for,
      among other things, foregone interest and the cost of accelerated tax payments.
      The JLWA Sellers requested acceleration of this promissory note in connection
      with our separate Qualified Public Offering. Further, in connection with the
      execution of the JLWA Modification Agreement, we
      executed an amendment of the employment and non-competition agreement with
      Mr. Witt. Under the terms of the amendment, upon his voluntary termination
      of employment without good reason, Mr. Witt would be obligated to reimburse
      us in an amount equal to (i) 25% of the number of shares issued to the JLWA
      Sellers within 12 months prior to such termination and (ii) 25% of the base
      salary of Mr. Witt paid within 12 months prior to such
      termination.




On
      May 14, 2007, the financial institution that provides our line of credit
      increased the amount available under the line of credit to $15,000,000 and
      on
      November 6, 2007, the line of credit was increased to $20,000,000. Pursuant
      to
      the May 14, 2007 adjustment, we granted the financial institution a security
      interest in, and pledged and assigned to the financial institution substantially
      all of the current and future acquired personal property of GlobalOptions,
      Inc.
      Furthermore, we reaffirmed our unconditional guaranty originally made on
      March 8, 2006. Pursuant to the reaffirmation, we acknowledged that our
      guaranty of the loan provided to GlobalOptions, Inc. and the corresponding
      grant
      of a security interest in all of its property apply to the subject financial
      institution’s loan agreements and any other agreements, assignments or
      instruments relating to such indebtedness. In connection with the modification,
      Bode entered into an intellectual property security agreement with the financial
      institution, pursuant to which Bode granted the financial institution a security
      interest in all of its rights, title and interests in, to and under its
      intellectual property. As of December 31, 2007, our net borrowings were $0
      under
      our line of credit, and based upon the amount of qualifying accounts receivable,
      provided for an amount eligible to draw under the line of credit of $8,782,000.




On
      October 29, 2007, the Company completed an underwritten public offering of
      4,500,000 shares of its common stock receiving approximately $20.25 million
      in
      gross proceeds or $18.2 million in net proceeds. The Company used a portion
      of
      the net proceeds from the proposed underwritten public offering to repay $4.3
      million of notes and $38,000 of related accrued interest and intends to use
      the
      balance of the net proceeds for working capital, general corporate purposes,
      and
      potentially for strategic acquisitions and investments.




On
      October 29, 2007, the Company borrowed $5,400,000 under the line of credit
      for
      the pre-payment of the JLWA $4,500,000 promissory note, pre-payment fee and
      accrued interest, and such amount was subsequently repaid.




Prior
      to
      our underwritten public offering, we historically met our operating cash needs
      by using borrowings under our line of credit arrangement and through private
      placements of equity and debt securities. At December 31, 2007, we had working
      capital of $17,621,000. We currently believe that cash on hand, operating
      improvements that we believe will result in cash flows from operations and
      our
      available borrowings of $8,782,000 at December 31, 2007 under our line of credit
      facility will be sufficient to finance our operations through December 31,
      2008.




34


**Off-Balance
      Sheet Arrangements**




We
      have
      not entered into any transactions with unconsolidated entities in which we
      have
      financial guarantees, subordinated retained interests, derivative instruments
      or
      other contingent arrangements that expose us to material continuing risks,
      contingent liabilities or any other obligations under a variable interest in
      an
      unconsolidated entity that provides us with financing, liquidity, market risk
      or
      credit risk support.





**Critical
      Accounting Policies**





Our
      significant accounting policies, including the assumptions and judgments
      underlying them, are more fully described in our “Notes to Consolidated
      Financial Statements” included elsewhere within this Annual Report on Form 10-K.
      Some of our accounting policies require the application of significant judgment
      by management in the preparation of the consolidated financial statements and,
      as a result, they are subject to a greater degree of uncertainty. In applying
      these policies, management uses its judgment to determine the appropriate
      assumptions to be used in calculating estimates that affect the reported amounts
      of assets, liabilities, revenues and expenses. Management bases its estimates
      and assumptions on historical experience and on various other factors that
      are
      believed to be reasonable under the circumstances. We have identified certain
      of
      our accounting policies as the ones that are most important to the portrayal
      of
      our consolidated financial condition and results of operations and which require
      management to make its most difficult and subjective judgments, often as a
      result of the need to make estimates of matters that are inherently uncertain.
      Our critical accounting policies include the following:




*Revenue
      Recognition and Related Costs*




For
      investigation, crisis management and non-DNA related security, revenue is
      recognized on a time and materials or fixed price arrangement and is recognized
      as the services are performed pursuant to the applicable contractual
      arrangements. Revenue related to time and materials arrangements is recognized
      in the period in which the services are performed. Revenue related to fixed
      price arrangements is recognized based upon the achievement of certain
      milestones or progress points within the project plan. The impact of any
      revisions in estimated total revenue and direct contract costs is recognized
      in
      the period in which they become known. Expenses incurred by professional staff
      in the generation of revenue are billed to the client and recorded as revenue
      when incurred.




For
      DNA
      related revenues, revenue is recognized when it is realized or realizable and
      earned. The Company considers revenue realized or realizable and earned when
      it
      has persuasive evidence that an agreement exists, prices are fixed or
      determinable, services and products are provided to the client, and
      collectibility is reasonably assured. The Company reduces revenue for estimated
      discounts and other allowances.





Revenues
      earned on DNA related services are derived from the following sources:
      (1) forensic DNA analysis; (2) research and development projects; and
      (3) sales of DNA collection products. The Company recognizes revenues from
      forensic DNA analysis at the time tests are completed and the results are
      reported to the client. Revenues from research and development projects are
      recognized as the related research is completed and when the Company has
      satisfied specific obligations under the terms of the respective agreements.
      Revenues from the sales of DNA collection products are recognized upon delivery
      of the products to the client.




Forensic
      DNA analysis is billed on a per sample fixed fee arrangement. Research and
      development projects are billed on a cost plus fixed fee
      arrangement.




Costs
      incurred in the performance of forensic DNA analysis are recorded as inventories
      and charged to cost of revenues upon the completion of the project, which
      generally ranges from one to three months. Costs related to research and
      development projects are expensed as incurred and costs related to DNA
      collection products are maintained as inventory and charged to operations when
      the products are delivered.





*Intangible
      Assets, Goodwill and Impairment*




In
      accordance with the requirements of Statement of Financial Accounting Standards
      No. 141 (SFAS No. 141), “Business Combinations,” we recognize
      certain intangible assets acquired in acquisitions, primarily goodwill, trade
      names, covenants not to compete and client relationships. In accordance with
      the
      provisions of SFAS No. 142, “Goodwill and Other Intangible Assets, (SFAS
      142)” on a regular basis, we perform impairment analysis of the carrying value
      of goodwill and certain other intangible assets by assessing the recoverability
      when there are indications of potential impairment based on estimates of
      undiscounted future cash flows.




35




At
      December 31, 2007, the Company performed an evaluation of its goodwill. The
      Company performed its annual impairment tests of goodwill for three of its
      reporting segments: Preparedness Services, Fraud and SIU Services
      and Security Consulting Investigations, as required under SFAS 142. As a
      result of these tests, the Company determined that the amount of goodwill
      recorded in connection with the Fraud and SIU Services segment was impaired
      or
      not fully recoverable, as the current performance and future expectations do
      not
      support the carrying value of goodwill. As a result, the Company recorded a
      $5,144,000 impairment charge during the year ended December 31, 2007 for the
      Fraud and SIU Services segment.




At
      December 31, 2006, the Company performed an evaluation of goodwill. We
      performed our annual impairment tests of goodwill for our reporting segments:
      Preparedness Services, Fraud and SIU Services and Security Consulting and
      Investigations, as required under SFAS 142. As a result of these tests, we
      determined that the remaining amount of goodwill recorded in connection with
      two
      of the three reporting segments was impaired or not fully recoverable, as the
      current performance and future expectations did not support the carrying value
      of goodwill for these reporting segments. The impairment affects Fraud and
      SIU
      Services and Security Consulting and Investigations. As a result, we recorded
      a
      $3,029,000 impairment charge for the year ended December 31, 2006 of which
      $1,135,000 is for Fraud and SIU Services and $1,894,000 is for Security
      Consulting and Investigations.




*Allowance
      for Doubtful Accounts*




The
      number of clients that comprise our client base, along with the different
      industries, governmental entities and geographic regions, including foreign
      countries, in which our clients operate, limits concentrations of credit risk
      with respect to accounts receivable. We do not generally require collateral
      or
      other security to support client receivables, although we do require retainers,
      up-front deposits or irrevocable letters of credit in certain situations. We
      have established an allowance for doubtful accounts based upon facts surrounding
      the credit risk of specific clients and past collections history. Credit losses
      have been within management’s expectations.




*Stock-Based
      Compensation*





Prior
      to
      January 1, 2006, the Company accounted for the stock option plans under the
      recognition and measurement provisions of Accounting Principles Board Opinion
      No. 25 ("APB 25"). Accordingly, the Company would recognize employee stock
      based
      compensation expense only if it granted options at a price lower than the
      closing price on the date of grant. Any resulting compensation expense would
      then have been recognized ratably over the associated service period.  No
      stock-based employee compensation expense relating to the Company’s stock option
      plans was reflected in net loss available to common stockholders for the year
      ended December 31, 2005, as all options granted under its plans had an exercise
      price equal to or greater than the market value of the underlying common stock
      on the date of grant. Prior to January 1, 2006, the Company provided pro-forma
      disclosure amounts in accordance with Statement of Financial Accounting
      Standards No. 148, "Accounting for Stock-Based Compensation-Transition and
      Disclosure" ("SFAS 148"), as if the fair value method defined by SFAS 123 had
      been applied to its stock-based compensation.





Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of
      SFAS 123R, using the modified prospective transition method and therefore has
      not restated prior years results. Under this transition method, employee
      stock-based compensation expense for the year ended December 31, 2006 included
      compensation expense for all stock-based compensation awards granted, but not
      yet fully vested, prior to January 1, 2006.  The fair value of the options
      granted was determined at the original grant date in accordance with the
      provisions of SFAS 123R.  Stock-based compensation expense for all
      share-based payment awards granted after December 31, 2005 is based on the
      grant-date fair value estimated in accordance with the provisions of SFAS 123R.
      The Company recognizes these compensation costs over the requisite service
      period of the award, which is generally the vesting term of the options
      associated with the underlying employment agreement, where
      applicable.





As
      a
      result of adopting SFAS 123R, the impact to the consolidated financial
      statements for the year ended December 31, 2006 was to record an expense of
      approximately $2,258,000 greater than if the Company had continued to account
      for stock-based compensation under APB 25 and is reflected within general and
      administrative expenses. The impact of the adoption of SFAS 123R on both basic
      and diluted net loss per share for the year ended December 31, 2006 was $1.01
      per share.





In
      addition, SFAS No. 123(R) requires forfeitures to be estimated at the
      time of grant and revised, if necessary, in subsequent periods if actual
      forfeitures differ from those estimates. Forfeitures were estimated based on
      historical experience. Prior to the adoption of SFAS No. 123(R), the
      Company accounted for forfeitures as they occurred.


36




We
      account for equity instruments issued to non-employees in accordance with the
      provisions of Statement of Financial Accounting Standards No. 123R
“Share-Based Payment” (SFAS 123R) and the Emerging Issues Task Force (EITF)
      Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to
      Other Than Employees for Acquiring, or In Conjunction with Selling, Goods or
      Services” (EITF 96-18) which require that such equity instruments be recorded at
      their fair value on the measurement date, which is typically the date the
      services are performed. Stock-based compensation for non-employees is accounted
      for under EITF 96-18 and is reflected within general and administrative
      expenses.




**Recent
      Accounting Pronouncements**




In
      February 2006, the Financial Accounting Standards Board (FASB) issued SFAS
      No.
      155 “Accounting for Certain Hybrid Financial Instruments” (SFAS 155), which
      eliminates the exemption from applying SFAS 133 to interests in securitized
      financial assets so that similar instruments are accounted for similarly
      regardless of the form of the instruments. SFAS 155 also allows the election
      of
      fair value measurement at acquisition, at issuance or when a previously
      recognized financial instrument is subject to a remeasurement event. Adoption
      is
      effective for all financial instruments acquired or issued after the beginning
      of the first fiscal year that begins after September 15, 2006. Early adoption
      is
      permitted. The adoption of SFAS 155 did not have a material effect on our
      consolidated financial position, results of operations or cash flows.




In
      March
      2006, the FASB issued SFAS No. 156 “Accounting for Servicing of Financial
      Assets” (SFAS 156), which requires all separately recognized servicing
      assets and servicing liabilities be initially measured
      at fair value. SFAS 156 permits, but does not require, the subsequent
      measurement of servicing assets and servicing liabilities at fair value.
      Adoption is required as of the beginning of the first fiscal year that begins
      after September 15, 2006. Early adoption is permitted. The adoption of SFAS
      156
      did not have a material effect on our consolidated financial position, results
      of operations or cash flows.




In
      July
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes — an interpretation of FASB Statement No. 109” (FIN 48), which
      clarifies the accounting for uncertainty in tax positions. This interpretation
      requires that we recognize in our consolidated financial statements the impact
      of a tax position, if that position is more likely than not of being sustained
      on audit, based on the technical merits of the position. The provisions of
      FIN
      48 are effective as of the beginning of our 2007 fiscal year, with the
      cumulative effect of the change in accounting principle recorded as an
      adjustment to opening retained earnings. The adoption of FIN 48 did not
      have a material effect on our consolidated financial position, results of
      operations or cash flows.




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(SFAS No. 157). This statement defines fair value, establishes a framework
      for measuring fair value and expands disclosure of fair value
      measurements. SFAS No. 157 applies under other accounting
      pronouncements that require or permit fair value measurements and accordingly,
      does not require any new fair value measurements. SFAS No. 157 is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007. We are in the process of evaluating the impact that
      the adoption of SFAS No. 157 will have on our consolidated financial
      position results of operations and financial condition.




In
      September 2006, the staff of the SEC issued Staff Accounting Bulletin
      No. 108 (SAB 108) which provides interpretive guidance on how the effects
      of the carryover or reversal of prior year misstatements should be considered
      in
      quantifying a current year misstatement. SAB 108 becomes effective in fiscal
      2007. Adoption of SAB 108 did not have a material impact on our consolidated
      financial position, results of operations or cash flows.




In
      December 2006, the FASB issued FASB Staff Position (FSP) EITF 00-19-2
“Accounting for Registration Payment Arrangements” (FSP EITF 00-19-2) which
      specifies that the contingent obligation to make future payments or otherwise
      transfer consideration under a registration payment arrangement should be
      separately recognized and measured in accordance with SFAS No. 5,
“Accounting for Contingencies.” Adoption of FSP EITF 00-19-02 is required
      for fiscal years beginning after December 15, 2006, and did not have a
      material impact on our consolidated financial position, results of operations
      or
      cash flows.


37




In
      February 2007, the FASB issued Statement of Financial Accounting Standard 159
      “The Fair Value Option for Financial Assets and Financial Liabilities—Including
      an amendment of FASB Statement No. 115”, which permits entities to choose
      to measure many financial instruments and certain other items at fair value.
      The
      fair value option established by this statement permits all entities to choose
      to measure eligible items at fair value at specified election dates. A business
      entity shall report unrealized gains and losses on items for which the fair
      value option has been elected in earnings at each subsequent reporting date.
      Adoption is required for fiscal years beginning after November 15,
      2007. Early adoption is permitted as of the beginning of a fiscal year that
      begins on or before November 15, 2007, provided the entity also elects to
      apply the provisions of FASB Statement No. 157, Fair Value Measurements. We
      are currently evaluating the expected effect of SFAS 159 on our
      consolidated financial statements and are currently not yet in a position to
      determine its effects.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements - An Amendment of ARB No. 51” (SFAS 160).
      SFAS 160 establishes accounting and reporting standards for the noncontrolling
      interest in a subsidiary (previously referred to as minority interests). SFAS
      160 also requires that a retained noncontrolling interest upon the
      deconsolidation of a subsidiary be initially measured at its fair value. Upon
      adoption of SFAS 160, the Company will be required to report its noncontrolling
      interests as a separate component of stockholders’ equity. The Company will also
      be required to present net income allocable to the noncontrolling interests
      and
      net income attributable to the stockholders of the Company separately in its
      statements of income. Currently, minority interests are reported as a liability
      or temporary equity in the Company’s balance sheets and the related income
      attributable to the minority interests is reflected as an expense in arriving
      at
      net income (loss). SFAS 160 is effective for fiscal years, and interim periods
      within those fiscal years, beginning on or after December 15, 2008. SFAS 160
      requires retroactive adoption of the presentation and disclosure requirements
      for existing minority interests. All other requirements of SFAS 160 shall be
      applied prospectively. The Company does not expect SFAS 160 to have a material
      impact on its consolidated financial statements.





In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 141R, “Business
      Combinations” (SFAS 141R), which replaces SFAS No. 141, “Business Combinations.”
SFAS 141R establishes principles and requirements for determining how an
      enterprise recognizes and measures the fair value of certain assets and
      liabilities acquired in a business combination, including noncontrolling
      interests, contingent consideration, and certain acquired contingencies. SFAS
      141R also requires acquisition-related transaction expenses and restructuring
      costs be expensed as incurred rather than capitalized as a component of the
      business combination. SFAS 141R will be applicable prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008. SFAS
      141R
      would have an impact on accounting for any businesses acquired after the
      effective date of this pronouncement.





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





Not
      applicable.





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





Our
      consolidated financial statements and the related notes to the financial
      statements called for by this item appear under the caption “Index to
      Consolidated Financial Statements” beginning on Page F-1 attached hereto of this
      Annual Report on Form 10-K.




38




**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Table
        of Contents to Consolidated Financial Statements**


**Page(s)**Report
                of Independent Registered Public Accounting Firm
            
            
            F-1Consolidated
                Balance Sheets as of December 31, 2007 and 2006
            
            
            F-2Consolidated
                Statements of Operations for the Years Ended December 31, 2007, 2006
                and
                2005
            
            
            F-3Consolidated
                Statements of Stockholders' Equity for the Years Ended December 2007,
                2006
                and 2005
            
            
            F-4Consolidated
                Statements of Cash Flows for the Years Ended December 31, 2007, 2006
                and
                2005
            
            
            F-7Notes
                to Consolidated Financial Statements
            
            
            F-12









REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To
        the
        Stockholders and Board of Directors
 GlobalOptions
        Group, Inc. and Subsidiaries
  We
        have
        audited the accompanying consolidated balance sheets of GlobalOptions Group,
        Inc. and Subsidiaries (the “Company”) as of December 31, 2007 and 2006 and the
        related consolidated statements of operations, stockholders’ equity, and cash
        flows for the years ended December 31, 2007, 2006 and 2005. These consolidated
        financial statements are the responsibility of the Company’s management. Our
        responsibility is to express an opinion on these consolidated 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 audits to obtain reasonable assurance about whether the
        financial statements are free of material misstatement. The Company is not
        required to have, nor were we engaged to perform, an audit of its internal
        control over financial reporting. Our audits included consideration of internal
        control over financial reporting as a basis for designing audit procedures
        that
        are appropriate in the circumstances, but not for the purpose of expressing
        an
        opinion on the effectiveness of the Company’s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit also includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements, 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 consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of GlobalOptions
        Group, Inc. and Subsidiaries as of December 31, 2007 and 2006, and the
        consolidated results of their operations and their cash flows for the years
        ended December 31, 2007, 2006, and 2005 in conformity with United States
        generally accepted accounting principles.
 
 /s/
                  Marcum & Kliegman LLPNew
                  York, New YorkMarch
                  26, 2008
  F-1


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Consolidated
        Balance Sheets**
  **December
                  31,****2007**
              
              **2006****ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              4,426,110
              
              $
              21,533,381Accounts
                  receivable, net of allowance for doubtfulaccounts
                  of approximately $2,459,000 in 2007 and $1,464,000 in 2006,
                  respectively
              
              
              25,212,663
              
              
              19,918,791Inventories
              
              
              2,325,660
              
              
              -Prepaid
                  expenses and other current assets
              
              
              792,489
              
              
              453,611Total
                  current assets
              
              
              32,756,922
              
              
              41,905,783Property
                  and equipment, net
              
              
              5,570,461
              
              
              798,366Intangible
                  assets, net
              
              
              7,269,923
              
              
              7,630,425Goodwill
              
              
              19,767,605
              
              
              18,577,261Security
                  deposits and other assets
              
              
              578,366
              
              
              314,445Total
                  assets
              
              $
              65,943,277
              
              $
              69,226,280**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:Notes
                  payable
              
              $
              800,000
              
              $
              1,430,819Obligation
                  to issue common stock
              
              
              2,160,000
              
              
              -Due
                  to former members of JLWA for earnout
              
              
              -
              
              
              5,227,985Accounts
                  payable
              
              
              5,723,173
              
              
              4,148,158Deferred
                  revenues
              
              
              542,448
              
              
              106,872Accrued
                  compensation and related benefits
              
              
              3,740,387
              
              
              2,526,512Other
                  current liabilities
              
              
              2,169,978
              
              
              1,196,881Total
                  current liabilities
              
              
              15,135,986
              
              
              14,637,227Long-term
                  liabilities:Notes
                  payable, less current portion
              
              
              395,430
              
              
              500,000Other
                  long-term obligations
              
              
              454,311
              
              
              190,008Total
                  long-term liabilities
              
              
              849,741
              
              
              690,008Total
                  liabilities
              
              
              15,985,727
              
              
              15,327,235Commitments
                  and contingenciesStockholders'
                  equity:Preferred
                  stock, $0.001 par value, 14,900,000 and 14,924,000 shares authorized
                  in2007
                  and 2006, respectively, no shares issued or outstanding
              
              
              -
              
              
              -Series
                  A convertible preferred stock, voting, $0.001 par value, 16,000
                  sharesauthorized,
                  6,380 shares issued and outstanding in 2006, liquidation preference
                  of
                  $6,380,000
              
              
              -
              
              
              6Series
                  B convertible preferred stock, voting, $0.001 par value, 60,000
                  sharesauthorized,
                  53,073 shares issued and outstanding in 2006, liquidation preference
                  of
                  $53,073,000
              
              
              -
              
              
              53Series
                  D convertible preferred stock, voting, $0.001 par value, 100,000
                  shares
                  authorized,55,989.52
                  shares issued and outsanding in 2007, liquidation preference
                  $56
              
              
              56
              
              
              -Common
                  stock, $0.001 par value; 100,000,000 shares
                  authorized;9,660,269
                  and 2,678,059 shares issued and outstanding in 2007 and 2006,
                  respectively
              
              
              9,660
              
              
              2,678Additional
                  paid-in capital
              
              
              102,537,333
              
              
              78,557,545Accumulated
                  deficit
              
              
              (52,589,499
              )
              
              (24,661,237
              )Total
                  stockholders' equity
              
              
              49,957,550
              
              
              53,899,045Total
                  liabilites and stockholders' equity
              
              $
              65,943,277
              
              $
              69,226,280






See
      notes
      to these consolidated financial statements.




F-2


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Consolidated
        Statements of Operations**
  **For
                  the Years Ended****2007**
              
              **2006**
              
              **2005**Revenues
              
              $
              87,130,669
              
              $
              61,923,822
              
              $
              9,028,341Cost
                  of revenues
              
              
              48,968,519
              
              
              32,243,298
              
              
              5,074,045Gross
                  profit
              
              
              38,162,150
              
              
              29,680,524
              
              
              3,954,296Operating
                  expenses:Selling
                  and marketing
              
              
              14,821,286
              
              
              8,635,235
              
              
              540,301General
                  and administrative
              
              
              44,908,145
              
              
              25,354,303
              
              
              6,937,148Impairment
                  loss on goodwill and intangibles
              
              
              5,144,423
              
              
              3,144,309
              
              
              -Total
                  operating expenses
              
              
              64,873,854
              
              
              37,133,847
              
              
              7,477,449Loss
                  from operations
              
              
              (26,711,704
              )
              
              (7,453,323
              )
              
              (3,523,153
              )Other
                  income (expense):Interest
                  income
              
              
              296,680
              
              
              477,027
              
              
              18,229Interest
                  expense
              
              
              (813,238
              )
              
              (652,639
              )
              
              (65,049
              )Other
                  income
              
              
              100,000
              
              
              -
              
              
              -Prepayment
                  premium
              
              
              (800,000
              )
              
              -
              
              
              -Amortization
                  of debt discounts on convertiblenotes
                  payable
              
              
              -
              
              
              (7,522,602
              )
              
              -Amortization
                  of deferred financing costs
              
              
              -
              
              
              (2,694,500
              )
              
              -Other
                  (expense), net
              
              
              (1,216,558
              )
              
              (10,392,714
              )
              
              (46,820
              )Net
                  loss
              
              
              (27,928,262
              )
              
              (17,846,037
              )
              
              (3,569,973
              )Deemed
                  dividends to Series A and B convertiblepreferred
                  stockholders
              
              
              -
              
              
              (24,413,362
              )
              
              (979,750
              )Net
                  loss applicable to common stockholders
              
              $
              (27,928,262
              )
              $
              (42,259,399
              )
              $
              (4,549,723
              )Basic
                  and diluted net loss per share
              
              $
              (6.69
              )
              $
              (19.36
              )
              $
              (3.03
              )Weighted
                  average number of common sharesoutstanding
                  - basic and diluted
              
              
              4,177,435
              
              
              2,183,324
              
              
              1,500,139






See
      notes
      to these consolidated financial statements.


F-3


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Consolidated
        Statement of Stockholders' Equity**
 **For
        the Year Ended December 31, 2005**


**Common
                  Stock**
              
              
              **Series
                        A**
                      **Convertible**
                      Preferred
                        Stock
              
              
              **Series
                  B**
                **Convertible**
                Preferred
                  Stock
              
              
              **Series
                          C**
                        **Convertible**
                        Preferred
                          Stock
              
              
              **Series
                      D**
                    **Convertible**
                    Preferred
                      Stock**Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              **Additional
                        Paid-in Capital**
              
              
              ****Accumulated****
                **Deficit**
              
              
              **Total**Balance,
                  January 1, 2005
              
              
              1,166,416
              
              $
              1,166
              
              $
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              $
              3,350,496
              
              $
              (3,245,227
              )
              $
              106,435Issuance
                  of stock options for services
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              157,005
              
              
              -
              
              
              157,005Amortization
                  of deferred consulting fees
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              16,819
              
              
              -
              
              
              16,819Issuance
                  of common stock in connection with exercise of warrants for
                  cash
              
              
              22,059
              
              
              22
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              119,978
              
              
              -
              
              
              120,000Issuance
                  of common stock in connection with exercise of cashless
                  warrants
              
              
              2,572
              
              
              3
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (3
              )
              
              -
              
              
              -Issuance
                  of common stock upon conversion of principal and interest 
                  convertible note payable - stockholder
              
              
              45,236
              
              
              45
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              267,038
              
              
              -
              
              
              267,083Issuance
                  of common stock for services
              
              
              25,290
              
              
              25
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              487,825
              
              
              -
              
              
              487,850Issuance
                  of Series A convertible preferred stock
              
              
              -
              
              
              -
              
              
              7,750
              
              
              8
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              7,749,992
              
              
              -
              
              
              7,750,000Offering
                  costs in connection with private placements of Series A convertible
                  preferred stock
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (548,781
              )
              
              -
              
              
              (548,781
              )Outstanding
                  common stock of GlobalOptins Group, Inc. at date of reverse
                  merger
              
              
              549,750
              
              
              550
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (550
              )
              
              -
              
              
              -Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (3,569,973
              )
              
              (3,569,973
              )Balance,
                  December 31, 2005
              
              
              1,811,323
              
              $
              1,811
              
              
              7,750
              
              $
              8
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              $
              11,599,819
              
              $
              (6,815,200
              )
              $
              4,786,438




See
        notes
        to these consolidated financial statements.


F-4


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Consolidated
        Statement of Stockholders' Equity**


**For
        the Year Ended December 31, 2006**
  **Common
                  Stock**
              
              **Series
                        A**
                      **Convertible**
                      Preferred
                        Stock
              
              **Series
                  B**
                Convertible
                Preferred
                  Stock
              
              **Series
                        C**
                      **Convertible**
                      Preferred
                        Stock
              
              **Series
                        D**
                      **Convertible**
                      Preferred
                        Stock**Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Additional
                        Paid-in Capital**
              
              **Accumulated**
                **Deficit**
              
              **Total**Balance,
                  January 1, 2006
              
              
              1,811,323
              
              $
              1,811
              
              
              7,750
              
              $
              8
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              $
              11,599,819
              
              $
              (6,815,200
              )
              $
              4,786,438Issuance
                    of common stock in connection with the purchase of
                    JLWA
              
              
              102,459
              
              
              103
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,999,897
              
              
              -
              
              
              2,000,000Issuance
                    of common stock to executive employee for future
                    services
              
              
              100,000
              
              
              100
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (100
              )
              
              -
              
              
              -Issuance
                    of common stock to consultant for future services
              
              
              75,000
              
              
              75
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (75
              )
              
              -
              
              
              -Issuance
                    of common stock as finders fee in connection with the acquisition
                    of
                    Safir
              
              
              10,883
              
              
              11
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              174,989
              
              
              -
              
              
              175,000Issuance
                    of common stock to consultant for services
              
              
              7,317
              
              
              7
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              117,071
              
              
              -
              
              
              117,078Amortization
                  of deferred consulting fees
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              735,525
              
              
              -
              
              
              735,525Issuance
                    of Series B convertible preferred stock upon exchange of convertible
                    notes
                    payable and accrued interest
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              53,073
              
              
              53
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              46,150,679
              
              
              -
              
              
              46,150,732Issuance
                    of common stock in connection with purchase of Safir
              
              
              375,000
              
              
              375
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              5,999,625
              
              
              -
              
              
              6,000,000Issuance
                    of common stock in connection with purchase of Secure
                    Source
              
              
              26,371
              
              
              26
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              499,974
              
              
              -
              
              
              500,000Issuance
                    of common stock in connection with purchase of Hyperion
                    Risk
              
              
              84,081
              
              
              84
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,499,916
              
              
              -
              
              
              1,500,000Amortization
                    of debt discounts on convertible notes payable
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              7,522,602
              
              
              -
              
              
              7,522,602Amortization
                  of stock options costs
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,257,707
              
              
              -
              
              
              2,257,707Issuance
                    of common stock in connection with the conversion of shares of
                    Series A convertible preferred stock
              
              
              85,625
              
              
              86
              
              
              (1,370
              )
              
              (2
              )
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (84
              )
              
              -
              
              
              -Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (17,846,037
              )
              
              (17,846,037
              )Balance,
                  December 31, 2006
              
              
              2,678,059
              
              $
              2,678
              
              
              6,380
              
              $
              6
              
              
              53,073
              
              $
              53
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              $
              78,557,545
              
              $
              (24,661,237
              )
              $
              53,899,045






See
        notes
        to these consolidated financial statements.


F-5


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Consolidated
        Statement of Stockholders' Equity**
 **For
        the Year Ended December 31, 2007**
  **Common
                  Stock**
              
              **Series
                        A**
                      **Convertible**
                      Preferred
                        Stock
              
              **Series
                  B**
                Convertible
                Preferred
                  Stock
              
              **Series
                        C**
                      **Convertible**
                      Preferred
                        Stock
              
              **Series
                        D**
                      **Convertible**
                      Preferred
                        Stock**Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Additional
                  Paid-in Capital**
              
              **Accumulated
                  Deficit**
              
              **Total**Balance,
                  January 1, 2007
              
              
              2,678,059
              
              $
              2,678
              
              
              6,380
              
              $
              6
              
              
              53,073
              
              $
              53
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              $
              78,557,545
              
              $
              (24,661,237
              )
              $
              53,899,045Fractional shares
                  of common stock  issued in connection with reverse split
              
              
              42
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Adjustment
                    to Series B Convertible Preferred shares
                    outstanding
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (3
              )
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Issuance
                    of common stock in  connection with the purchase of On Line
                    Consulting
              
              
              84,375
              
              
              84
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,349,916
              
              
              -
              
              
              1,350,000Issuance
                    of common stock in connection with purchase of
                    Facticon
              
              
              87,500
              
              
              87
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,399,913
              
              
              -
              
              
              1,400,000Exercise
                  of stock options
              
              
              88,236
              
              
              88
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              47,912
              
              
              -
              
              
              48,000Cashless
                  exercise of stock options
              
              
              39,706
              
              
              40
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (317,684
              )
              
              -
              
              
              (317,644
              )Stock
                  issued to employees pursuant to 2006 Long-Term Incentive
                  Plan
              
              
              3,471
              
              
              4
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              41,648
              
              
              -
              
              
              41,652Stock
                  issued to consultants for services
              
              
              3,823
              
              
              4
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              67,496
              
              
              -
              
              
              67,500Stock
                    based compensation - restricted stock vested
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              677,297
              
              
              -
              
              
              677,297Amortization
                  of consultant stock option costs
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              63,623
              
              
              -
              
              
              63,623Amortization
                    of employee stock options costs
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,479,605
              
              
              -
              
              
              2,479,605Issuance
                    of common stock in connection with the conversion of shares of
                    Series A
                    Convertible Preferred Stock
              
              
              3,125
              
              
              3
              
              
              (50
              )
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (3
              )
              
              -
              
              
              -Equity
                  restructuring (See Note 14)
              
              
              630,765
              
              
              631
              
              
              (6,330
              )
              
              (6
              )
              
              (53,070
              )
              
              (53
              )
              
              59,400
              
              
              59
              
              
              19,706.52
              
              
              20
              
              
              (651
              )
              
              -
              
              
              -Issuance
                  of common stock in connection with qualified public offering net
                  of
                  offering costs
              
              
              4,500,000
              
              
              4,500
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              18,172,234
              
              
              -
              
              
              18,176,734Conversion
                  of Series C Convertible Preferred Stock into shares of common stock
                  and
                  share of Series D Convertible Preferredred Stock
              
              
              1,541,167
              
              
              1,541
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (59,400
              )
              
              (59
              )
              
              36,283.00
              
              
              36
              
              
              (1,518
              )
              
              -
              
              
              -Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (27,928,262
              )
              
              (27,928,262
              )Balance,
                  December 31, 2007
              
              
              9,660,269
              
              $
              9,660
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              
              55,989.52
              
              $
              56
              
              $
              102,537,333
              
              $
              (52,589,499
              )
              $
              49,957,550






See
        notes
        to these consolidated financial statements.


F-6


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Consolidated
        Statements of Cash Flows**
  **For
                  the Years Ended****December
                  31,****2007**
              
              **2006**
              
              **2005**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (27,928,262
              )
              $
              (17,846,037
              )
              $
              (3,569,973
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Provision
                  for bad debts
              
              
              1,698,576
              
              
              653,623
              
              
              254,224Depreciation
                  and amortization
              
              
              3,917,115
              
              
              2,109,544
              
              
              208,057Deferred
                  rent
              
              
              37,735
              
              
              136,476
              
              
              35,582Accretion
                  of interest on discounted notes
              
              
              37,430
              
              
              -
              
              
              -Amortization
                  of debt discounts
              
              
              -
              
              
              7,522,602
              
              
              -Amortization
                  of deferred financing costs
              
              
              -
              
              
              2,694,500
              
              
              -Impairment
                  of goodwill and intangible assets
              
              
              5,144,423
              
              
              3,144,309
              
              
              -Stock-based
                  compensation
              
              
              3,329,677
              
              
              3,110,308
              
              
              661,674Changes
                  in operating assets:Accounts
                  receivable
              
              
              (722,860
              )
              
              (11,050,971
              )
              
              (346,433
              )Inventories
              
              
              193,729
              
              
              -
              
              
              -Prepaid
                  expenses and other current assets
              
              
              (59,255
              )
              
              (12,382
              )
              
              (43,844
              )Security
                  deposits and other assets
              
              
              (263,921
              )
              
              (165,215
              )
              
              34,745Changes
                  in operating liabilities:Accounts
                  payable
              
              
              769,151
              
              
              494,716
              
              
              (167,286
              )Deferred
                  revenues
              
              
              395,751
              
              
              (47,546
              )
              
              -Accrued
                  compensation and related benefits
              
              
              575,670
              
              
              1,424,959
              
              
              (2,005
              )Due
                  to former stockholder of CBR
              
              
              -
              
              
              (441,602
              )
              
              (201,829
              )Due
                  to former members of JLWA for earnout
              
              
              7,732,015
              
              
              5,227,985
              
              
              -Other
                  current liabilities
              
              
              (431,558
              )
              
              728,255
              
              
              (113,522
              )Other
                  long term obligations
              
              
              108,083
              
              
              -
              
              
              -Total
                  adjustments
              
              
              22,461,761
              
              
              15,529,561
              
              
              319,363Net
                  cash used in operating activities
              
              
              (5,466,501
              )
              
              (2,316,476
              )
              
              (3,250,610
              )Cash
                  flows from investing activities:Purchases
                  of property and equipment
              
              
              (1,519,758
              )
              
              (286,871
              )
              
              (29,699
              )Purchase
                  of intangible assets
              
              
              (919,525
              )
              
              (65,000
              )
              
              -Acquisition
                  of CBR, less cash acquired of $26,086
              
              
              -
              
              
              
              
              
              (4,362,876
              )Acquisition
                  of On Line Consulting
              
              
              (987,840
              )
              
              -
              
              
              -Acquisition
                  of Facticon
              
              
              (1,300,000
              )
              
              -
              
              
              -Acquisition
                  of Bode, less cash acquired of $284,251
              
              
              (12,907,562
              )
              
              -
              
              
              -Acquisition
                  of JLWA
              
              
              -
              
              
              (6,003,540
              )
              
              -Acquisition
                  of Safir, less cash acquired of $447,115
              
              
              -
              
              
              (1,693,534
              )
              
              -Acquisition
                  Hyperion Risk, less cash acquired of $79,592
              
              
              -
              
              
              (2,202,034
              )
              
              -Net
                  cash used in investing activities
              
              
              (17,634,685
              )
              
              (10,250,979
              )
              
              (4,392,575
              )






See
      notes
      to these consolidated financial statements.


F-7


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Consolidated
        Statements of Cash Flows, continued**
  **For
                  the Years Ended****December
                  31,****2007**
              
              **2006**
              
              **2005**Cash
                  flows from financing activities:Net
                  (repayments of) proceeds from line of credit
              
              
              -
              
              
              (543,453
              )
              
              437,550Proceeds
                  from issuance of Series A convertible preferred stock
              
              
              -
              
              
              -
              
              
              7,750,000Offering
                  costs in connection with private placements of Series Aconvertible
                  preferred stock
              
              
              -
              
              
              -
              
              
              (548,781
              )Proceeds
                  from issuance of common stockin
                  connection with qualified public offering, net of offering
                  costs
              
              
              18,176,734
              
              
              -
              
              
              -Proceeds
                  from convertible notes payable
              
              
              -
              
              
              45,050,000
              
              
              -Repayment
                  of convertible notes payable
              
              
              -
              
              
              (8,181,681
              )
              
              -Repayment
                  of notes payable
              
              
              (12,230,819
              )
              
              (819,132
              )
              
              -Proceeds
                  from exercise of stock options
              
              
              48,000
              
              
              -
              
              
              -Deferred
                  financing costs
              
              
              -
              
              
              (1,933,500
              )
              
              -Net
                  cash provided by financing activities
              
              
              5,993,915
              
              
              33,572,234
              
              
              7,638,769Net
                  (decrease) increase in cash and cash equivalents
              
              
              (17,107,271
              )
              
              21,004,779
              
              
              (4,416
              )Cash
                  and cash equivalents - beginning of year
              
              
              21,533,381
              
              
              528,602
              
              
              533,018Cash
                  and cash equivalents - end of year
              
              $
              4,426,110
              
              $
              21,533,381
              
              $
              528,602Supplemental
                  disclosure of cash flow information:Cash
                  paid during the year for interest
              
              $
              827,317
              
              $
              100,131
              
              $
              56,299Supplemental
                  disclosures of non-cash investing and financing
                  activities:Common
                  stock issued upon conversion ofSeries
                  A convertible preferred stock
              
              $
              3
              
              $
              86
              
              $
              -Common
                  stock ($1,541) and Series D convertible preferred stock
                  ($36)issued
                  upon conversion of Series C convertible preferred stock
              
              $
              1,577
              
              $
              -
              
              $
              -Common
                  stock issued upon conversion ofconvertible
                  note payable - stockholder and related accrued interest
              
              $
              -
              
              $
              -
              
              $
              267,083Common
                  stock issued upon the cashless exercise of warrants
              
              $
              -
              
              $
              -
              
              $
              21Issuance
                  of common stock ($631), Series C ($59) and Series D ($20)convertible
                  preferred stock in equity restructuring
              
              $
              710
              
              $
              -
              
              $
              -Issuance
                  of Series B convertible preferred stock upon exchange ofconvertible
                  notes payable and accrued interest
              
              $
              -
              
              $
              46,150,732
              
              $
              -Common
                  stock issued ($40) and withholding tax accrued ($317,644) inconnection
                  with a cashless exercise
              
              $
              317,684
              
              $
              -
              
              $
              -Deferred
                  financing costs incurred through theissuance
                  of convertible notes payable
              
              $
              -
              
              $
              761,000
              
              $
              -Obligation
                  to issue common stock and notes payableissued
                  to fund JLWA earnout liability
              
              $
              12,960,000
              
              $
              -
              
              $
              -






See
        notes
        to these consolidated financial statements.


F-8


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Consolidated
        Statements of Cash Flows, continued**
  **For
                  the Years Ended****December
                  31,****2007**
              
              **2006**
              
              **2005**Supplemental
                  non-cash investing and financing activity - acquisition of On Line
                  Consulting:Assets
                  acquired and liabilities assumed:Property
                  and equipment
              
              $
              96,589
              
              $
              -
              
              $
              -Intangible
                  assets
              
              
              1,199,000
              
              
              -
              
              
              -Goodwill
                  recognized on purchase business combination
              
              
              1,844,329
              
              
              -
              
              
              -Accounts
                  payable, accrued expenses and deferred revenues
              
              
              (198,361
              )
              
              -
              
              
              -Other
                  current liabilities
              
              
              (45,717
              )
              
              -
              
              
              -Total
                  purchase price
              
              
              2,895,840
              
              
              -
              
              
              -Less:
                  Cash paid to acquire On Line Consulting
              
              
              (987,840
              )
              
              -
              
              
              -Non-cash
                  consideration to seller
              
              $
              1,908,000
              
              $
              -
              
              $
              -Non-cash
                  consideration consisted of:Common
                  stock issued to acquire On Line Consulting
              
              $
              1,350,000
              
              $
              -
              
              $
              -Notes
                  payable issued to seller
              
              
              558,000
              
              
              -
              
              
              -Total
                  non-cash consideration
              
              $
              1,908,000
              
              $
              -
              
              $
              -Supplemental
                  non-cash investing and financing activity - acquisition of
                  Bode:Assets
                  acquired and liabilities assumed:Accounts
                  receivable
              
              $
              5,510,441
              
              $
              -
              
              $
              -Inventories
              
              
              2,519,389
              
              
              -
              
              
              -Other
                  current assets (including cash of $284,251)
              
              
              560,372
              
              
              -
              
              
              -Property
                  and equipment
              
              
              4,133,338
              
              
              -
              
              
              -Intangible
                  assets
              
              
              310,000
              
              
              -
              
              
              -Goodwill
                  recognized on purchase business combination
              
              
              1,377,063
              
              
              -
              
              
              -Accounts
                  payable, accrued expenses and deferred rent obligations
              
              
              (1,218,790
              )
              
              -
              
              
              -Total
                  purchase price
              
              
              13,191,813
              
              
              -
              
              
              -Less:
                  Cash acquired
              
              
              (284,251
              )
              
              -
              
              
              -Less:
                  Cash paid to acquire Bode
              
              
              (12,907,562
              )
              
              -
              
              
              -Non-cash
                  consideration to seller
              
              $
              -
              
              $
              -
              
              $
              -Supplemental
                  non-cash investing and financing activity - acquisition of
                  Facticon:Assets
                  acquired and liabilities assumed:Accounts
                  receivable
              
              $
              759,147
              
              $
              -
              
              $
              -Property
                  and equipment
              
              
              34,000
              
              
              -
              
              
              -Intangible
                  assets
              
              
              120,000
              
              
              -
              
              
              -Goodwill
                  recognized on purchase business combination
              
              
              3,113,376
              
              
              -
              
              
              -Accounts
                  payable, accrued expenses and deferred revenues
              
              
              (1,226,523
              )
              
              -
              
              
              -Total
                  purchase price
              
              
              2,800,000
              
              
              -
              
              
              -Less:
                  Cash paid to acquire Facticon
              
              
              (1,300,000
              )
              
              -
              
              
              -Non-cash
                  consideration to seller
              
              $
              1,500,000
              
              $
              -
              
              $
              -Non-cash
                  consideration consisted of :Note
                  payable issued to seller
              
              $
              100,000
              
              $
              -
              
              $
              -Common
                  stock issued to acquire Facticon
              
              
              1,400,000
              
              
              -
              
              
              -Total
                  non-cash consideration
              
              $
              1,500,000
              
              $
              -
              
              $
              -






See
      notes
      to these consolidated financial statements.


F-9




**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Consolidated
        Statements of Cash Flows, continued**
  **For
                  theYears Ended****December
                  31,****2007**
              
              **2006**
              
              **2005**Supplemental
                  non-cash investing and financing activity - acquisition of
                  JLWA:Assets
                  acquired and liabilities assumed:Current
                  assets
              
              $
              -
              
              $
              4,345,154
              
              $
              -Property
                  and equipment
              
              
              -
              
              
              185,235
              
              
              -Intangible
                  assets
              
              
              -
              
              
              4,930,000
              
              
              -Goodwill
                  recognized on purchase business combination
              
              
              -
              
              
              883,183
              
              
              -Security
                  deposits and prepaid expenses
              
              
              -
              
              
              100,475
              
              
              -Accounts
                  payable, accrued expenses and deferred revenues
              
              
              -
              
              
              (2,040,507
              )
              
              -Total
                  purchase price
              
              
              -
              
              
              8,403,540
              
              
              -Less:
                  Cash paid to acquire JLWA
              
              
              -
              
              
              (6,003,540
              )
              
              -Non-cash
                  consideration to seller
              
              $
              -
              
              $
              2,400,000
              
              $
              -Non-cash
                  consideration, consisted of:Common
                  stock issued to acquire JLWA
              
              $
              -
              
              $
              2,000,000
              
              $
              -Note
                  payable issued to seller
              
              
              -
              
              
              400,000
              
              
              -Total
                  non-cash consideration
              
              $
              -
              
              $
              2,400,000
              
              $
              -Supplemental
                  non-cash investing and financing activity - acquisition of
                  Safir:Assets
                  acquired and liabilities assumed:Current
                  assets (including cash of $447,115)
              
              $
              -
              
              $
              2,852,888
              
              $
              -Property
                  and equipment
              
              
              -
              
              
              180,906
              
              
              -Intangible
                  assets
              
              
              -
              
              
              1,770,000
              
              
              -Goodwill
                  recognized on purchase business combination
              
              
              -
              
              
              11,534,765
              
              
              -Security
                  deposits and prepaid expenses
              
              
              -
              
              
              156,525
              
              
              -Accounts
                  payable, accrued expenses and deferred revenues
              
              
              -
              
              
              (1,179,435
              )
              
              -Total
                  purchase price
              
              
              -
              
              
              15,315,649
              
              
              -Less:
                  Cash acquired
              
              
              -
              
              
              (447,115
              )
              
              -Less:
                  Cash paid to acquire Safir
              
              
              -
              
              
              (1,493,534
              )
              
              -Less:
                  Cash paid as finders fee
              
              
              -
              
              
              (200,000
              )
              
              -Non-cash
                  consideration to seller
              
              $
              -
              
              $
              13,175,000
              
              $
              -Non-cash
                  consideration consisted of:Common
                  stock issued to acquire Safir
              
              $
              -
              
              $
              6,000,000
              
              $
              -Common
                  stock issued as finders fee
              
              
              -
              
              
              175,000
              
              
              -Note
                  payable issued to seller
              
              
              -
              
              
              7,000,000
              
              
              -Total
                  non-cash consideration
              
              $
              -
              
              $
              13,175,000
              
              $
              -Supplemental
                  non-cash investing and financing activity - acquisition of Secure
                  Source:Assets
                  acquired and liabilities assumed:Property
                  and equipment
              
              $
              -
              
              $
              101,459
              
              $
              -Intangible
                  assets
              
              
              -
              
              
              1,111,000
              
              
              -Goodwill
                  recognized on purchase business combination
              
              
              -
              
              
              2,107,867
              
              
              -Other
                  assets
              
              
              -
              
              
              1,795
              
              
              -Accounts
                  payable, accrued expenses and deferred revenues
              
              
              -
              
              
              (109,621
              )
              
              -Non-cash
                  consideration to seller
              
              $
              -
              
              $
              3,212,500
              
              $
              -Non-cash
                  consideration consisted of:Common
                  stock issued to acquire Secure Source
              
              $
              -
              
              $
              500,000
              
              $
              -Note
                  payable issued to seller
              
              
              -
              
              
              2,712,500
              
              
              -Total
                  non-cash consideration
              
              $
              -
              
              $
              3,212,500
              
              $
              -






See
        notes
        to these consolidated financial statements.




F-10


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Consolidated
          Statements of Cash Flows, continued**


**For
                  the Years Ended****December
                  31,****2007**
              
              **2006**
              
              **2005**Supplemental
                  non-cash investing and financial activity - acquisition of Hyperion
                  Risk:Assets
                  acquired and liabilities assumed:Current
                  assets (including cash of $79,592)
              
              $
              -
              
              $
              878,218
              
              $
              -Property
                  and equipment
              
              
              -
              
              
              60,958
              
              
              -Intangible
                  assets
              
              
              -
              
              
              687,690
              
              
              -Goodwill
                  recognized on purchase business combination
              
              
              -
              
              
              2,815,367
              
              
              -Other
                  assets
              
              
              -
              
              
              14,100
              
              
              -Accounts
                  payable, accrued expenses and deferred revenues
              
              
              -
              
              
              (674,707
              )
              
              -Total
                  purchase price
              
              
              -
              
              
              3,781,626
              
              
              -Less:
                  Cash acquired
              
              
              -
              
              
              (79,592
              )
              
              -Less:
                  Cash paid to acquire Hyperion Risk
              
              
              -
              
              
              (2,202,034
              )
              
              -Non-cash
                  consideration to seller
              
              $
              -
              
              $
              1,500,000
              
              $
              -Non-cash
                  consideration consisted of:Common
                  stock issued to acquire Hyperion Risk
              
              $
              -
              
              $
              1,500,000
              
              $
              -Supplemental
                  non-cash investing and financial activity - acquisition of
                  CBR:Assets
                  acquired and liabilities assumed:Current
                  assets (including cash of $26,086)
              
              $
              -
              
              $
              -
              
              $
              1,573,706Property
                  and equipment
              
              
              -
              
              
              -
              
              
              153,802Intangible
                  assets
              
              
              -
              
              
              -
              
              
              1,192,000Goodwill
                  recognized on purchase business combination
              
              
              -
              
              
              -
              
              
              4,264,612Security
                  deposits
              
              
              -
              
              
              -
              
              
              16,032Current
                  liabilities
              
              
              -
              
              
              -
              
              
              (1,348,627
              )Due
                  to former stockholder of CBR
              
              
              -
              
              
              -
              
              
              (643,431
              )Total
                  purchase price
              
              
              -
              
              
              -
              
              
              5,208,094Less:
                  Cash acquired
              
              
              -
              
              
              -
              
              
              (26,086
              )Less:
                  Cash paid to acquire CBR
              
              
              -
              
              
              -
              
              
              (4,362,876
              )Non-cash
                  consideration to seller
              
              $
              -
              
              $
              -
              
              $
              819,132Non-cash
                  consideration consisted of:Note
                  payable issued to seller
              
              $
              -
              
              $
              -
              
              $
              819,132






See
        notes
        to these consolidated financial statements.




F-11


GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **1. 
        Nature of Operations**
 
 GlobalOptions,
        LLC was formed in November 1998 as a limited liability company (“LLC”) in the
        state of Delaware.  On January 24, 2002, with the approval of the members
        of the LLC, the LLC converted to a corporation under Delaware law with the
        name
        GlobalOptions, Inc. (“GlobalOptions”).
 
 On
        June
        24, 2005, GlobalOptions consummated a “reverse merger” transaction, with
        Creative Solutions with Art, Inc., (“Creative Solutions”) a Nevada corporation,
        and the newly formed GlobalOptions Acquisition Corp., (“GlobalOptions
        Acquisition”) a Delaware corporation, a wholly-owned subsidiary of Creative
        Solutions.  GlobalOptions Acquisition merged with and into GlobalOptions
        with the result that on June 24, 2005, GlobalOptions became the subsidiary
        of a
        public company.
 
 Following
        the merger, Creative Solutions changed its name to GlobalOptions Group, Inc.
        (“GlobalOptions Group” or the “Company”) and began trading on the OTC (over the
        counter) Bulletin Board.  As a result of the reverse merger, GlobalOptions
        became the wholly-owned subsidiary of the newly renamed GlobalOptions Group,
        with GlobalOptions’ former stockholders acquiring a majority of the outstanding
        shares of the Company’s common stock, par value $.001 per share, and
        GlobalOptions’ officers and directors replaced the officers and directors of
        Creative Solutions.  The reverse merger was consummated under Delaware law
        and pursuant to an Agreement and Plan of Merger, dated June 24, 2005 (the
“Merger Agreement”).  For accounting purposes, the reverse merger has been
        treated as an acquisition of Creative Solutions by GlobalOptions and a
        recapitalization of GlobalOptions.  The historical consolidated financial
        statements prior to June 24, 2005 are those of GlobalOptions.  Pursuant to
        the reverse merger, GlobalOptions has restated its statements of stockholders’
equity on a recapitalization basis, so that all accounts are now presented
        as if
        the reverse merger had occurred at the beginning of the earliest period
        presented. All references to GlobalOptions Group or the Company refer to
        GlobalOptions Group, Inc. and its consolidated subsidiaries, unless the context
        otherwise requires.
 
 The
        Company is an integrated provider of risk mitigation and management services
        to
        government entities, Fortune 1,000 corporations and high net-worth and
        high-profile individuals throughout the world. The Company delivers these
        services through four business units: Preparedness Services; Fraud and Special
        Investigative Unit (SIU) Services; Security Consulting and Investigations;
        and
        International Strategies. The Preparedness Services, Fraud and SIU Services,
        and
        Security Consulting and Investigations units represent the Company’s three
        financial reporting segments. The results of the International Strategies
        unit,
        on the basis of its relative materiality, are included in the Fraud and SIU
        Services segment.
 
 In
        this
        report, the Company has renamed its business segments as follows:
 
 Currently
                  reported as:
              
              Formerly
                  reported as:Preparedness
                  Services
              
              JLWA-Crisis
                  Management and Corporate
                GovernanceFraud
                  and SIU Services
              
              CBR-Investigations
                  and Litigation SupportSecurity
                  Consulting and Investigations
              
              Safir-Risk
                  Management
  The
        Company is a provider of risk mitigation services to Fortune 500 corporations,
        governmental organizations and high-profile individuals throughout the
        world.  The Company’s risk mitigation services currently include (1) risk
        management and security, (2) investigations and litigation support, and (3)
        crisis management and corporate governance.
  On
        August
        14, 2005, the Company acquired Confidential Business Resources,
        Inc. (“CBR”), a privately-held nationwide investigations firm based in
        Nashville, Tennessee (See Note 4).
  On
        March
        10, 2006, the Company acquired James Lee Witt Associates, LLC (“JLWA”), a
        nationwide crisis and emergency management consulting firm headquartered
        in
        Washington, D.C. with three additional offices nationwide (See Note
        4).
  On
        May
        12, 2006 the Company acquired Safir Rosetti, LLC (“Safir”). Safir is a security
        consulting, investigative and intelligence firm headquartered in New York
        City
        (See Note 4).
  F-12
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **1.
        Nature of Operations, continued**
 
 On
        May
        12, 2006, the Company acquired substantially all of the business and certain
        assets of Secure Source, Inc. (“Secure Source”), a Delaware corporation. Secure
        Source is an international risk consulting firm with offices in Washington,
        D.C.
        and Dallas, Texas (See Note 4).
 
 On
        August
        10, 2006, the Company acquired substantially all of the business and assets
        of
        Hyperion Risk, Inc. (“Hyperion Risk”). Hyperion Risk is a security consulting,
        investigative and intelligence firm with its central corporate office located
        in
        Orlando, Florida (See Note 4).
 
 Effective
        on December 8, 2006, as approved by a special meeting of stockholders held
        on
        December 5, 2006, the Company became a Delaware Corporation. In connection
        with
        the chartering of the Company in the state of Delaware, the authorized capital
        stock was increased to 115,000,000 shares, with 15,000,000 shares authorized
        as
        preferred stock, and 100,000,000 shares authorized as common
        stock.
 
 On
        January 9, 2007, GlobalOptions Group purchased substantially all of the business
        and assets of SPZ Oakland Corporation, dba On Line Consulting Service, Inc.
        (“On
        Line Consulting”), a full service security and fire alarm consulting and design
        firm based in Oakland, California (See Note 4).
 
 On
        February 28, 2007, GlobalOptions Group acquired substantially all of the
        business and assets of Facticon, Inc. (“Facticon”), a Pennsylvania
        corporation. Facticon is a surveillance, investigative and intelligence firm
        based in Chadds Ford, Pennsylvania (See Note 4).
 
 On
        February 28, 2007, GlobalOptions Group purchased the common stock of The
        Bode
        Technology Group, Inc. ("Bode"), a Virginia corporation. Bode is a leading
        provider forensic DNA analysis and proprietary DNA collection tools. Bode
        is
        based in Lorton, Virginia (See Note 4).
 
 On
        March
        6, 2007 the Company executed a 1 for 8 reverse stock split and began trading
        under the symbol GOPG.OB. Accordingly, all share and per share information
        has
        been restated within this report.
 
 **2.
        Principles of Consolidation**
  The
        consolidated financial statements of the Company include the consolidated
        financial statements of GlobalOptions Group, Inc. and its wholly-owned
        subsidiary, GlobalOptions, Inc. and its wholly-owned subsidiary, Bode. All
        material intercompany accounts and transactions are eliminated in consolidation.
 
 **3. 
        Summary of Significant Accounting Policies**
 
 ***Use
        of Estimates***
 
 The
        preparation of financial statements in conformity with United States generally
        accepted accounting principles requires management to makes estimates and
        assumptions. Such estimates and assumptions affect the reported amounts of
        assets and liabilities and disclosure of contingent assets and liabilities
        at
        the date of the consolidated financial statements and the reported amounts
        of
        revenues and expenses. Actual results could differ from estimated amounts. Significant
        estimates and assumptions include reserves related to receivables and
        inventories, the recoverability of long-term assets, deferred taxes and related
        valuation allowances and valuation of equity instruments.
 
 ***Concentrations
        of Credit Risk***
 
 Cash:
        The
        Company maintains its cash with primarily two financial institutions,
        which exceeded the federally insured limit throughout the year. At December
        31,
        2007 and 2006, the Company had cash on deposit of approximately $4,569,000
        and
        $22,086,000, respectively, in excess of federally insured
        limits.
  F-13
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **3. 
        Summary of Significant Accounting Policies, continued**
 
 ***Concentrations
        of Credit Risk, continued***
 
 Accounts
        Receivable: The number of clients that comprise the Company’s client base, along
        with the different industries, governmental entities and geographic regions,
        including foreign clients, in which the Company’s clients operate, limits
        concentrations of credit risk with respect to accounts receivable. The Company
        does not generally require collateral or other security to support client
        receivables, although the Company does require retainers, up-front deposits
        or
        irrevocable letters-of-credit in certain situations. The Company has established
        an allowance for doubtful accounts based upon facts surrounding the credit
        risk
        of specific clients and past collections history. Credit losses have been
        within
        management’s expectations.
 
 Cash
        Equivalents: The Company considers all short-term investments with a maturity
        of
        three months or less when purchased to be cash equivalents.
 
 ***Inventories***
  Inventories
        are stated at the lower of cost or market. Cost is determined by the first-in,
        first-out method. Reserves for obsolete inventories are provided for based
        on
        historical experience.
 
 The
        Company maintains inventories in connection with its DNA related services.
        Raw
        materials consist mainly of reagents, primers, enzymes, chemicals and plates
        used in genotyping and components to manufacture kits. Work in progress consists
        mainly of data banking and casework not yet completed and kits that are in
        the
        production process. Finished goods consist mainly of kits that have been
        produced, but have not been shipped.
 
 ***Property
        and Equipment***
 
 Property
        and equipment is stated at cost and is being depreciated using the straight-line
        method over their estimated useful lives, generally five to seven years.
        Leasehold improvements are being amortized over the shorter of the useful
        life
        or the remaining lease term. Upon retirement or other disposition of these
        assets, the cost and related accumulated depreciation and amortization of
        these
        assets are removed from the accounts and the resulting gains or losses are
        reflected in the consolidated results of operations. Expenditures for
        maintenance and repairs are charged to operations as incurred. Renewals and
        betterments are capitalized.
 
 ***Intangible
        Assets***
  In
        accordance with the requirements of Statement of Financial Accounting Standards
        (“SFAS”) No. 141 (“SFAS No. 141”), “Business Combinations”, the Company
        recognizes certain intangible assets acquired in acquisitions, primarily
        goodwill, trade names, covenants not to compete, and
        client relationships.
 
 ***Goodwill
        and Impairment***
  The
        Company accounts for its goodwill in accordance with SFAS No. 142,
“Goodwill and Other Intangible Assets” (“SFAS 142”). Under this standard, the
        Company is required to perform a goodwill  impairmenttest at
        least on an annual basis and whenever events or changes in circumstances
        indicate that the carrying value may not be recoverable from estimated future
        cash flows. The testing for  impairmentof  goodwillis
        performed in two steps: (1) potential  impairmentis
        identified by comparing the fair value of a reporting unit (based on market
        capitalization, undiscounted cash flows, or other acceptable methods) with
        its
        carrying amount; and (2) if fair value is less than the carrying amount, an
        impairment loss is estimated as the excess of the carrying amount of the
        goodwill over its fair value. Goodwill must be written down when impaired.
        The
        Company has adopted December 31 as the annual date for preparing its impairment
        assessment, unless other triggering events occur during the year which might
        indicate that an impairment has occurred.
 
 ***Deferred
        Offering Costs***
  Costs
        incurred in connection with the Company’s underwritten public offering were
        capitalized to deferred offering costs. Upon the closing of the offering,
        these
        costs were charged against the proceeds from the offering (See Note
        14).
  F-14
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **3. 
        Summary of Significant Accounting Policies, continued** ******
 
 ***Deferred
        Financing Costs***
  The
        costs
        incurred in connection with issuance of certain notes payable (See Note 11)
        was
        capitalized to deferred financing costs and was amortized over the term of
        the
        related debt.
 
 ***Investment
        in Company***
 
 The
        Company maintains a 50% ownership interest in a risk management company
        operating in Europe and accounts for its investment using the equity method.
        In
        accordance with Financial Accounting Standards Board (“FASB”) Interpretation No.
        46R, “Consolidation of Variable Interest Entities” (“FIN 46R”), the Company has
        evaluated its relationship with this entity which is related to the Company
        by
        virtue of common ownership and has determined that it is not a variable interest
        entity and therefore is not consolidating this entity with the Company’s
        consolidated financial statements.
  ***Revenue
        Recognition and Related Costs***
  For
        investigation, crisis management and non-DNA related security, revenue is
        recognized on a time and materials or fixed price arrangement and is recognized
        as the services are performed pursuant to the applicable contractual
        arrangements. Revenue related to time and materials arrangements is recognized
        in the period in which the services are performed. Revenue related to fixed
        price arrangements is recognized based upon the achievement of certain
        milestones or progress points within the project plan. The impact of any
        revisions in estimated total revenue and direct contract costs is recognized
        in
        the period in which they become known. Expenses incurred by professional
        staff
        in the generation of revenue are billed to the client and recorded as revenue
        when incurred.
  For
        DNA
        related revenues, revenue is recognized when it is realized or realizable
        and
        earned. The Company considers revenue realized or realizable and earned when
        it
        has persuasive evidence that an agreement exists, prices are fixed or
        determinable, services and products are provided to the client, and
        collectibility is reasonably assured. The Company reduces revenue for estimated
        discounts and other allowances.
  Revenues
        earned on DNA related services are derived from the following sources:
        (1) forensic DNA analysis; (2) research and development projects; and
        (3) sales of DNA collection products. The Company recognizes revenues from
        forensic DNA analysis at the time tests are completed and the results are
        reported to the client. Revenues from research and development projects are
        recognized as the related research is completed and when the Company has
        satisfied specific obligations under the terms of the respective agreements.
        Revenues from the sales of DNA collection products are recognized upon delivery
        of the products to the client.
  Forensic
        DNA analysis is billed on a per sample fixed fee arrangement. Research and
        development projects are billed on a cost plus fixed fee
        arrangement.
  Costs
        incurred in the performance of forensic DNA analysis are recorded as inventories
        and charged to cost of revenues upon the completion of the project, which
        generally ranges from one to three months. Costs related to research and
        development projects are expensed as incurred and costs related to DNA
        collection products are maintained as inventory and charged to operations
        when
        the products are delivered
 
 ***Advertising***
 
 The
        Company expenses the cost of advertising as incurred. Advertising expense
        for
        the years ended December 31, 2007, 2006, and 2005 was approximately
        $126,000, $62,000 and $26,000, respectively.
 
 ***Income
        Taxes***
 
 The
        Company accounts for income taxes using the liability method as required
        by SFAS
        No. 109, “Accounting for Income Taxes” (“SFAS 109”). Under this method, deferred
        tax assets and liabilities are determined based on differences between their
        financial reporting and tax basis of assets and liabilities. The Company
        establishes a valuation allowance for deferred tax assets. The Company was
        not
        required to provide for a provision for income taxes for the three and nine
        months ended September 30, 2006 and 2007, respectively, as a result of losses
        incurred during these periods.
  F-15
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **3. 
        Summary of Significant Accounting Policies, continued**  ******
 
 ***Income
        Taxes, continued***
 
 Deferred
        tax assets pertaining to windfall tax benefits on exercise of non-qualified
        stock options and the corresponding credit to additional paid-in capital
        are
        recorded if the related tax amount either reduces income taxes payable or
        results in an income tax refund. The Company has elected the “with and without
        approach” regarding ordering of windfall tax benefits to determine whether the
        windfall tax benefit did reduce income taxes payable or resulted in an income
        tax refund in the current year. Under this approach, the windfall tax benefits
        would be recognized in additional paid-in capital only if an incremental
        income
        tax benefit is realized after considering all other income tax benefits
        presently available to the Company.
 
 Effective
        January 1, 2007, the Company adopted the provisions of FASB 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 income taxes recognized in the Company’s consolidated financial statements in
        accordance with FASB Statement 109, “Accounting for Income Taxes”, and
        prescribes a recognition threshold and measurement process for financial
        statement recognition and measurement of a tax position taken or expected
        to be
        taken in a tax return. FIN 48 also provides guidance on derecognition,
        classification, interest and penalties, accounting in interim periods,
        disclosure and transition.
 
 Management
        has evaluated and concluded that there are no significant uncertain tax
        positions requiring recognition in the Company’s consolidated financial
        statements as of January 1, 2007. The evaluation was performed for the tax
        years
        ended December 31, 2006, 2005, 2004 and 2003 which remain subject to examination
        for federal, state, and local income tax purposes by various taxing authorities
        as of December 31, 2007.
 
 The
        Company’s policy is to classify assessments, if any, for tax related interest as
        interest expense and penalties as general and administrative
        expenses.
 
 ***Stock-Based
        Compensation***
 
 The
        Company accounts for equity instruments issued to non-employees in accordance
        with the provisions of SFAS 123 “Accounting for Stock Based Compensation” (“SFAS
        123”) and the Emerging Issues Task Force (“EITF”) Issue No.  96-18, 
“Accounting  for  Equity  Instruments  That Are Issued to
        Other Than  Employees  for  Acquiring,  or In 
Conjunction  with Selling,  Goods or Services” (“EITF 96-18”) which
        require that such equity instruments are recorded at their fair value on
        the
        measurement  date, which is typically the date the services are
        performed.  Stock based compensation for non-employees is accounted for
        under EITF 96-18 and is reflected within general and administrative
        expenses.
 
 The
        Company accounts for stock-based compensation in accordance with the provisions
        of SFAS 123R “Share Based Payment” (“SFAS 123R”).
 
 The
        Company recognizes compensation costs over the requisite service period of
        the
        award, which is generally the vesting term of the options associated with
        the
        underlying employment agreement, where applicable.
  ***Net
        Loss Per Common Share***
 
 Basic
        net
        loss per common share is computed based on the weighted average number of
        shares
        of common stock outstanding, as adjusted, during the years presented. Common
        stock equivalents, consisting of stock options, warrants and Series A, B
        and D
        convertible preferred stock were not included in the calculation of the diluted
        loss per share because their inclusion would have been anti-dilutive.  The
        basic weighted average number of shares was reduced for non-vested restricted
        stock awards and contingently returnable escrowed shares issued in connection
        with acquisitions, and was increased for non-contingent shares to be issued
        in
        connection with the JLWA modification agreement (See Note 10). Potentially
        dilutive securities of 1,191,665, 1,028,793 and 621,268 realizable from the
        exercise of options as well as 3,732,821, 6,580,603, and 930,469 securities
        issuable upon the conversion of convertible preferred stock and warrants
        at
        December 31, 2007, 2006 and 2005, respectively, as well as restricted stock
        of
        175,000 at December 31, 2007 and contingently returnable shares from the
        Facticon and Hyperion acquisitions of 78,923, 53,844 and 0 at December 31,
        2007,
        2006, and 2005, respectively, have been excluded from the computation of
        diluted
        net loss per share, because the effect of their inclusion would have been
        anti-dilutive.
  F-16
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **3. 
        Summary of Significant Accounting Policies, continued** ******
 
 ***Recent
        Accounting Pronouncements***
 
 In
        February 2006, the Financial Accounting Standards Board (“FASB”) issued
        SFAS No. 155 - Accounting for Certain Hybrid Financial Instruments (“SFAS 155”),
        which eliminates the exemption from applying SFAS 133 to interests in
        securitized financial assets so that similar instruments are accounted for
        similarly regardless of the form of the instruments. SFAS 155 also allows
        the
        election of fair value measurement at acquisition, at issuance, or when a
        previously recognized financial instrument is subject to a remeasurement
        event.
        Adoption is effective for all financial instruments acquired or issued after
        the
        beginning of the first fiscal year that begins after September 15, 2006.
        Early adoption is permitted. The adoption of SFAS 155 did not have a material
        effect on the Company’s consolidated financial position, results of operations
        or cash flows. ****
 
 In
        March 2006, the FASB issued SFAS No. 156 - Accounting for Servicing of
        Financial Assets (“SFAS 156”), which requires all separately recognized
        servicing assets and servicing liabilities be initially measured at fair
        value.
        SFAS 156 permits, but does not require, the subsequent measurement of servicing
        assets and servicing liabilities at fair value. Adoption is required as of
        the
        beginning of the first fiscal year that begins after September 15, 2006.
        Early adoption is permitted. The adoption of SFAS 156 did not have a material
        effect on the Company’s consolidated financial position, results of operations
        or cash flows.
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
        No. 157”).  This Statement defines fair value, establishes a framework for
        measuring fair value and expands disclosure of fair value measurements. 
SFAS No. 157 applies under other accounting pronouncements that require or
        permit fair value measurements and accordingly, does not require any new
        fair
        value measurements.  SFAS No. 157 is effective for financial statements
        issued for fiscal years beginning after November 15, 2007.  The
        Company is in the process of evaluating the impact that the adoption of SFAS
        No.
        157 will have on its consolidated financial position results of operations
        and
        financial condition.
 
 In
        September 2006, the staff of the SEC issued Staff Accounting Bulletin No.
        108
        ("SAB 108") which provides interpretive guidance on how the effects of the
        carryover or reversal of prior year misstatements should be considered in
        quantifying a current year misstatement. SAB 108 becomes effective in fiscal
        2007. Adoption of SAB 108 did not have a material impact on the Company's
        consolidated financial position, results of operations or cash
        flows.
  In
        December 2006, the FASB issued FASB Staff Position (“FSP”) EITF 00-19-2
“Accounting for Registration Payment Arrangements” (“FSP EITF 00-19-2”) which
        specifies that the contingent obligation to make future payments or otherwise
        transfer consideration under a registration payment arrangement should be
        separately recognized and measured in accordance with SFAS No. 5,
“Accounting for Contingencies.” Adoption of FSP EITF 00-19-2 is required for
        fiscal years beginning after December 15, 2006. Adoption of FSP EITF
        00-19-2 did not have a material impact on the Company's consolidated financial
        position, results of operations or cash flows.
 
 In
        February 2007, the FASB issued Statement of Financial Accounting Standard
        159
“The Fair Value Option for Financial Assets and Financial Liabilities -
        Including an amendment of FASB Statement No. 115”, which permits entities to
        choose to measure many financial instruments and certain other items at fair
        value. The fair value option established by this Statement permits all entities
        to choose to measure eligible items at fair value at specified election dates.
        A
        business entity shall report unrealized gains and losses on items for which
        the
        fair value option has been elected in earnings at each subsequent reporting
        date. Adoption is required for fiscal years beginning after November 15,
        2007.  Early adoption is permitted as of the beginning of a fiscal year
        that begins on or before November 15, 2007, provided the entity also elects
        to
        apply the provisions of FASB Statement No. 157, Fair Value Measurements.
        The
        Company is currently evaluating the expected effect of SFAS 159 on its
        consolidated financial statements and is currently not yet in a position
        to
        determine such effects.
  F-17
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **3. 
        Summary of Significant Accounting Policies, continued**
 
 ***Recent
        Accounting Pronouncements, continued***
 
 In
        December 2007, the FASB issued SFAS No. 141R (“SFAS 141R”),
        “Business Combinations”, which establishes principles and requirements for how
        the acquirer recognizes and measures in its financial statements the
        identifiable assets acquired, the liabilities assumed, and any noncontrolling
        interest in the acquiree, goodwill acquired in the business combination or
        a
        gain from a bargain purchase. SFAS 141R
        is
        effective for business combinations with an acquisition date on or after
        the
        beginning of the first annual reporting period beginning on or after December
        15, 2008. The Company expects SFAS 141R
        to
        have an impact on the accounting for any future business acquisitions as
        of the
        effective date.
 
 In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
        Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”).
        SFAS 160 establishes accounting and reporting standards for the noncontrolling
        interest (minority interest) in a subsidiary and for the deconsolidation
        of a
        subsidiary. SFAS 160 requires a) the ownership interest in the subsidiary
        held
        by parties other than the parent to be clearly identified and presented in
        the
        consolidated balance sheet within equity, but separate from the parent’s equity,
        b) the amount of consolidated net income attributable to the parent and to
        the
        noncontrolling interest to be clearly identified and presented on the face
        of
        the consolidated statement of operations and c) changes in a parent’s ownership
        interest while the parent retains its controlling financial interest in its
        subsidiary to be accounted for consistently. Entities must provide sufficient
        disclosures that clearly identify and distinguish between the interests of
        the
        parent and the interests of the noncontrolling owners. SFAS 160 is effective
        for
        financial statements issued for fiscal years beginning on or after December
        15,
        2008, and interim periods within those fiscal years. The Company does not
        expect
        SFAS 160 to have a material impact on its consolidated financial statements.
  **4.**  **Acquisitions**
 
 As
        an
        integrated provider of risk mitigation and management services to government
        entities, Fortune 1,000 corporations and high-net worth and high-profile
        individuals, the Company’s strategy has been to grow initially through strategic
        acquisitions. Consummating these strategic acquisitions enabled the Company
        to
        build market share, acquire key executives with extensive industry experience
        and excellent reputations, the cost of which is reflected in the goodwill
        recorded with each acquisition.
 
 ***Acquisition
        of CBR***
  On
        August 14, 2005, GlobalOptions purchased substantially all of the assets
        and business activities of CBR. The aggregate purchase price paid for CBR’s
        assets and business was approximately $5,208,000.
  The
        aggregate purchase price of approximately $5,208,000 was subject to certain
        adjustments through August 13, 2006 to the opening balance working capital,
        as such purchase price adjustments were defined in the agreement. The aggregate
        purchase price of $5,208,000 consisted of cash in the amount of $4,246,000
        (net
        of cash acquired of $26,000), a broker fee of approximately $143,000 and
        a note
        payable to the seller in the amount of $819,000 paid August 14, 2006. The
        note payable to the seller was non-interest bearing and was unsecured.
  The
        assets and liabilities of CBR were recorded in the Company’s consolidated
        balance sheet at their fair values at the date of acquisition. As part of
        the
        purchase of CBR on August 14, 2005, the Company acquired identifiable
        intangible assets of approximately $1,192,000. Of the identifiable intangibles
        acquired, $80,000 has been assigned to trade names, $52,000 to developed
        technology, $550,000 to client relationships, and $510,000 to non-compete
        agreements. The acquired intangibles have been assigned definite lives and
        are
        subject to amortization, as described in the table below.
  F-18
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.**  **Acquisitions,
        continued**
  ***Acquisition
        of CBR, continued***
  The
        following details amortization periods for the identifiable, amortizable
        intangibles:
 
 Intangible Asset Category
              
              Amortization Period
                in yearsTrade
                  names
              
              
              5
                  yearsDeveloped
                  technology
              
              
              3
                  yearsNon-compete
                  agreements
              
              
              3
                  yearsClient
                  relationships
              
              
              5
                  years
  The
        following details the allocation of the purchase price for the acquisition
        of
        CBR:
 
 Fair ValueCash
              
              $
              26,086Accounts
                  receivable
              
              
              1,527,071Prepaid
                  expenses
              
              
              20,549Property
                  and equipment
              
              
              153,802Security
                  deposits
              
              
              16,032Intangible
                  asset - trade names
              
              
              80,000Intangible
                  asset - developed technology
              
              
              52,000Intangible
                  asset—non-compete agreements
              
              
              510,000Intangible
                  asset—client relationships
              
              
              550,000Accounts
                  payable
              
              
              (900,175
              )Accrued
                  compensation and related benefits
              
              
              (413,457
              )Due
                  to former stockholder of CBR
              
              
              (643,431
              )Other
                  current liabilities
              
              
              (34,995
              )Net
                  fair values assigned to assets acquired and liabilities
                  assumed
              
              
              943,482Goodwill
              
              
              4,264,612Total
              
              $
              5,208,094
  The
        following represents a summary of the purchase price consideration:
 
 Fair
                  ValueCash
                  (net of cash acquired of $26,086)
              
              $
              4,246,092Broker
                  fee incurred—included as part of purchase price
              
              
              142,870Note
                  payable
              
              
              819,132Total
                  Purchase Price Consideration
              
              $
              5,208,094
  The
        results of operations for CBR for the years ended December 31, 2007 and 2006
        and
        for the period from August 15, 2005 to December 31, 2005 are reflected
        in the Company’s consolidated results for the years ended December 31,
        2007, 2006, and 2005, respectively, in the accompanying consolidated statements
        of operations.
  F-19
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
  **4.
        Acquisitions, continued**
 
 ***Acquisition
        of JLWA***
  The
        acquisition of JLWA was made pursuant to a certain Asset Purchase Agreement
        (the
“Initial JLWA Agreement”) dated January 13, 2006, and Asset Purchase Agreement -
        amendment No.1 “Initial JLWA Agreement” between GlobalOptions Group and the
        former owners of JLWA ( the “JLWA Sellers”). The aggregate purchase price paid
        for JLWA’s assets and business was $8,404,000, after finalization and payment of
        a purchase price adjustment of $546,000 on June 9, 2006. The aggregate purchase
        price consisted of a cash payment at closing of $3,600,000, a cash payment
        of $1,857,000 to pay off JLWA’s line of credit balance and related accrued
        interest, the issuance of 102,459 shares of common stock of GlobalOptions
        Group,
        valued at $2,000,000, a 4.6% note payable to JLWA of $400,000 that was paid
        on
        March 9, 2007, and a non-interest bearing working capital purchase price
        adjustment obligation of $546,000 that was paid on June 9, 2006 (Also see
        Note
        10, discussion of JLWA 2007 Modification Agreement).
  The
        assets and liabilities of JLWA have been recorded in the Company’s consolidated
        balance sheet at their fair values at the date of acquisition.  As part of
        the purchase of JLWA on March 10, 2006, the Company acquired identifiable
        intangible assets of approximately $4,930,000.  Of the identifiable
        intangibles acquired, $1,870,000 has been assigned to trade names and $3,060,000
        to client relationships. The acquired intangibles have been assigned definite
        lives and are subject to amortization, as described in the table
        below.
 
 The
        following details amortization periods for the identifiable, amortizable
        intangibles:
 
 Intangible
                  Assets Category
              
              Amortization PeriodTrade
                  names
              
              
              10
                  yearsClient
                  relationships
              
              
              3
                  years
 
 The
        following details the allocation of the final purchase price for the acquisition
        of JLWA, after the aforementioned purchase price adjustment recorded on June
        9,
        2006:
 
 Fair
                  ValueAccounts
                  receivable
              
              $
              4,345,154Prepaid
                  expenses
              
              
              35,154Property
                  and equipment
              
              
              185,235Security
                  deposits
              
              
              65,321Intangible
                  asset - trade names
              
              
              1,870,000Intangible
                  asset - client relationships
              
              
              3,060,000Accounts
                  payable
              
              
              (1,830,599
              )Deferred
                  revenues
              
              
              (116,917
              )Accrued
                  expenses
              
              
              (92,991
              )Net
                  fair values assigned to assets acquired and liabilities assumed
              
              
              7,520,357Goodwill
              
              
              883,183Total
              
              $
              8,403,540
  F-20
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.
        Acquisitions, continued**
  ***Acquisition
        of JLWA , continued***
 
 The
        following presents a summary of the purchase price consideration for the
        purchase of JLWA:
 
 Cash
              
              $
              5,457,296Note
                  payable
              
              
              400,000Working
                  capital purchase price adjustment, in cash
              
              
              546,244Value
                  of common stock issued
              
              
              2,000,000Total
                  Purchase Price Consideration
              
              $
              8,403,540
 
 The
        note
        payable of $400,000 that was paid on March 9, 2007 and bore interest at a
        rate
        of 4.6% per annum was subordinated to the Company’s line of credit (See Note
        9).   On June 8, 2006, in connection with the finalization of the
        working capital adjustment for the purchase of JLWA, the Company recorded
        an
        adjustment of approximately $1,779,000, primarily related to uncollected
        accounts receivable, to reduce the total purchase price to approximately
        $8,404,000 and paid the final adjusted note and obligation payable of $546,244.
        In addition, the agreement provides for JLWA to obtain up to an additional
        $15,400,000 in earnout payments upon the attainment of certain revenue goals
        subsequent to the closing of the transaction and the continued employment
        of
        James Lee Witt, the former president and chief executive officer or JLWA.
        On May
        11, 2007, the earnout provisions of the agreement were modified (See Note
        10).
  The
        results of operations for JLWA for the year ended December 31, 2007 and for
        the
        period from March 10, 2006 to December 31, 2006, are reflected in the Company’s
        results for the years ended December 31, 2007 and 2006, in the accompanying
        consolidated statements of operations.
  ***Acquisition
        of Safir***
 
 On
        May
        12, 2006 GlobalOptions, a wholly-owned subsidiary of the Company, acquired
        substantially all of the business and assets of Safir, a Delaware limited
        liability company. Safir is a security consulting, investigative and
        intelligence firm headquartered in New York City with seven additional offices
        nationwide.
 
 The
        acquisition was made pursuant to a certain Asset Purchase Agreement (the
“Safir
        Agreement”) dated January 27, 2006, as amended on May 12, 2006. The aggregate
        purchase price paid for Safir’s assets and business was approximately
        $15,300,000 consisting of $6,000,000 in 8% convertible promissory notes paid
        on
        June 29, 2006, $1,000,000 in 4% promissory notes of the Company (“4% Escrow
        Promissory Note”), due May 12, 2007, $6,000,000 in the common stock of
        GlobalOptions Group, consisting of 375,000 shares at $16.00 per share, payments
        to retire certain indebtedness of $1,940,649 of Safir previously advanced
        and a
        finders fee of $375,000 paid to QuanStar Group, LLC, a related party. The
        Company could prepay the obligation under the 4% Escrow Promissory Note in
        the
        amount of 1/3 of the collected amount of the purchased accounts receivable.
        The
        prepayments under the 4% Escrow Promissory Note were made on July 20, 2006,
        September 21, 2006, November 14, 2006, February 7, 2007 and March 12, 2007
        and
        the Company paid $442,000, $164,000, $114,000, $50,000 and $40,000,
        respectively, in principal on the 4% promissory notes due on May 12,
        2007.
 
 The
        $6,000,000 8% convertible promissory note contained a feature that allowed,
        upon
        the election of the conversion option by the holder, for the holder to receive
        a
        premium of 10% of the note, just prior to conversion of the note into common
        stock. The Company recorded an adjustment of $600,000 for the value of this
        beneficial conversion premium feature as a conversion option liability in
        accordance with EITF 00-19 “Accounting for Derivative Financial Instruments
        Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF 00-19”) as
        the number of shares of common stock required to repay the note were not
        fixed
        and determinable. The debt discount was amortized to expense over the term
        of
        the note. As of June 29, 2006, the Company had recorded $367,500 of amortization
        of the debt discount. On June 29, 2006, the Company repaid this debt in full.
        Upon extinguishment, the Company reclassified the conversion option liability
        to
        additional paid-in capital and the unamortized debt discount of $232,500
        was
        recorded as a loss on extinguishment of debt and classified as amortization
        of
        debt discount on convertible notes payable in the accompanying consolidated
        statement of operations for the year ended December 31, 2006.
  F-21
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.**  **Acquisitions,
        continued**
  ***Acquisition
        of Safir, continued***
 
 The
        assets and liabilities of Safir have been recorded in the Company’s consolidated
        balance sheet at their fair values at the date of acquisition.  As part of
        the purchase of Safir on May 12, 2006, the Company acquired identifiable
        intangible assets of $1,770,000, consisting of a trade name for $420,000,
        $70,000 for the value of non-servicing agreements and $1,280,000 for the
        value
        of client relationships.  The acquired intangibles have been assigned
        definite lives and are subject to amortization, as described in the table
        below.
 
 The
        following details amortization periods for the identifiable, amortizable
        intangibles:
  Intangible
                  Asset Category
              
              Amortization PeriodTrade
                  names
              
              
              10
                  yearsNon-compete
                  agreements
              
              
              3
                  yearsClient
                  relationships
              
              
              3
                  years
 
 The
        following details the allocation of the purchase price for the acquisition
        of
        Safir:
 
 Fair
                  ValueCash
              
              $
              447,115Accounts
                  receivable
              
              
              2,405,773Prepaid
                  expenses
              
              
              107,729Property
                  and equipment
              
              
              180,906Intangible
                  assets – trade name
              
              
              420,000Intangible
                  assets – non-compete-agreements
              
              
              70,000Intangible
                  assets – client relationships
              
              
              1,280,000Security
                  deposits and other assets
              
              
              48,796Accounts
                  payable
              
              
              (487,383
              )Accrued
                  compensation and related benefits
              
              
              (393,773
              )Accrued
                  expenses
              
              
              (298,279
              )Net
                  fair values assigned to assets acquired and liabilities assumed
              
              
              3,780,884Goodwill
              
              
              11,534,765Total
              
              $
              15,315,649
 
 The
        following presents a summary of the purchase price consideration for the
        purchase of Safir:
 
 Cash
                  (net of cash acquired of $447,115)
              
              $
              1,940,649Notes
                  payable
              
              
              7,000,000Value
                  of common stock issued
              
              
              6,000,000Finders
                  fee paid in cash
              
              
              200,000Finders
                  fee paid in value of common stock issued
              
              
              175,000Total
                  Purchase Price Consideration
              
              $
              15,315,649
 
 The
        results of operations for Safir for the year ended December 31, 2007 and
        for the
        period from May 12, 2006 to December 31, 2006, are reflected in the Company’s
        results for the years ended December 31, 2007 and 2006, in the accompanying
        consolidated statements of operations.
  F-22
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.
        Acquisitions, continued**
  ***Acquisition
        of Secure Source***
 
 On
        May
        12, 2006, the Company acquired substantially all of the business and certain
        assets of Secure Source, a Delaware corporation.
 
 The
        acquisition was made pursuant to a certain Asset Purchase Agreement dated
        May
        12, 2006, (the "Secure Source Agreement"), between the Company, Secure Source,
        Marian E. Nicastro and David W. Nicastro. The aggregate purchase price paid
        for
        Secure Source’s assets and business of $3,212,000 consisted of $750,000 in 5%
        promissory notes due May 12, 2009, $1,462,500 in 3% promissory notes that
        were
        paid on June 29, 2006, $500,000 in 5% promissory notes paid May 12, 2007
        and
        $500,000 in common stock of GlobalOptions Group, consisting of 26,371 shares
        at
        $18.96 per share.
 
 The
        assets and liabilities of Secure Source have been recorded in the Company’s
        consolidated balance sheet at their fair values at the date of
        acquisition.  As part of the purchase of Secure Source on May 12, 2006, the
        Company acquired identifiable intangible assets of $1,111,000, consisting
        of a
        trade name of $60,000, client relationships of $250,000 and the value of
        a
        non-compete agreement of $801,000. The acquired intangibles have been assigned
        definite lives and are subject to amortization, as described in the table
        below.
 
 
 The
        following details amortization periods for the identifiable, amortizable
        intangibles:
 
 Intangible
                  Asset Category
              
              Amortization PeriodTrade
                  names
              
              
              10
                  yearsNon-compete
                  agreements
              
              
              3
                  yearsClient
                  relationships
              
              
              3
                  years
  The
        following details the allocation of the purchase price for the acquisition
        of
        Secure Source:
  Fair
                  ValueProperty
                  and equipment
              
              $
              101,459Other
                  assets
              
              
              1,795Intangible
                  asset – trade names
              
              
              60,000Intangible
                  asset – non-compete agreements
              
              
              801,000Intangible
                  asset – client relationships
              
              
              250,000Capital
                  leases
              
              
              (72,121
              )Client
                  advances
              
              
              (37,500
              )Net
                  fair values assigned to assets acquired and     liabilities
                  assumed
              
              
              1,104,633Goodwill
              
              
              2,107,867Total
              
              $
              3,212,500
  F-23
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.
        Acquisitions, continued**
 
 ***Acquisition
        of Secure Source, continued***
 
 The
        following presents a summary of the purchase price consideration for the
        purchase of Secure Source:
 
 Notes
                  payable
              
              $
              2,712,500Value
                  of common stock issued
              
              
              500,000Total
                  Purchase Price Consideration
              
              $
              3,212,500
 
 The
        results of operations for Secure Source for the year ended December 31, 2007
        and
        for the period from May 12, 2006 to December 31, 2006, are reflected in the
        Company’s results for the years ended December 31, 2007 and 2006, in the
        accompanying consolidated statements of operations.
  ***Acquisition
        of Hyperion Risk***
 
 On
        August
        10, 2006, the Company acquired substantially all of the business and assets
        of
        Hyperion Risk, a Florida corporation.
 
 The
        acquisition was made pursuant to a certain Asset Purchase Agreement dated
        August
        10, 2006, (the "Hyperion Risk Agreement"), between the Company and Hyperion
        Risk. The aggregate purchase price paid was $3,782,000, which consisted of
        $2,282,000 in cash, of which $260,000 was used for the payment by the Company
        of
        Hyperion Risk's credit line balance, $1,500,000 consisting of 84,081 shares
        of
        the common stock of the Company, valued at $17.84 per share.
  The
        assets and liabilities of Hyperion Risk have been recorded in the Company’s
        consolidated balance sheet at their fair values at the date of
        acquisition.  As part of the purchase of Hyperion Risk on August 10, 2006,
        the Company acquired identifiable intangible assets of $687,690, consisting
        of a
        trade name of $60,000, developed technology of $277,690, client relationships
        of
        $240,000 and the value of a non-compete agreement of $110,000.  The
        acquired intangibles have been assigned definite lives and are subject to
        amortization, as described in the table below.
 
 The
        following details amortization periods for the identifiable, amortizable
        intangibles:
  Intangible
                  Asset Category
              
              Amortization PeriodTrade
                  names
              
              
              5
                  yearsDeveloped
                  technology
              
              
              3
                  yearsClient
                  relationships
              
              
              5
                  yearsNon-compete
                  agreements
              
              
              3
                  years
  F-24
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.**  **Acquisitions,
        continued**
 
 ***Acquisition
        of Hyperion Risk, continued***
  The
        following details the allocation of the purchase price for the acquisition
        of
        Hyperion Risk:
  Fair
                  ValueCurrent
                  assets (including cash of $79,592)
              
              $
              878,218Property
                  and equipment
              
              
              60,958Security
                  deposits and other assets
              
              
              14,100Intangible
                  asset – non-compete agreements
              
              
              110,000Intangible
                  asset – trade names
              
              
              60,000Intangible
                  asset – developed technology
              
              
              277,690Intangible
                  asset – client relationships
              
              
              240,000Accounts
                  payable
              
              
              (334,950
              )Accrued
                  payroll and related benefits
              
              
              (77,857
              )Other
                  current liabilities
              
              
              (220,121
              )Deferred
                  rent obligations
              
              
              (41,779
              )Net
                  fair values assigned to assets acquired and liabilities assumed
              
              
              966,259Goodwill
              
              
              2,815,367Total
              
              $
              3,781,626
 
 The
        following presents a summary of the purchase price consideration for the
        purchase of Hyperion Risk:
  Cash
              
              $
              2,281,626Value
                  of common stock issued
              
              
              1,500,000Total
                  Purchase Price Consideration
              
              $
              3,781,626
 
 The
        results of operations for Hyperion Risk for the year ended December 31, 2007
        and
        for the period from August 10, 2006 to December 31, 2006, are reflected in
        the
        Company’s results for the years ended December 31, 2007 and 2006, in the
        accompanying consolidated statements of operations.
 
 ***Acquisition
        of On Line Consulting***
 
 On
        January 9, 2007, GlobalOptions Group purchased substantially all of the business
        and assets of On Line Consulting, a full service security and fire alarm
        consulting and design firm based in Oakland, California. The acquisition
        was
        made pursuant to a certain Asset Purchase Agreement dated January 9, 2007
        (the
“On Line Consulting Agreement”) between GlobalOptions Group and On Line
        Consulting. The aggregate purchase price for On Line Consulting’s business and
        assets was approximately $2,896,000 plus the assumption of certain liabilities,
        and consisted of $1,546,000 in cash and 84,375 shares of common stock of
        GlobalOptions Group valued at $16.00 per share for a total value of $1,350,000.
        At closing, the Company paid $750,000 of the cash portion of the purchase
        price,
        and issued promissory notes for $417,000 paid January 9, 2008, and $141,000
        due
        January 9, 2009. On March 23, 2007, the Company paid cash of $224,000, and
        recorded an obligation of $14,000, which was paid on August 29, 2007. Further,
        at closing, the Company delivered to the seller 46,875 shares of GlobalOptions
        common stock, with 37,500 shares which were held in escrow. On January 9,
        2008,
        18,750 of the escrow shares were delivered to the seller. The remaining 18,750
        escrow shares are scheduled to be delivered to seller on January 9, 2009.
  F-25
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.**  **Acquisitions,
        continued**
 
 ***Acquisition
        of On Line Consulting, continued***
 
 All
        of
        the promissory notes issued in connection with the acquisition of On Line
        Consulting bear no stated interest rate. The promissory note obligations
        were
        discounted at a market interest rate of 6% per annum and are recorded at
        their
        discounted values, reflecting discounts of $33,000 and $4,000 and face values
        of
        $417,000 and $141,000 for the notes due January 9, 2008 and 2009, respectively.
        The accreted interest for the year ended December 31, 2007 was approximately
        $37,000.
 
 The
        assets and liabilities of On Line Consulting were recorded in the Company’s
        consolidated balance sheet at their fair values at the date of acquisition.
        As
        part of the purchase of On Line Consulting on January 9, 2007, the Company
        acquired identifiable intangible assets of $1,199,000. Of the identifiable
        intangibles acquired, $70,000 has been assigned to trade names, $59,000 to
        non-compete agreements, and $1,070,000 to client relationships. The acquired
        intangibles have been assigned definite lives and are subject to amortization,
        as described in the table below.
 
 The
        following details amortization periods for the identifiable, amortizable
        intangibles:
 
 Intangible
                  Asset Category
              
              Amortization PeriodTrade
                  names
              
              
              5
                  yearsNon-compete
                  agreements
              
              
              3
                  yearsClient
                  relationships
              
              
              7
                  years
 
 The
        Company collected On Line Consulting’s accounts receivable in the amount of
        approximately $102,000, the obligations for which have been included in other
        current liabilities at December 31, 2007 and were paid on February 25,
        2008.
 
 The
        following details the allocation of the purchase price for the acquisition
        of On
        Line Consulting:
 
 Fair
                  ValueProperty
                  and equipment
              
              $
              96,589Intangible
                  asset – trade names
              
              
              70,000Intangible
                  asset – non-compete agreements
              
              
              59,000Intangible
                  asset – client relationships
              
              
              1,070,000Accounts
                  payable
              
              
              (75,000
              )Accrued
                  compensation and related benefits
              
              
              (83,536
              )Deferred
                  revenues
              
              
              (39,825
              )Capital
                  lease obligation
              
              
              (33,718
              )Other
                  liabilities
              
              
              (11,999
              )Net
                  fair values assigned to assets acquired andliabilities
                  assumed
              
              
              1,051,511Goodwill
              
              
              1,844,329Total
              
              $
              2,895,840
 
 F-26
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.**  **Acquisitions,
        continued**
 
 ***Acquisition
        of On Line Consulting, continued***
 
 The
        following represents a summary of the purchase price consideration:
 
 Cash
              
              $
              974,100Common
                  stock
              
              
              1,350,000Amount
                  due to seller
              
              
              13,740Notes
                  payable
              
              
              558,000Total
                  Purchase Price Consideration
              
              $
              2,895,840
 
 The
        results of operations for On Line Consulting for the period from January
        10,
        2007 to December 31, 2007, are reflected in the Company’s results for the year
        ended December 31, 2007 in the accompanying consolidated statements of
        operations.
 
 ***Acquisition
        of Bode***
 
 On
        February 28, 2007, the Company acquired the common stock of Bode. Bode provides
        forensic DNA analysis, proprietary DNA collection products, and related research
        services to law enforcement agencies, federal and state governments, crime
        laboratories and disaster management organizations and is based in Lorton,
        Virginia. Bode was a wholly-owned subsidiary of ChoicePoint Inc., a Georgia
        corporation ("ChoicePoint"). The acquisition was made pursuant to a certain
        Stock Purchase Agreement, dated February 28, 2007 (the "Bode Agreement"),
        between ChoicePoint Government Services Inc., ChoicePoint and the Company.
        On
        March 8, 2007, Bode was reincorporated in the state of Delaware. On September
        26, 2007, the Company finalized the working capital adjustment in connection
        with the acquisition of Bode in the amount of $691,813, resulting in an as
        adjusted total purchase price of $13,191,813. This adjustment amount was
        recorded as additional goodwill and was paid on October 1, 2007.
 
 The
        assets and liabilities of Bode have been recorded in the Company’s consolidated
        balance sheet at their fair values at the date of acquisition.  As part of
        the purchase of Bode on February 28, 2007, the Company acquired identifiable
        intangible assets of $310,000.  Of the identifiable intangibles acquired,
        $200,000 has been assigned to trade names and $110,000 to developed technology.
        The acquired intangibles have been assigned definite lives and are subject
        to
        amortization, as described in the table below.
 
 The
        following details amortization periods for the identifiable, amortizable
        intangibles:
 
 Intangible
                  Asset Category
              
              Amortization PeriodTrade
                  names
              
              
              10
                  yearsDeveloped
                  technology
              
              
              5
                  years
  F-27
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.**  **Acquisitions,
        continued**
 
 ***Acquisition
        of Bode, continued***
 
 The
        following details the allocation of the purchase price for the acquisition
        of
        Bode:
 
 Cash
                  and cash equivalents
              
              $
              284,251Accounts
                  receivable
              
              
              5,510,441Inventories
              
              
              2,519,389Other
                  current assets
              
              
              276,121Property
                  and equipment
              
              
              4,133,338Intangible
                  asset – trade names
              
              
              200,000Intangible
                  asset – development technology
              
              
              110,000Accounts
                  payable
              
              
              (545,401
              )Deferred
                  rent obligations
              
              
              (94,399
              )Accrued
                  expenses
              
              
              (578,990
              )Net
                  fair values assigned to assets acquired and liabilities assumed
              
              
              11,814,750Goodwill
              
              
              1,377,063Total
                  purchase price in cash
              
              $
              13,191,813
 
 The
        purchase price was paid entirely in cash.
 
 The
        results of operations for Bode for the period from March 1, 2007 to December
        31,
        2007, are reflected in the Company’s results for the year ended December 31,
        2007 in the accompanying consolidated statements of operations.
 
 ***Acquisition
        of Facticon***
 
 On
        February 28, 2007, GlobalOptions Group purchased substantially all of the
        business and assets of Facticon, Inc.   Facticon is a
        surveillance, investigative and business intelligence firm located in Chadds
        Ford, Pennsylvania.
 
 The
        acquisition was made pursuant to a certain Asset Purchase Agreement, dated
        February 28, 2007 (the "Facticon Agreement"), between GlobalOptions Group
        and
        Facticon. The aggregate purchase price paid was $2,800,000, which consisted
        of
        $1,400,000 in cash and 87,500 shares of common stock in GlobalOptions
        Group, valued at $1,400,000 and the assumption of certain liabilities. Of
        the
        total purchase price, $1,300,000 of the cash portion and $1,000,000 of the
        stock
        portion have been placed into an escrow account and pursuant to the escrow
        agreement (“Facticon Escrow Agreement”) shall be disbursed in satisfaction of
        the claims of certain tax jurisdictions, creditors and claims of litigants
        against the seller. The Facticon Agreement has been amended to extend past
        one
        year from closing, the release of escrow funds, pending the resolution of
        certain claims against Facticon.
  F-28
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.**  **Acquisitions,
        continued**
 
 ***Acquisition
        of Facticon, continued***
 
 The
        assets and liabilities of Facticon have been recorded in the Company’s
        consolidated balance sheet at their fair values at the date of
        acquisition.  As part of the purchase of Facticon on February 28, 2007, the
        Company acquired identifiable intangible assets of $120,000, consisting of
        $60,000 for a trade name and $60,000 for the value of client relationships.
         The acquired intangibles have been assigned definite lives and are subject
        to amortization, as described in the table below. In addition, the Company
        has
        recorded an adjustment of approximately $693,000 to record additional goodwill
        and an accrued liability in connection with the Company’s estimated successor
        liability, net of indemnification recoveries of approximately $270,000 from
        the
        sellers, related to Facticon’s pre-acquisition compensation practices.
 
 The
        following details the amortization periods for the identifiable, amortizable
        intangibles:
 
 Intangible
                  Asset Category
              
              Amortization PeriodTrade
                  name
              
              
              5
                  yearsClient
                  relationships
              
              
              3
                  years
 
 The
        following details the allocation of the purchase price for the acquisition
        of
        Facticon:
  Fair
                  ValueAccounts
                  receivable
              
              $
              759,147Property
                  and equipment
              
              
              34,000Intangible
                  assets – trade name
              
              
              60,000Intangible
                  assets – client relationships
              
              
              60,000Accounts
                  payable
              
              
              (185,463
              )Accrued
                  compensation and related benefits
              
              
              (237,026
              )Accrued
                  expenses
              
              
              (1,497,229
              )Net
                  fair values assigned to assets acquired and liabilities assumed
              
              
              (1,006,571
              )Goodwill
              
              
              3,806,571Total
              
              $
              2,800,000
 
 The
        following presents a summary of the purchase price consideration for the
        purchase of Facticon:
 
 Cash
              
              $
              1,300,000Note
                  issued to seller
              
              
              100,000Value
                  of common stock issued
              
              
              1,400,000Total
                  Purchase Price Consideration
              
              $
              2,800,000
 
 The
        results of operations for Facticon for the period from March 1, 2007 to December
        31, 2007, are reflected in the Company’s results for the year ended December 31,
        2007 in the accompanying consolidated statements of operations.
  F-29
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **4.**  **Acquisitions,
        continued**
 
 ***Unaudited
        Pro-Forma Financial Information***
 
 The
        following presents the unaudited pro-forma combined results of operations
        of the
        Company with CBR, JLWA, Safir, Secure Source, Hyperion Risk, On Line Consulting,
        Bode and Facticon, for the periods preceding the acquisition of their respective
        net assets or common stock. The respective acquisition dates are August 15,
        2005
        for CBR, March 10, 2006 for JLWA, May 12, 2006 for Safir and Secure Source,
        August 10, 2006 for Hyperion Risk, January 9, 2007 for On Line Consulting
        and
        February 28, 2007 for Bode and Facticon.
 
 For
                  the Years Ended December 31,2007
              
              2006
              
              2005Revenues
              
              $
              90,275,335
              
              $
              98,441,868
              
              $
              78,506,462Net
                  loss available tocommon
                  stockholders
              
              $
              (29,758,017
              )
              $
              (53,168,951
              )
              $
              (5,152,648
              )Pro-forma
                  basic and dilutednet
                  loss per common share
              
              $
              (7.12
              )
              $
              (21.68
              )
              $
              (2.46
              )Pro-forma
                  weighted averagecommon
                  shares outstanding-
                  basic and diluted
              
              
              4,177,435
              
              
              2,183,324
              
              
              1,500,139
 
 The
        pro
        forma combined results are not necessarily indicative of the results that
        actually would have occurred if the acquisitions of CBR, JLWA, Safir, Secure
        Source, Hyperion Risk, On Line Consulting, Bode and Facticon had been completed
        as of the beginning of 2005, 2006 or 2007, nor are they necessarily indicative
        of future consolidated results.
 
 **5.
        Inventories**
 
 Inventories
        are comprised of the following as of December 31, 2007:
 
 Raw
                  materials
              
              $
              899,793Work
                  in progress – DNA Analysis
              
              
              479,523Finished
                  goods
              
              
              946,344Inventories
              
              $
              2,325,660
  F-30
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **6. 
        Intangible Assets and Goodwill**
 
 ***Intangible
        Assets***
  Intangible
        assets consist of amounts related to the 2005 acquisition of CBR and the
        2006
        acquisitions, consisting of JLWA, Safir, Secure Source and Hyperion Risk
        and the
        2007 acquisitions, consisting of On Line Consulting, Bode and Facticon.
 
 Intangible
        assets are comprised of the following :
  Trade
                  Names
              
              
              Developed
                  Technology
              
              
              Non-Compete
                  Agreements
              
              
              Client
                  Relationships
              
              
              Patents
              
              
              Accumulated
                  Amortization
              
              
              TotalBalance
                  as of January 1, 2006
              
              $
              80,000
              
              $
              52,000
              
              $
              510,000
              
              $
              729,000
              
              $
              -
              
              $
              (137,320
              )
              $
              1,233,680Purchase
                  of customer list
              
              
              -
              
              
              -
              
              
              65,000
              
              
              -
              
              
              -
              
              
              -
              
              
              65,000Acquisition
                  of JLWA
              
              
              1,870,000
              
              
              -
              
              
              -
              
              
              3,060,000
              
              
              -
              
              
              -
              
              
              4,930,000Acquisition
                  of Safir
              
              
              420,000
              
              
              -
              
              
              70,000
              
              
              1,280,000
              
              
              -
              
              
              -
              
              
              1,770,000Acquisition
                  of Secure Source
              
              
              60,000
              
              
              -
              
              
              801,000
              
              
              250,000
              
              
              -
              
              
              -
              
              
              1,111,000Acquisition
                  of HyperionRisk
              
              
              60,000
              
              
              277,690
              
              
              110,000
              
              
              240,000
              
              
              -
              
              
              -
              
              
              687,690Revaluation
                  of customerrelationships
              
              
              -
              
              
              -
              
              
              -
              
              
              (179,000
              )
              
              -
              
              
              -
              
              
              (179,000
              )Impairment
                  charge
              
              
              -
              
              
              -
              
              
              (115,778
              )
              
              -
              
              
              -
              
              
              -
              
              
              (115,778
              )Amortization
                  expense
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,872,167
              )
              
              (1,872,167
              )Balance
                  as ofDecember
                  31, 2006
              
              
              2,490,000
              
              
              329,690
              
              
              1,440,222
              
              
              5,380,000
              
              
              -
              
              
              (2,009,487
              )
              
              7,630,425Acquisition
                  of On LineConsulting
              
              
              70,000
              
              
              -
              
              
              59,000
              
              
              1,070,000
              
              
              -
              
              
              -
              
              
              1,199,000Acquisition
                  of Bode
              
              
              200,000
              
              
              110,000
              
              
              -
              
              
              -
              
              
              69,525
              
              
              -
              
              
              379,525Acquisition
                  of Facticon
              
              
              60,000
              
              
              -
              
              
              -
              
              
              60,000
              
              
              -
              
              
              -
              
              
              120,000Purchase
                  of customerrelationships
              
              
              -
              
              
              -
              
              
              -
              
              
              850,000
              
              
              -
              
              
              -
              
              
              850,000Abandonment
                  of tradenames
              
              
              (260,000
              )
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              260,000
              
              
              -Amortization
                  expense
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (2,909,027
              )
              
              (2,909,027
              )Balance
                  as ofDecember
                  31,2007
              
              $
              2,560,000
              
              $
              439,690
              
              $
              1,499,222
              
              $
              7,360,000
              
              $
              69,525
              
              $
              (4,658,514
              )
              $
              7,269,923Weighted
                  average amortizationperiod
                  at 12/31/06 in years
              
              
              9.0
              
              
              2.5
              
              
              3.0
              
              
              3.7
              
              
              -Weighted
                  average amortizationperiod
                  at 12/31/07 in years
              
              
              7.9
              
              
              2.9
              
              
              1.2
              
              
              4.1
              
              
              -
              (1)
 
 (1)
        Patents not yet approved and as such, amortization period has not yet
        begun
  F-31
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **6. 
        Intangible Assets and Goodwill, continued**
 
 ***Intangible
        Assets, continued***
 
 The
        estimated amortization of amortizable intangible assets are comprised of
        the
        following for the five years ending December 31, 2012:
  For the
                  Years Ending
              
              Total
              
              Trade
                Names
              
              Developed
                Technology
              
              Non-Compete
                Agreements
              
              Client
                RelationshipsDecember 31,2008
              
              $
              2,663,552
              
              $
              305,000
              
              $
              135,589
              
              $
              438,257
              
              $
              1,784,7062009
              
              
              1,467,675
              
              
              305,000
              
              
              33,960
              
              
              171,187
              
              
              957,5282010
              
              
              991,316
              
              
              305,000
              
              
              22,015
              
              
              485
              
              
              663,8162011
              
              
              718,025
              
              
              251,378
              
              
              22,015
              
              
              —
              
              
              444,6322012
              
              
              533,698
              
              
              207,345
              
              
              3,496
              
              
              —
              
              
              322,857Totals
              
              $
              6,374,266
              
              $
              1,373,723
              
              $
              217,075
              
              $
              609,929
              
              $
              4,173,539
 
 During
        the years ended December 31, 2007, 2006 and 2005, the Company recorded
        amortization expense related to the acquired amortizable intangibles of
        approximately $2,909,000, $1,872,000 and $137,000, respectively.  For the
        year ended December 31, 2007, the Company recorded a charge to general and
        administrative costs of approximately $186,000 (which was included in
        amortization expense) in connection with the abandonment of the trade names
        previously used within CBR, Hyperion, Secure Source and Facticon. For the
        year
        ended December 31, 2006, the Company recorded a charge to impairment expense
        of
        approximately $116,000 for the impairment of the value of a non-compete
        agreement.
 
 On
        December 17, 2007, the Company entered into a five year agreement with an
        insurance service company to provide Fraud and SIU services. In connection
        to
        the agreement, the Company paid a cash inducement fee of $850,000, which
        has
        been recorded as an intangible asset - client relationships, as a fee paid
        to
        obtain a revenue generating client relationship. This intangible asset will
        be
        amortized on a straight line basis over the term of agreement. In addition,
        the
        agreement includes a contingent fee of $150,000, payable 15 months from closing,
        for which a portion is subject to forfeiture if revenues under the agreement
        do
        not meet certain agreed upon goals. Under the terms of the agreement, the
        Company will pay a commission upon the achievement of certain gross revenues
        at
        rates ranging from 3% to 7%. For each twelve month period ending on the first,
        second, third, fourth, and fifth anniversaries of the agreement, the Company
        will pay an additional commission in an amount equal to 3% of all revenues
        in
        excess of $2,100,000 up to $3,000,000; 5% of all revenues in excess of
        $3,000,000 up to $4,000,000; and 7% of all revenues in excess of $4,000,000.
 
 ***Goodwill
        Impairment***
  At
        December 31, 2007, the Company performed an annual evaluation of its goodwill.
        The Company performed its annual impairment tests of goodwill for three of
        its
        reporting segments: Preparedness Services, Fraud and SIU Services
        and Security Consulting Investigations, as required under SFAS 142. As a
        result of these tests, the Company determined that the amount of goodwill
        recorded in connection with the Fraud and SIU Services segment was impaired
        or
        not fully recoverable, as the current performance and future expectations
        do not
        support the carrying value of goodwill. As a result, the Company recorded
        a
        $5,144,423 impairment charge during the year ended December 31, 2007 for
        the
        Fraud and SIU Services segment.
 
 At
        December 31, 2006, the Company performed an annual evaluation of its goodwill.
        The Company performed its annual impairment tests of goodwill for three of
        its
        reporting segments: Preparedness Services, Fraud and SIU Services
        and Security Consulting Investigations, as required under SFAS 142. As a
        result of these tests, the Company determined that the amount of goodwill
        recorded in connection with two of the three reporting segments was impaired
        or
        not fully recoverable, as the current performance and future expectations
        do not
        support the carrying value of goodwill for these reporting segments. The
        impairment affects Fraud and SIU Services and Security Consulting and
        Investigations. As a result, the Company recorded a $3,028,533 impairment
        charge
        during the year ended December 31, 2006 of which $1,134,765 was for the Fraud
        and SIU Services segment and $1,893,768 was for the Security Consulting and
        Investigations segment.
  F-32
 
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **6. 
        Intangible Assets and Goodwill, continued**
 
 ***Goodwill***
 
 A
        summary
        of Goodwill is comprised of the following for the years ended December 31,
        2007
        and 2006:
 Preparedness
                    Services
                
                Fraud
                    and
                  SIU
                    Services****
                
                Security
                  Consulting and
                  Investigations
                
                ConsolidatedBalance
                    as of January 1, 2006
                
                $
                —
                
                $
                4,324,620
                
                $
                —
                
                $
                4,324,620Acquisition
                    of JLWA
                
                
                883,183
                
                
                —
                
                
                —
                
                
                883,183Acquisition
                    of Safir
                
                
                —
                
                
                —
                
                
                11,534,765
                
                
                11,534,765Acquisition
                    of Secure Source
                
                
                —
                
                
                2,107,867
                
                
                
                
                
                2,107,867Acquisition
                    of Hyperion Risk
                
                
                —
                
                
                2,815,367
                
                
                —
                
                
                2,815,367Purchase
                    price adjustments
                
                
                —
                
                
                (60,008
                )
                
                —
                
                
                (60,008
                )Impairment
                    charge
                
                
                —
                
                
                (1,134,765
                )
                
                (1,893,768
                )
                
                (3,028,533
                )Balance
                    as of December 31, 2006
                
                $
                883,183
                
                $
                8,053,081
                
                $
                9,640,997
                
                $
                18,577,261Acquisition
                    of On Line Consulting
                
                
                —
                
                
                —
                
                
                1,320,229
                
                
                1,320,229Acquisition
                    of Bode
                
                
                —
                
                
                —
                
                
                575,250
                
                
                575,250Acquisition
                    of Facticon
                
                
                —
                
                
                2,420,181
                
                
                —
                
                
                2,420,181Purchase
                    Price Adjustment - On Line
                
                
                —
                
                
                —
                
                
                524,100
                
                
                5524,100Purchase
                    price adjustment - Bode
                
                
                —
                
                
                —
                
                
                801,813
                
                
                801,813Purchase
                    price adjustment - Facticon
                
                
                —
                
                
                693,195
                
                
                —
                
                
                693,195Impairment
                    charge
                
                
                —
                
                
                (5,144,424
                )
                
                —
                
                
                (5,144,424
                )Balance
                    as of December 31, 2007
                
                $
                883,183
                
                $
                6,022,033
                
                $
                12,862,389
                
                $
                19,767,605
 
 Of
        the
        total goodwill of $19,767,605 and $18,577, 261 at December 31, 2007 and December
        31, 2006, respectively, $18,390,542 and $18,577,261 is expected to be deductible
        for tax purposes. The amount of goodwill recorded in 2007 for Bode of $1,377,063
        is not expected to be tax deductible .
 
 **7.**  **Property
        and Equipment**
  A
        summary
        of property and equipment is comprised of the following:
 
 As
                  of December 31,2007
              
              2006Computer
                  and equipment and software
              
              $
              2,358,833
              
              $
              741,335Laboratory
                  equipment
              
              
              1,504,897
              
              
              -Furniture
                  and fixtures
              
              
              753,098
              
              
              261,160Vehicles
              
              
              162,029
              
              
              162,029Leasehold
                  improvements
              
              
              2,376,485
              
              
              217,7697,155,342
              
              
              1,382,293Less:
                  accumulated depreciation and amortization
              
              
              (1,584,881
              )
              
              (583,927
              )Property
                  and equipment, net
              
              $
              5,570,461
              
              $
              798,366
 
 Depreciation
        and amortization of property and equipment for the years ended December 31,
        2007, 2006 and 2005 was approximately $1,012,000, $237,000 and $71,000,
        respectively.
  F-33
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **8.**  **Accrued
        Compensation and Related Benefits**
 
 A
        summary
        of accrued compensation and related benefits is comprised of the
        following:
 As
                    of December 31,2007
                
                2006Accrued
                    bonuses
                
                $
                1,941,574
                
                $
                1,769,852Accrued
                    payroll and commissions
                
                
                801,427
                
                
                458,060Accrued
                    employee benefits
                
                
                997,387
                
                
                298,600Total
                
                $
                3,740,388
                
                $
                2,526,512
  **9. 
        Line of Credit**
 
 During
        November 2003, GlobalOptions signed a $1,000,000 line of credit with a financial
        institution with an interest rate of prime plus 1.25%, secured by accounts
        receivable and subject to monthly covenants.
 
 In
        conjunction with the establishment of this line of credit, the financial
        institution was granted warrants to purchase 3,676 shares of the Company’s
        common stock at $4.80 per share. The value of these warrants, computed
        using the Black-Scholes option pricing model, was de-minimus. These
        warrants were exercised on June 24, 2005 on a cashless basis for 2,572
        shares of the Company’s common stock.
  On
        May 4,
        2005, this line of credit agreement was amended to increase the facility
        amount
        to $1,875,000.  This line of credit was renewed on February 3, 2006 with an
        expiration date of February 3, 2007.   During March 2006, the Company
        entered into an agreement to guarantee the obligations of GlobalOptions under
        this line of credit.  Effective on October 12, 2006, the line of credit was
        amended to increase the facility amount to $5,000,000 and to extend the
        expiration date to October 11, 2007.
 
 On
        May 14, 2007, the financial institution that provides the Company’s line of
        credit increased the amount available under the line of credit to $15,000,000.
        Pursuant to the agreement, the Company granted the financial institution
        a
        security interest in, and pledged and assigned to the financial institution,
        substantially all of the current and future acquired personal property of
        GlobalOptions, Inc. Furthermore, the Company reaffirmed its unconditional
        guaranty originally made on March 8, 2006. Pursuant to the reaffirmation,
        the Company acknowledged that its guaranty of the loan provided to
        GlobalOptions, Inc. and the corresponding grant of a security interest in
        all of
        its property apply to the subject financial institution’s loan agreements and
        any other agreements, assignments or instruments relating to such indebtedness.
        In connection with the modification, Bode entered into an intellectual property
        security agreement with the financial institution pursuant to which Bode
        granted
        the financial institution a security interest in all of its rights, title
        and
        interests in, to and under its intellectual property, which consisted
        principally of patents.
 
 On
        October 29, 2007, the Company borrowed $5,400,000 under the line for the
        prepayment of the JLWA $4,500,000 promissory note, prepayment premium and
        accrued interest, and such amount which was borrowed under the line of credit
        was subsequently repaid (See Note 10).
 
 On
        November 6, 2007, GlobalOptions entered into an amendment to the agreement
        with
        the financial institution that provides the line of credit. The amendment
        increased to $20,000,000 the amount available under the line of credit and
        modified certain liquidity and financial earnings covenants.
 
 In
        connection with this line of credit, the Company must satisfy certain liquidity
        and earnings financial covenants. The interest rate on the line of credit
        at
        December 31, 2007 was 8.75%. There was no balance under the line of credit
        at
        December 2007 and 2006. Based upon the amount of eligible accounts receivable
        balances and the authorized line, the Company had the availability to draw
        approximately $8,782,000 and $5,000,000 against the line of credit, at December
        2007 and 2006, respectively.
  F-34
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **10. 
        Due to Former Members of JLWA for Earnout and JLWA Modification
        Agreement**
  In
        connection with the purchase of JLWA (See Note 4), the initial JLWA Agreement
        provided for the JLWA sellers to obtain up to an additional $15,400,000 in
        earnout payments upon the attainment of certain revenue goals subsequent
        to the
        closing of the transaction and the continued employment of James Lee Witt.
  As
        set
        forth in the initial JLWA Agreement, the Company had agreed to pay the JLWA
        sellers an earnout (the “Earnout”), based upon the achievement of certain
        revenue goals subsequent to March 10, 2006 (the “Closing
        Date”).
  For
        the
        twelve (12) month periods ending on the first, second, third and fourth
        anniversaries of the Closing Date, the JLWA Sellers were to be paid such
        Earnout
        based upon the achievement of certain revenues, as set forth below.  The
        total amount of the Earnout was limited to a cumulative amount of
        $15,400,000.
  The
        Earnout was to be paid to Seller within sixty (60) days of the dates of the
        respective anniversaries of the Closing Date as described
        below:
  • the
        first $4,000,000 of the Earnout was to be paid in cash; and
  •
the
        remainder of the Earnout was to be paid 50% in cash and 50% in shares of
        common
        stock of the Company (which number of shares shall be calculated by dividing
        the
        total amount of the Earnout payable in shares of common stock by the closing
        price of the Company’s common stock on the last day of each of the respective
        Earnout periods).
  The
        Earnout was payable based upon revenue generated by the JLWA segment division
        of
        the Company, so long as such revenue generated a gross margin of at least
        50%,
        and could include revenues generated by certain acquisitions of the JLWA
        division of the Company, as provided in the agreement.  Revenues of the
        JLWA division whereupon the gross margin was below 50% were not eligible
        for the
        Earnout.
  The
        Earnout was computed by the application of the percentages to JLWA earned
        revenues according to the table, below:
 
 Related
                  Revenue Earnout
                  Periods
              
              Percentage Applied
                to JLWA earned RevenuesMarch
                  10, 2006 – March 9, 2007Up
                  to
                  $6,000,000
              
              
              0
              %Between
                  $6,000,000 and
                  $16,000,000
              
              
              40
              %Greater
                  than $16,000,000
              
              
              10
              %March
                  10, 2007 – March 9, 2008Up
                  to
                  $7,000,000
              
              
              0
              %Greater
                  than $7,000,000
              
              
              10
              %
  At
        December 31, 2006, the amount due to the of JLWA sellers for the Earnout
        liability due under the initial JLWA Agreement was approximately $5,228,000
        and
        has been charged to expense and included in selling and marketing expenses
        in
        the accompanying consolidated statement of operations for the year then
        ended.
  F-35
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **10. 
        Due to Former Members of JLWA for Earnout and JLWA Modification Agreement,
        continued**
 
 On
        May 11, 2007, the Company reached an agreement with the JLWA Sellers to
        enter into a second amendment to the JLWA purchase agreement (“JLWA 2007
        Modification Agreement”). Under the JLWA 2007 Modification Agreement, the
        Company agreed to make additional payments in the form of cash, promissory
        notes
        and common stock to the JLWA Sellers in exchange for eliminating the earnout
        provisions of the asset purchase agreement. The additional payments under
        the
        JLWA 2007 Modification Agreement consisted of (i) a cash payment of
        $2,000,000, which was paid on May 14, 2007, (ii) a $4,500,000
        promissory note accruing interest at 5.65% per annum, due on
        January 15, 2008, subject to a 5% penalty fee if not paid on that due date
        (see below), (iii) 300,000 shares of common stock issued on
        January 30, 2008, which were registered on February 14, 2008, and
        (iv) a $4,300,000 promissory note accruing interest at 11.0% per
        annum, due on August 11, 2008. The JLWA Sellers had the right to request
        acceleration of the $4,300,000 promissory note upon the consummation of a
        public
        offering (see below).
 
 Further,
        in connection with the execution of the JLWA Modification Agreement, the
        Company
        executed an amendment of the employment and non-competition agreement with
        James
        Lee Witt. Under the terms of the amendment, upon his voluntary termination
        of
        employment without good reason, Mr. Witt would be obligated to reimburse
        the Company in an amount equal to (i) 25% of the number of shares issued to
        the JLWA Sellers within 12 months prior to such termination and (ii) 25% of
        the base salary of Mr. Witt paid within 12 months prior to such termination
        (See Notes 14 and 20).
 
 The
        JLWA
        Modification Agreement resulted in $12,960,000 of non-contingent consideration,
        of which approximately $6,630,000 was deemed as earnout accrued through
        May 10, 2007 and $6,330,000 was deemed to be accelerated earnout expense.
        Earnout expense under the JLWA Agreement (as amended) was approximately
        $7,745,000 for the year ended December 31, 2007.
  On
        October 20, 2007, the Company reached an agreement with the JLWA Sellers
        under which the JLWA Sellers agreed to the prepayment of the principal and
        accrued interest on a $4.5 million promissory note, originally due on
        January 15, 2008, that the Company had issued to them pursuant to the terms
        of the JLWA Modification Agreement. In connection with this acceleration,
        on
        October 29, 2007, the Company made a negotiated prepayment premium of $800,000
        to compensate the JLWA Sellers for, among other things, foregone interest
        and
        the cost of accelerated tax payments. The Company borrowed approximately
        $5.4
        million from its line of credit to fund these payments, plus interest of
        $121,475, prior to the completion of the underwritten public offering (See
        Note
        9).
  On
        October 29, 2007, pursuant to the terms of the JLWA Modification Agreement,
        the
        JLWA Sellers requested and were granted accelerated payment of the $4,300,000
        promissory note, plus interest of $38,103, in connection with the October
        29,
        2007 completion of the Company’s underwritten public offering.
 
 **11. 
        Notes Payable**
 
 On
        March
        10, 2006, the Company closed the private placement of an aggregate of
        $12,500,000 in principal amount of 8% promissory notes due on June 30,
        2006.  Pursuant to the promissory notes, as amended, upon the consummation
        of a qualified follow-on financing, holders were required by August 31, 2006
        to
        exchange these promissory notes through the issuance of shares of the Company’s
        common stock equal to 115% of the principal amount of the notes being exchanged,
        plus accrued and unpaid principal, subject to the terms of the agreement. 
Under the promissory note agreements, the Company could extend the maturity
        for
        two successive 30 day periods. In connection with raising these funds, the
        Company incurred a total fee of approximately $416,000 to Burnham Hill Partners
        (“BHP”) (See Note 14) and others, for which $306,000 was paid in cash and
        $110,000 of which the Company issued additional 8% promissory notes. The
        holders
        of these promissory notes subordinated their interest to the Company’s
        obligations to the bank under the line of credit facility (See Note
        9).
  F-36
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **11. 
        Notes Payable, continued**
 
 On
        May
        12, 2006, the Company closed on an additional $2,000,000 in principal amount
        of
        their 8% promissory notes which were due on June 30, 2006.  The terms of
        these notes required the holder to make the election to exchange the notes
        for
        the Company’s Series B convertible preferred stock, subject to the terms of the
        agreement. In connection herewith, the Company incurred an obligation to
        BHP for
        financing costs aggregating $140,000, of which $100,000 was payable in
        cash.  The remaining $40,000 was payable in additional promissory
        notes.
 
 On
        June
        28, 2006, the Company closed on an additional $30,550,000 in principal amount
        of
        their 8% promissory notes which were due on June 30, 2006.  The Company
        could convert these promissory notes at a 115% conversion premium into common
        stock of the Company. In connection herewith, the Company incurred an obligation
        to BHP for financing costs aggregating $2,138,500, of which $1,527,500 was
        paid
        in cash.  The remaining $611,000 was paid in additional promissory
        notes.
 
 On
        June
        29, 2006, the notes issued on March 10, 2006, May 12, 2006 and June 28, 2006,
        with an aggregate principal amount of $45,811,000 and aggregate accrued interest
        of $339,731, were exchanged for 53,073 units of the Company’s convertible
        creferred stock - Series B (See Note 14 -Stockholders’ Equity, Series B
        convertible preferred stock).
 
 In
        accordance with EITF 00-27 “Application of Issue No. 98-5 to Certain
        Convertible Instruments” (“EITF 00-27”), the notes issued on June 28, 2006
        are considered to have a conversion premium feature as the premium is equal
        to
        115% of the principal amount of the notes. The Company recorded a debt discount
        of $6,922,602 relating to the conversion premium. As per above, on June 29,
        2006 these notes were exchanged for units consisting of shares of the Company’s
        Series B convertible preferred stock and warrants to purchase common stock.
        The
        exchange of these notes caused the debt discount to be fully amortized.
 
 The
        Company incurred deferred financing costs in conjunction with the promissory
        notes payable issued on March 10, 2006, May 12, 2006 and
        June 28, 2006. Total cash fees associated with these note issuances were
        $1,933,500. In addition, $761,000 was paid in additional promissory notes.
        The
        aggregate of $2,694,500 of deferred financing costs was amortized through
        June 29, 2006, the date the notes were exchanged for units consisting of
        shares of the Company’s Series B convertible preferred stock and warrants to
        purchase common stock (See Note 14).
 
 On
        March
        8, 2007, the Company repaid $400,000 related to a note payable for the JLWA
        acquisition.
 
 On
        May 10, 2007, the Company reached an agreement with the former owners of
        Secure Source to extend the maturity date of the 5% promissory notes in the
        principal amount of $750,000, which were issued as partial payment of the
        purchase price for the Secure Source acquisition, to May 31, 2007. On
        May 30, 2007, the Company paid the $750,000 note payable installment in
        full.
 
 During
        the year ended December 31, 2007, the Company paid $280,819 in full satisfaction
        of the note payable to the former owners of Safir for the Safir
        acquisition.
 
 On
        May
        11, 2007, under the JLWA Modification Agreement (See Note 10), the Company
        agreed to make additional payments in the form of cash, promissory notes
        and
        common stock to the JLWA Seller. The additional payments under the JLWA
        Modification Agreement include, but are not limited to, (i) a $4,500,000
        promissory note accruing interest at 5.65% per annum, due on January 15,
        2008,
        subject to a 5% penalty fee if not paid on that due date, and (ii) a $4,300,000
        promissory note accruing interest at 11.0% per annum, due on August 11, 2008.
        On
        October 29, 2007 the company paid $8,800,000 in full satisfaction of the
        notes
        payable.
  F-37
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **11. 
        Notes Payable, continued**
 
 At
        December 31, 2007 and 2006, notes payable consisted of the
        following:
  2007
              
              2006Notes
                  payable to seller for Witt Acquisition (See Note 4)
              
              $
              -
              
              $
              400,000Note
                  Payable for Safir Acquisition (See Note 4)
              
              
              -
              
              
              280,819Note
                  payable to seller for Secure Source Acquisition (See Note
                  4)
              
              $
              500,000
              
              
              1,250,000Note
                  payable to seller for Facticon Acquisition (See Note 4)
              
              
              100,000
              
              
              -Notes
                  payable to seller for On Line Consulting Acquisition(See
                  Note 4)
              
              
              595,430
              
              
              -Total
              
              
              1,195,430
              
              
              1,930,819Less –
                  current portion
              
              
              800,000
              
              
              1,430,819Long-term
                  portion
              
              $
              395,430
              
              $
              500,000
 
 The
        scheduled maturities of notes payable are shown in the following
        table:
 
 For
                  the Years Ending December 31,
              
              Amount2008
              
              $
              800,0002009
              
              
              395,430Total
              
              $
              1,195,430
 
 **12.
        Income Taxes**
 
 The
        Company’s net deferred tax asset of approximately $16,553,000 and $5,860,000 at
        December 31, 2007 and 2006 respectively, is subject to a 100% valuation
        allowance because it is more likely than not that the net deferred tax asset
        will not be realized. The valuation allowances related to the Company’s deferred
        tax asset increased by approximately $10,693,000, $3,241,000 and $1,427,000
        for
        the years ended December 31, 2007, 2006 and 2005,
        respectively.
  Significant
        components of the Company’s deferred tax assets and liability at December 31,
        2007 and 2006 is as follows:
 
 Deferred
                  tax assets:
              
              2007
              
              2006Net
                  operating loss carryforwards
              
              $
              5,148,823
              
              $
              2,005,120Stock-based
                  compensation
              
              
              1,946,199
              
              
              1,339,822Allowance
                  for doubtful accounts
              
              
              983,532
              
              
              783,045Excess
                  of tax over book basis of property and equipment
              
              
              -
              
              
              20,692Intangible
                  assets
              
              
              1,545,572
              
              
              642,113Goodwill
              
              
              7,104,899
              
              
              855,629Non-deductible
                  accruals
              
              
              420,861
              
              
              213,328Total
                  gross deferred tax assets
              
              
              17,149,887
              
              
              5,859,749Deferred
                  tax liability:Excess
                  of book over tax basis of property and equipment
              
              
              (596,723
              )
              
              -Net
                  deferred tax assets before valuation allowance
              
              
              16,553,164
              
              
              5,859,749Less:
                  valuation allowance
              
              
              (16,553,164
              )
              
              (5,859,749
              )Deferred
                  tax assets, net
              
              $
              -
              
              $
              -
  As
        of
        December 31, 2007, the Company had available approximately $12,864,000 and
        $12,909,000 of federal and state net operating losses (“NOL”), respectively,
        available for income tax purposes that may be carried forward to offset future
        taxable income, if any. These carryforwards expire in years 2021 through
        2027.
        The Company’s ability to use approximately $5,602,000 and $6,097,000 of its
        federal and state NOL carryforwards generated prior to July, 2006, respectively,
        is subject to an annual limitation of approximately $4,643,000 in future
        years
        pursuant to Section 382 of the Internal Revenue Code (“IRC”). For the year
        2008 and thereafter, the Company is no longer subject to any such
        limitations.
  F-38
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **12.
        Income Taxes, continued**
  As
        a
        result of the full valuation allowance, no income tax benefit has been recorded
        at December 31, 2007, 2006 and 2005 related to the Company’s operating
        losses for book purposes. The provision for income taxes using the statutory
        federal tax rate as compared to the Company’s effective tax rate is summarized
        as follows:
 
 As
                  of December 31,2007
              
              2006
              
              2005Tax
                  benefit at federal statutory rate
              
              
              (34.0
              )%
              
              (34.0
              )%
              
              (34.0
              )%State
                  income taxes
              
              
              (6.0
              )
              
              (6.0
              )
              
              (6.0
              )Permanent
                  differences
              
              
              1.0
              
              
              24.2
              
              
              -Utilization
                  of net operating losscarryforward
              
              
              -
              
              
              (1.3
              )
              
              -Other
              
              
              0.7
              
              
              (1.0
              )
              
              -Increase
                  in valuation allowance
              
              
              38.3
              
              
              18.1
              
              
              40.0Effective
                  income tax rate
              
              
              -
              %
              
              -
              %
              
              -
              %
 
 **13. 
        Commitments****and
        Contingencies**
  ***Employment
        Agreements***
 
 ***Dr.
        Harvey W. Schiller, Ph.D*** .
 On
        January 29, 2004, GlobalOptions entered into an employment agreement with
        Harvey W. Schiller, Ph.D., its Chairman of the Board and Chief Executive
        Officer. This agreement provided for base compensation of $200,000 per annum.
        The agreement provided for a sign-on grant of an option to purchase 55,147
        shares of common stock for which there is a 3 year vesting period and a one
        year
        bonus consisting of a grant of an option to purchase 55,147 shares of common
        stock that also vests over a 3 year period. For both stock option grants
        the
        exercise price is $4.80 per share.
 
 Dr. Schiller’s
        employment agreement was assigned to the Company effective as of June 27,
        2005. With the consummation of the reverse merger, the Company agreed to
        assume
        all of GlobalOptions’ rights and responsibilities under the employment
        agreement. Pursuant to the assignment, the following modifications, among
        others, were made to the employment agreement: (i) Dr. Schiller’s
        salary was increased to the annual rate of $300,000 retroactive to
        January 1, 2005, (ii) all 147,831 of Dr. Schiller’s stock options
        in GlobalOptions were confirmed to vest immediately upon the consummation
        of the
        reverse merger, (iii) Dr. Schiller agreed to forego receiving any 2005
        annual bonus that he is entitled to under the employment agreement, and
        (iv) the Company and Dr. Schiller agree to negotiate in good faith
        bonus arrangements after December 31, 2005.
 
 On
        December 19, 2006, the agreement was amended to extend the term through
        January 31, 2010. The agreement is subject to automatic one-year
        extensions, unless either party provides 60 days notice to the other party
        of
        its intention not to renew the agreement. The amendment provides for an annual
        base salary of $375,000, $400,000 and $425,000 starting January 1 of 2007,
        2008, and 2009 respectively, as well as an annual performance bonus payable
        50%
        in cash and 50% in restricted common stock which will vest upon the achievement
        of goals agreed upon mutually between Dr. Schiller and the Compensation
        Committee. In connection with the extension of the term of this employment
        agreement, Dr. Schiller was awarded a one-time grant of 100,000 shares of
        restricted common stock. The 100,000 shares of restricted stock has been
        provided as a pool of eligible restricted common stock shares that will be
        earned (or vested) by Dr. Schiller pursuant solely to the achievement of
        the performance goals agreed upon between Dr. Schiller and the Compensation
        Committee (see Note 20). At December 31, 2007, an accrued bonus of $150,000
        has
        been recorded in accrued compensation and related benefits and included in
        general and administrative expenses. In the event of death or disability,
        Dr. Schiller (or his estate) will be entitled to salary and pro rata bonus
        until termination, and 90 days from termination to exercise vested options;
        unvested options will be forfeited. If terminated for cause, Dr. Schiller
        will forfeit all unexercised options. In the event Dr. Schiller terminates
        for good reason or the employment agreement is terminated without cause,
        50% of
        his unvested stock options will vest and all vested options will remain
        exercisable for a period of 90 days from termination. The employment agreement
        contains non-compete and non-solicitation provisions for 12 months following
        termination, as well as confidentiality provisions. In the event of a change
        of
        control of the Company, the employment agreement provides for the vesting
        of all
        unvested options.
  F-39
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **13. 
        Commitments**  **and
        Contingencies, continued**
  ***Employment
        Agreements, continued***
 
 ***Mr.
        Jeffrey Nyweide***
 GlobalOptions
        was a party to a consulting agreement with BKS Advisors, LLC (“BKS”) (the
“Consulting Agreement”) pursuant to which BKS Advisors provides GlobalOptions
        management with certain business, strategy and financial services. The agreement
        with BKS had a term which extended through October 2006
        and provided for a monthly fee of $25,000 which could be adjusted
        based on the level of services provided. On June 1, 2005, BKS assigned its
        rights under this agreement to Jeffrey O. Nyweide, Chief Financial Officer
        and
        Executive Vice President of Corporate Development of GlobalOptions Group.
        On
        December 19, 2006, the Compensation Committee amended the term of this
        consulting agreement to extend through January 2010. In addition, the monthly
        fee provided for in this agreement was increased to $27,083, $29,167, and
        $31,250 for the years 2007, 2008 and 2009, respectively, as well as an annual
        performance bonus payable 50% in cash and 50% in restricted common stock
        which
        will vest upon the achievement of goals agreed upon mutually between Mr.
        Nyweide
        and the Compensation Committee. In connection with the extension of the term
        of
        this consulting agreement, Mr. Nyweide was awarded a one-time grant of 75,000
        shares of restricted common stock. The 75,000 shares of restricted common
        stock
        has been provided as a pool of eligible restricted stock shares that will
        be
        earned (or vested) by Mr. Nyweide pursuant solely to the achievement of the
        performance goals agreed upon between Mr. Nyweide and the Compensation Committee
        (see Note 20). At December 31, 2007, an accrued bonus of $112,500 has been
        recorded in accrued compensation and related benefits and included in general
        and administrative expenses.
  On
        August 13, 2007, effective as of August 1, 2007, The Company
        terminated the Consulting Agreement and entered into an employment agreement
        (the “Employment Agreement”) Mr. Nyweide, which sets forth the terms and
        provisions governing Mr. Nyweide’s employment with the Company.
 
 The
        Employment Agreement provides that Mr. Nyweide will report to the Chairman
        of the Company for an initial term commencing on August 1, 2007 and
        terminating on January 31, 2010, subject to one year extensions. Under the
        Employment Agreement Mr. Nyweide’s salary for the remainder of 2007 will be
        $27,083.33 per month and his annual base salary for 2008 will be $350,000
        and
        2009 will be $375,000. In addition, Mr. Nyweide shall receive $9,000 per
        month to help defray his cost of living in New York City. Mr. Nyweide shall
        also be entitled to annual bonuses payable 50% in cash and 50% in restricted
        stock subject to vesting according to mutually agreed goals, established
        by the
        Company’s Compensation Committee of its Board of Directors.
 
 The
        Employment Agreement provides that all options to purchase common stock and
        the
        75,000 shares of restricted stock subject to vesting as described above,
        granted
        to Mr. Nyweide pursuant to the Consulting Agreement, shall remain in full
        force and effect. Upon a change in control of the Company, all such options
        and
        restricted stock shall immediately vest, all performance conditions shall
        deemed
        to have been met and the exercise term of any stock options will equal the
        term
        of such options as originally granted. In addition, the Company has agreed
        to
        provide Mr. Nyweide with all employee benefit plans and programs offered by
        the Company to its senior management, including, but not limited to, 401(k)
        plans and group life, disability, health, medical and dental insurance plans.
 
 In
        the
        event that the Company terminates Mr. Nyweide’s employment with Cause (as
        defined in the Employment Agreement) or Mr. Nyweide resigns without Good
        Reason (as defined in the Employment Agreement), the Company’s obligations are
        limited generally to paying Mr. Nyweide his base salary through the
        termination date. In the event that the Company terminates Mr. Nyweide’s
        employment without Cause or Mr. Nyweide resigns with Good Reason, the
        Company is generally obligated to continue to pay 50% of Mr. Nyweide’s
        compensation for the remainder of the term of the Employment Agreement and
        his
        rights to his options and shares of restricted stock shall be determined
        in
        accordance with the plans pursuant to which such options or shares were granted.
  F-40
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **13. 
        Commitments**  **and
        Contingencies, continued**
  ***Employment
        Agreements, continued***
 
 ***Mr.
        Thomas Ondeck***
 Mr.
        Ondeck, President of the Global International division of the Company, entered
        into a five year employment agreement in January 2002. On October 17, 2006,
        this
        agreement was amended to extend the term through January 2010. The agreement
        is
        subject to automatic one year extensions unless either party provides 60
        days
        notice to the other party of its intention not to renew the agreement. The
        amended agreement provides for an annual base salary of $300,000 and an annual
        bonus of up to one hundred percent of base salary. The bonus amount is based
        upon the achievement of mutually agreed upon goals established by the
        Compensation Committee. Salary increases will be determined by the Compensation
        Committee and will be based upon the Company’s performance, as well as Mr.
        Ondeck’s contribution to that performance. Pursuant to the employment agreement,
        GlobalOptions maintains a “key-man” life insurance policy on the life of Mr.
        Ondeck, with a face amount of $500,000. The employment agreement may be
        terminated for cause by GlobalOptions upon the death or disability of Mr.
        Ondeck, or upon 30-days’ notice by either party. In the event GlobalOptions
        terminates the employment agreement without cause, it is required to pay
        Mr.
        Ondeck his current base salary and benefits for the lesser of 12 months,
        or the
        remaining term of the agreement.
 
 ***Mr.
        Halsey Fischer***
 Concurrently
        with its acquisition of the assets and business of CBR on August 14, 2005
        (See Note 4), GlobalOptions entered into a three-year employment and
        non-competition agreement with Halsey Fischer, the former president and chief
        executive officer of CBR. Pursuant to the agreement, Mr. Fischer became
        Chief Executive Officer of the Fraud and SIU Services unit and agreed to
        perform
        such other duties and responsibilities as the Board of Directors may assign,
        and
        has agreed to devote his full business time to GlobalOptions at a salary
        of
        $200,000 per year and a discretionary annual bonus of up to $50,000. The
        employment agreement may be terminated for cause by GlobalOptions, upon the
        death or disability of the executive, or upon 30-days’ notice by either party
        after three years from the commencement date. In the event GlobalOptions
        terminates the employment agreement without cause, it is required to pay
        Mr. Fischer his base salary and certain benefits for six months following
        termination. The employment agreement also contains non-compete and
        non-solicitation provisions for 12 months following termination, as well
        as
        confidentiality provisions.
 
 ***Mr.
        James Lee Witt***
 Concurrently
        with our acquisition of JLWA in March 2006 (See Note 4), the Company entered
        into a four year employment agreement with James Lee Witt. Pursuant to the
        agreement, Mr. Witt became the Chief Executive Officer of the Preparedness
        Services unit and agreed to perform such other duties and responsibilities
        as
        the Board of Directors may assign, and has agreed to devote his full time
        to the
        Company at a salary of $300,000 per year and a discretionary annual bonus.
        In
        addition, Mr. Witt receives a supplement of $200,000 to his annual compensation
        as consideration for his resignation from the International Code Council.
        The
        employment agreement may be terminated for cause by the Company, upon the
        death
        or disability of the executive, or upon 30-days’ notice by either party. In the
        event the Company terminates the employment agreement without cause, it is
        required to pay Mr. Witt his base salary and certain benefits for twelve
        months following termination. The employment agreement also contains non-compete
        and non-solicitation provisions for 12 months following termination, as well
        as
        confidentiality provisions. Further, on May 11, 2007, in connection with
        the
        execution of the JLWA 2007 Modification Agreement (See Note 10), the Company
        executed an amendment of Mr. Witt’s employment and non-competition agreement.
        Under the terms of this amendment, upon his voluntary termination of employment
        without good reason, Mr. Witt would be obligated to reimburse the Company
        in an amount equal to (i) 25% of the number of shares issued to the JLWA
        Sellers within 12 months prior to such termination and (ii) 25% of the base
        salary of Mr. Witt paid within 12 months prior to such
        termination.
  ***Mr.
        Howard  Safir***
 In
        May
        2006, concurrently with the Company’s acquisition of Safir (See Note 4), the
        Company entered into a three year employment agreement with Howard Safir,
        the
        former CEO of Safir. Pursuant to the agreement, Mr. Safir became the Chief
        Executive Officer of the Security Consulting and Investigations unit and
        agreed
        to perform such other duties and responsibilities as the Board of Directors
        may
        assign, and has agreed to devote substantially all of his business time,
        subject
        to a limited number of specified exceptions, to the Company at a salary of
        $300,000 per year and a discretionary annual bonus. The employment agreement
        may
        be terminated for cause by the Company, upon the death or disability of the
        executive, or upon 30-days’ notice by either party. In the event the Company
        terminates the employment agreement without cause during the initial term,
        it is
        required to pay Mr. Safir his base salary and certain benefits through
        March 21, 2009. The employment agreement also contains non-compete and
        non-solicitation provisions for 12 months following termination, as well
        as
        confidentiality provisions.
  F-41
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **13. 
        Commitments**  **and
        Contingencies, continued**
 
 ***Placement
        Agent Agreement***
 
 On
        March 9, 2006, the Company entered into an agreement with Burnham Hill Partners
        (“BHP”), a division of Pali Capital, Inc. to act as its placement agent in
        connection the private placement of certain promissory notes payable (See
        Note
        11).   In connection with this agreement, the Company has agreed to
        pay BHP a fee of 7% of certain of the gross proceeds received in connection
        with
        the issuance of the promissory notes payable.
 
 In
        addition, on March 14, 2006, the Company entered into a financial advisory
        agreement with BHP, with a term of nine months.   Under this
        agreement, BHP agreed to advise the Company in regard to potential strategic
        transactions.   Under this agreement, the Company agreed to issue to
        BHP a common stock warrant to purchase 31,250 shares, exercisable at $20.00
        per
        share to compensate BHP.  These warrants had a term of five years, a
        cashless exercise provision and standard weighted average anti-dilution
        protection and piggyback registration rights.  The value of these warrants
        was approximately $388,000 utilizing the Black Scholes option pricing model
        with
        the following assumptions: 0% dividend yield, 87% expected
        volatility, 4.77% risk-free rate and a five year expected life.  Stock
        based compensation expense of $388,000 has been recognized related to these
        warrants for the year ended December 31, 2006. On July 29, 2007, these warrants
        were exchanged for common stock in connection with the Company’s equity
        restructuring (See Note 14). For a period of one year from the date of this
        agreement, should the Company request the assistance of BHP, then in connection
        with certain transactions, the Company will pay to BHP a fee of 3% of the
        aggregate transaction value.
 
 Through
        December 31, 2006, BHP was paid aggregate consideration of $2,694,500 in
        connection with certain private placements of debt securities (See Note 11),
        consisting of cash and notes of $1,933,500 and $761,000, respectively.
 
 ***Operating
        Leases***
 
 In
        connection with the acquisitions of CBR, JLWA, Safir, Secure Source, Hyperion
        Risk, On Line Consulting, Bode and Facticon, GlobalOptions assumed the
        obligations for various office leases. Such lease obligations expire at various
        dates through June 2015.
 
 On
        July
        19, 2007, the Company entered into an agreement to lease 15,294 rentable
        square
        feet of office space in Washington, D.C, which replaces the Company’s expiring
        Washington D.C. office lease. The lease commenced on February 27, 2008 and
        expires on November 30, 2015. The Company has the option to extend the lease
        for
        an additional five years. Rent payments have been abated during the first
        six
        months of the lease.
 
 Future
        minimum lease payments under these operating leases are as follows:
 
 For
                  the Year Ending December 31,
              
              Amount2008
              
              $
              2,350,0002009
              
              
              2,777,0002010
              
              
              2,717,0002011
              
              
              2,488,0002012
              
              
              2,010,000Thereafter
              
              
              6,269,000Total
              
              $
              18,611,000
 
 Rent
        expense charged to operations amounted to approximately $3,103,000, $1,408,000,
        and $503,000 for the years ended December 31, 2007, 2006 and 2005,
        respectively.
 
 The
        terms
        of certain of the Company’s lease obligations provide for scheduled escalations
        in the monthly rent. In accordance with SFAS No. 13, “Accounting for Leases,”
the non-contingent rent increases are being amortized over the life of the
        leases on a straight line basis. Deferred rent of $346,228 and $190,008
        represents the long-term unamortized rent adjustment amount at December 31,
        2007
        and 2006 and was reflected as deferred rent obligations in the consolidated
        balance sheet. In addition, the current portion of deferred rent was $29,758
        and
        $53,844 at December 31, 2007 and 2006, respectively and is reflected within
        other current liabilities in the consolidated balance sheets.
  F-42
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **13. 
        Commitments**  **and
        Contingencies, continued**
 
 ***Advisory
        Agreements***
 
 On
        June
        12, 2007, the Company entered into an agreement with BHP to provide financial
        advisory services relating to the Equity Restructuring (see Note 14). In
        connection with this agreement, on July 26, 2007, the Company paid BHP a
        fee of
        $200,000.
 
 On
        August
        17, 2007, the Company entered into a financial advisory agreement with BHP
        to
        provide general advisory services including, but not limited to, identifying
        strategic transactions and providing capital market advice. The agreement
        commenced on September 1, 2007 and expired on December 31, 2007 and provided
        for
        compensation of $50,000 per month.
 
 ***Letters
        of Credit***
 
 In
        connection with the lease for its Washington D.C. office, the Company was
        required to maintain a standby letter of credit of $37,931 for the purpose
        of
        collateralizing future lease payments. During the year ended December 31,
        2005,
        the landlord drew upon the letter of credit and the security deposit in order
        to
        satisfy a portion of the Company’s obligations under the lease. Accordingly, at
        December 31, 2005, the Company was not in compliance with the standby letter
        of
        credit obligations under the lease. During March 2006, the Company reinstated
        the letter of credit and brought the Company back into compliance under the
        lease agreement. At December 31, 2007, the Company is in compliance under
        the
        terms of the lease and has amended the lease to allow the Company to remain
        in
        the premises through and including February 29, 2008 in accordance with the
        terms and conditions of the lease.
 
 In
        connection with the lease for the former JLWA office in Washington D.C.,
        the
        Company established a standby letter of credit of $150,000 for the purpose
        of
        collateralizing future lease payments. The letter of credit obligation is
        collateralized through the Company’s line of credit with a bank (See Note 9).
        During January 2007, the underlying lease was terminated.
 
 ***Litigation,
        Claims and Assessments***
 
 From
        time
        to time in the normal course of business the Company will be involved in litigation.  Except
        for certain claims against Facticon, as discussed in Note 4, the Company’s
        management has determined any asserted or unasserted claims to be immaterialto the
        consolidated financial statements.
 
 **14.**  ******  **Stockholders’
        Equity**
 
 ***Common
        Stock***
 
 The
        Company has authorized 100,000,000 shares of common stock. The holders of
        the
        Company’s common stock are entitled to one vote per share. The holders of common
        stock are entitled to receive ratably such dividends, if any, as may be declared
        by the Board of Directors out of legally available funds. However, the current
        policy of the Board of Directors is to retain earnings, if any, for the
        operation and expansion of the business. Upon liquidation, dissolution or
        winding-up of the Company, the holders of common stock are entitled to share
        ratably in all assets of the Company which are legally available for
        distribution, after payment of or provision for all liabilities and the
        liquidation preference of any outstanding Series D convertible preferred
        stock.
        The holders of common stock have no preemptive, subscription, redemption
        or
        conversion rights.
 
 On
        June
        10, 2006, the Company issued 10,883 shares of common stock, valued at $175,000,
        to a service provider in connection with the acquisition of Safir (See Note
        4).
 
 On
        January 1, 2007, under the 2006 Long-Term Incentive Plan, the Company issued
        3,471 shares of common stock with a value of $41,652 to various
        employees.
 
 On
        February 1, 2007, February 7, 2007 and February 21, 2007, the Company
        issued 39,706, 44,118 and 44,118 shares of common stock in connection with
        the
        exercise of stock options resulting in total proceeds of approximately
        $48,000.
 
 On
        February 21, 2007, the Company issued 3,125 shares of its common stock upon
        the
        conversion of 50 shares of Series A convertible preferred
        stock.
  F-43
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity**
 
 ***Common
        Stock, continued***
 
 Pursuant
        to a stock purchase agreement dated March 1, 2007, the Company issued 850
        shares
        of common stock to Verus International Group, of which John Oswald, one of
        our
        Directors, is Chief Executive Officer, valued at $15,000, 1,699 shares of
        common
        stock to Athorn, Clark and Partners, Inc. valued at $30,000 and 1,274 shares
        of
        common stock to Lippert/Heilshorn and Associates, Inc. valued at $22,500
        in
        connection with services provided to the Company.
 
 On
        July
        25, 2007, the Company completed an equity restructuring (the “Equity
        Restructuring”) in which holders of its Series A convertible preferred stock and
        Series B convertible preferred stock received, in consideration of the
        cancellation of those shares and all Series A, B-1 and B-2 warrants held
        by
        them, (1) one share of the Company’s newly created Series C convertible
        preferred stock for each share of Series A convertible preferred stock and
        Series B convertible preferred stock held by them and (2) 0.5 shares of
        common stock for each share into which the holder’s Series A convertible
        preferred stock and Series B convertible preferred stock was then convertible.
        In addition, holders of (a) the Company’s Series A warrants who did not
        also hold any shares of Series A convertible preferred stock and
        (b) the Company’s Series B warrants, Series C warrants and certain
        placement agent warrants received, in consideration of the cancellation of
        those
        warrants, 0.2 shares of common stock for each share subject to those warrants.
        Each share of Series C convertible preferred stock would automatically convert
        into 66.67 shares of common stock upon the consummation of a firm commitment
        underwritten public offering generating at least $20,000,000 in gross proceeds
        to the Company (a “Qualified Public Offering”). A limited number of holders
        whose receipt of common stock, whether in the Equity Restructuring or upon
        the
        conversion of the Series C convertible preferred stock, would cause them
        to
        beneficially own in excess of 4.99% of the Company’s outstanding common stock,
        received in the Equity Restructuring, and would receive upon the conversion
        of
        the Series C convertible preferred stock, in lieu of shares of common stock,
        shares of the Company’s Series D convertible preferred stock.
 
 In
        summary, as a result of the Equity Restructuring, (i) 6,330 shares of
        Series A convertible preferred stock, (ii) 53,070 shares of Series B
        convertible preferred stock and (iii) warrants to purchase an aggregate of
        2,913,041 shares of common stock were restructured into (x) 630,765 shares
        of common stock, (y) 59,400 shares of Series C convertible preferred stock
        and (z) 19,706.52 shares of Series D convertible preferred stock. On July
        26, 2007, the Company filed certificates with the Secretary of the State
        of
        Delaware eliminating the Series A and B convertible preferred stock.
  On
        October 29, 2007, the Company completed an underwritten public offering of
        4,500,000 shares of its common stock receiving approximately $20.25 million
        in
        gross proceeds or $18.2 million in net proceeds. The Company used a portion
        of
        the net proceeds from the proposed underwritten public offering to repay
        $4.3
        million of notes and $38,000 of related accrued interest.
  Upon
        the
        closing of the underwritten public offering on October 29, 2007, the then
        outstanding 59,400 shares of Series C convertible preferred stock were
        automatically converted into 1,541,167 shares of common stock and 36,282.8
        shares of Series D convertible preferred stock. At December 31, 2007, the
        Series
        D convertible preferred stock was convertible into 3,732,821 shares of common
        stock, subject to a 4.99% beneficial ownership cap in effect for these
        stockholders. On November 8, 2007, the Company filed a certificate with the
        State of Delaware, eliminating the Series C convertible preferred
        stock.
 
 During
        the year ended December 31, 2007, the Company issued 3,125 shares of common
        stock in connection with the conversion of 50 shares of Series A convertible
        preferred stock.
 
 During
        the year ended December 31, 2007, the Company issued 88,236 shares of common
        stock in connection with the exercise of stock options resulting in proceeds
        of
        $48,000.
 
 During
        the year ended December 31, 2007, the Company issued 39,706 shares of common
        stock in connection with the cashless exercise of 110,294 options. Additional
        paid-in capital was charged $317,644 to reflect the impact of the shares
        that
        were not issued in order to satisfy payroll withholding tax obligations which
        were paid in December 2007.
 
 The
        Company issued common stock in connection with the acquisitions of On Line
        Consulting and Facticon (See Note 4).
  F-44
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity, continued**
 
 ***GlobalOptions
        Shares Immediately Prior to the Reverse Merger***
 
 On
        June
        24, 2005, in anticipation of and in connection with the reverse merger
        agreement, each of the holders of its Series A, Series A-1 and Series A-2
        convertible preferred stock agreed to exchange the holders’ full rights,
        including accrued dividends of $1,381,099, in their convertible preferred
        shares
        on the basis of one share of the common stock of GlobalOptions Group for
        each
        13.6 shares of convertible preferred stock. This transaction resulted in
        the
        issuance of 824,504 shares of common stock of GlobalOptions Group in exchange
        for 11,213,254 shares of convertible preferred stock of GlobalOptions on
        June
        24, 2005.
 
 Pursuant
        to the Merger Agreement, stockholders of GlobalOptions received one share
        of GlobalOptions Group common stock for each 13.6 issued and outstanding
        shares
        of GlobalOptions common stock at closing for which 4,650,000 shares of
        GlobalOptions common stock was exchanged for 341,912 shares of common stock
        of
        GlobalOptions Group.
 
 The
        convertible preferred shares of GlobalOptions exchanged included the issuance
        of
        2,572 shares of common stock resulting from the cashless exercise in June
        2005
        of a warrant held by a financial institution for the purchase of 3,676 shares
        of
        stock of the Company, the issuance of 45,236 shares of common stock of the
        Company resulting from the surrender of QuanStar’s $250,000 Convertible Note and
        accrued interest of $17,083 and the issuance of 22,059 shares of common stock
        of
        the Company resulting from the exercise of a warrant to purchase 22,059 shares
        held by the QuanStar Group, LLC.
 
 ***Reverse
        Merger and Private Placement - Summary of
        Transactions***
 
 On
        June 24, 2005, the Company consummated a reverse merger transaction (See
        Note 1).
 
 At
        closing, GlobalOptions Group issued 1,236,283 shares of its common stock
        to the
        former common and convertible preferred stockholders of GlobalOptions, in
        exchange for 100% of their outstanding shares of GlobalOptions.
 
 GlobalOptions
        Group has assumed all of GlobalOption’s obligations under its outstanding stock
        option plan and had initially reserved 812,500 shares of GlobalOptions Group’s
        common stock for stock options issuable under a newly adopted 2005 Stock
        Option
        Plan (See Note 15). At the time of the reverse merger, GlobalOptions had
        outstanding stock options to purchase 4,450,721 shares of common stock, which
        outstanding options became stock options to purchase 327,259 shares of common
        stock of GlobalOptions Group, after giving effect to the reverse merger exchange
        ratio and the March 2007 1 for 8 stock split. Neither GlobalOptions nor
        GlobalOptions Group had any warrants to purchase shares of common stock
        outstanding immediately prior to the closing of the reverse merger. The pricing
        of all stock options has been adjusted on a 13.6 to 1 basis.
 
 Simultaneous
        with closing of the reverse merger, GlobalOptions Group sold to its majority
        stockholders its historical art business operations, and they assumed the
        historical liabilities of those operations. After giving effect to the
        cancellation of 9,962,750 shares held by the former stockholders, there were
        549,750 shares of GlobalOptions Group common stock outstanding before
        giving effect to the stock issuances in the reverse merger and private
        placement.
 
 In
        connection with the reverse merger, GlobalOptions Group completed the closing
        of
        a private placement of a total of 7,500 units consisting of one share of
        the
        Company’s Series A convertible preferred stock, par value $.001 per share,
        and a detachable, transferable warrant to purchase shares of the Company’s
        common stock, at a purchase price of $1,000 per unit, to accredited investors
        pursuant to the terms of a Confidential Private Offering Memorandum, dated
        April 18, 2005, as supplemented. Each share of Series A convertible
        preferred stock was initially convertible into 63 shares of common stock at
        any time. Each warrant entitles the holder to purchase 16 shares of common
        stock
        at an exercise price of $20.00 per share through June 24, 2009, subject to
        certain redemption provisions. The Company received proceeds from the tranches
        of the private placement of approximately $7,041,000, net of offering costs
        of
        approximately $459,000.
 
 Brookshire
        Securities Corporation served as placement agent in connection with the private
        placement. The placement agent received a cash fee in the aggregate of $200,000,
        four-year warrants to purchase 18,750 shares of GlobalOptions Group’s common
        stock at an exercise price of $16.00 per share, and four-year warrants to
        purchase an additional 43,750 shares of the Company’s common stock at an
        exercise price of $20.00 per share on terms which are identical to those
        warrants included in the units.
  F-45
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
  **14.**  ******  **Stockholders’
        Equity, continued**
 
 ***Reverse
        Merger and Private Placement - Summary of Transactions,
        continued***
 
 Under
        the
        terms of the private placement, the Company agreed to file a "resale"
        registration statement with the SEC covering the shares of common stock
        underlying the Series A convertible preferred stock and warrants issued in
        the
        private placement on or before October 28, 2005 (or 120 days after the closing).
        The Company was obligated to maintain the effectiveness of the "resale"
        registration statement from the effective date through and until 12 months
        after
        the date of closing of the merger, unless all securities registered under
        the
        registration statement have been sold or are otherwise able to be sold pursuant
        to Rule 144 under the Securities Act of 1933, provided the Company complies
        with
        their reporting obligations.
 
 In
        the
        event the "resale" registration statement was not filed with the SEC on or
        prior
        to the 180th day after the completion of the merger, each investor in the
        private placement was to receive an additional number of shares of Series
        A
        convertible preferred stock equal to 2% of the total number of shares of
        Series
        A preferred stock subscribed to by such investor in the private placement
        (which
        additional shares of underlying common stock would also be registered) for
        each
        month (or portion thereof) that the registration statement was not so filed,
        provided that the aggregate increase in such shares of Series A convertible
        preferred stock pursuant to this paragraph will in no event exceed 20% of
        the
        original number of shares of Series A convertible preferred stock subscribed
        for
        in the private placement.
 
 The
        Company agreed to use its best efforts to have the "resale" registration
        statement declared effective by the SEC as soon as possible after the initial
        filing and agreed to respond to all questions or comments by the SEC pertaining
        to such registration statement within 30 days of the receipt of such comments.
        In the event that the Company did not respond to questions or comments by
        the
        SEC pertaining to the registration statement within 30 days after the Company’s
        receipt of such comments, each investor in the private placement would receive
        an additional number of shares of Series A convertible preferred stock equal
        to
        2% of the total number of shares of Series A convertible preferred stock
        subscribed to by such investor in the private placement (which additional
        shares
        of underlying common stock would also be registered) for each month (or portion
        thereof) that the Company did respond to questions or comments by the SEC
        pertaining to such registration statement, provided that the aggregate increase
        in such shares of Series A convertible preferred stock pursuant to this
        paragraph would in no event exceed 20% of the original number of shares of
        Series A convertible preferred stock subscribed to in the private placement.
        This registration statement was declared effective and subsequently, on June
        11,
        2007, the Company withdrew the registration statement.
 
 Verus
        International Group (“Verus”), John Oswald, one of our Directors, is Chief
        Executive Officer, served as advisor to the Company on the structuring and
        execution of the reverse merger. In connection with the identification and
        structuring of the reverse merger and effective as of the closing of the
        reverse
        merger, the Company paid Verus or its designees a fee equal to 18,125 shares
        of
        common stock valued at $337,850 and a fee paid in warrants as an advisor
        for the
        private placement equal to 49,512 cashless four-year warrants to purchase
        the
        Company’s common stock exercisable at $16.00 per share, and a fee paid in
        warrants equal to 131,738 warrants to purchase the Company’s common stock
        exercisable at $20.00 per share on terms which are identical to those warrants
        included in the units.
 
 The
        Company’s placement agent entered into a selected dealer agreement with
        Starboard Capital Markets, LLC (“Starboard Capital”), a registered broker-dealer
        for the sale of certain of the units. Pursuant to the form of selected dealer
        agreement, for units sold by the selected dealer which were received and
        accepted by the Company and the placement agent, Starboard Capital received
        (i)
        a cash fee of $7,500 and (ii) warrants to purchase 18,750 shares of the
        Company’s common stock. These warrants are comprised of (i) warrants to purchase
        5,250 shares of common stock with an exercise price equal to $16.00 per share,
        exercisable for a four-year period commencing on the date of issuance, with
        cashless exercise features, and (ii) warrants to purchase 13,500 shares of
        common stock with an exercise price equal to $20.00 per share, exercisable
        for a
        four-year period commencing on the date of issuance, with features otherwise
        identical to the warrants sold in the private placement.
 
 The
        Company agreed to engage Verus for a period of 24 months following the
        closing of the merger and private offering to provide capital markets advisory
        services at a monthly rate of $10,000, payable in cash or in common stock
        at the
        then-current market value. During the years ended December 31, 2007, 2006
        and
        2005, the Company issued 850, 1,627 and 1,402 shares of common stock, valued
        at
        $15,000, $30,000 and $15,000, respectively, in connection with this
        agreement.
  F-46
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity, continued**
 
 ***Series
        A Convertible Preferred Stock***
 
 The
        Company has authorized a total of 15,000,000 shares of preferred stock. In
        conjunction with the reverse merger, the Company designated 16,000 shares
        as
        authorized for Series A convertible preferred stock.
 
 Holders
        of Series A convertible preferred stock were entitled to convert their shares
        into common stock, without any further payment thereafter. Each share of
        Series
        A convertible preferred stock was initially convertible into 63 shares of common
        stock at a conversion price of $16.00 per common share and was immediately
        convertible into common stock.
 
 On
        September 22, 2005, GlobalOptions Group closed out its initial private placement
        with the sale of 250 units, as detailed in the Company’s Confidential Private
        Offering Memorandum, dated April 18, 2005, as amended, consisting of one
        share
        of the Company’s Series A convertible preferred stock, par value $.001 per
        share, and a detachable, transferable warrant to purchase shares of the
        Company’s common stock. The Company received proceeds from the private placement
        of approximately $160,000, net of offering costs of $90,000. Each share of
        Series A convertible preferred stock was initially convertible into
        63 shares of common stock at any time. Each warrant entitles the holder to
        purchase 16 shares of common stock at an exercise price of $20.00 per share
        through June 24, 2009, subject to certain redemption provisions. In connection
        with this offering, Series A warrants to purchase 3,906 shares of common
        stock
        were issued to investors, Series B warrants to purchase 1,513 shares of common
        stock were issued to the placement agent and advisors and Series C warrants
        to
        purchase 570 shares of the common stock were issued to the placement agent
        and
        advisors. In addition, in conjunction with the close out of the initial private
        placement, Series B warrants to purchase 43,874 shares of the common stock
        and
        Series C warrants to purchase 16,543 shares of common stock were issued to
        Verus.
 
 Pursuant
        to the Equity Restructuring, all shares of Series A convertible preferred
        stock
        were retired on July 25, 2007. The Series A convertible preferred stock was
        eliminated on July 26, 2007.
 
 ***Series
        A Convertible Preferred Stock - Beneficial Conversion Feature and
        Deemed***  ***Dividends***
  At
        June
        24, 2005, the date of issuance, the fixed conversion price of the Series
        A
        convertible preferred stock of $16.00 represented a discount to the market
        value
        of the Company’s common stock, which was at a quoted market price of $16.80 per
        share. In accordance with EITF 00-27, and EITF 98-5, “Accounting for
        Convertible Securities with Beneficial Conversion Features or Contingently
        Adjusted Conversion Ratios”, the Company determined the relative fair value of
        the warrants and the Series A convertible preferred stock and allocated the
        proceeds received on a relative fair value basis. The fair value of the warrants
        was calculated using the Black-Scholes option pricing model with the following
        assumptions: dividend yield of 0%, expected volatility of 55%, risk-free
        interest rate of 3% and an expected term of two years. Based upon this
        calculation, the effective conversion price of the Series A convertible
        preferred stock was determined to be $15.04 per common share, resulting in
        a
        beneficial conversion feature of $832,500 at June 24, 2005.
 
 At
        September 22, 2005, the fixed conversion price of the Series A convertible
        preferred stock of $16.00 represented a discount to the market value of the
        Company’s common stock, which was at a quoted market price of $24.00 per share.
        The Company determined the relative fair value of the warrants and the Series
        A
        convertible preferred stock and allocated the proceeds received on a relative
        fair value basis. The fair value of the warrants was calculated using the
        Black-Scholes option pricing model with the following assumptions: dividend
        yield of 0%, expected volatility of 55%, risk-free interest rate of 3% and
        an
        expected term of two years. Based upon this calculation, the effective
        conversion price of the Series A convertible preferred stock was determined
        to
        be $9.44 per common share, resulting in a beneficial conversion feature of
        $147,250 at September 22, 2005.
 
 The
        Company has presented the beneficial conversion feature as a deemed dividend
        to
        the holders of the Series A convertible preferred stock on the consolidated
        statements of operations of $979,750 for the year ended December 31,
        2005.
  F-47
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity, continued**
 
 ***Series
        A Convertible Preferred Stock Features***
 
 The
        number of shares of common stock issuable upon conversion of the Series A
        convertible preferred stock was subject to adjustment upon the occurrence
        of
        certain events, including, among others, a stock split, reverse stock split
        or
        combination of the common stock; an issuance of common stock or other securities
        of the Company as a dividend or distribution on the common stock; a
        reclassification, exchange or substitution of the Company’s common stock; or a
        capital reorganization of the Company. In the event that the Company issued
        any
        shares of common stock or common stock equivalents in a private placement,
        secondary offering or shelf offering for cash consideration at a price less
        than
        $16.00 per share of common stock, the conversion rate would be that number
        of
        shares of common stock equal to $125 divided by the price per share at which
        the
        Company will issue common stock (the “Denominator”), but in no event would the
        Denominator be less than $6.12 per share.
 
 Holders
        of Series A convertible preferred stock were entitled to vote their shares
        on an
        as-if-converted to common stock basis, and would vote together with the holders
        of the common stock, and not as a separate class. Holders of Series A
        convertible preferred stock would also have any voting rights to which they
        were
        entitled by law.
 
 In
        the
        event of any voluntary or involuntary liquidation, dissolution or winding-up
        of
        the Company, holders of Series A convertible preferred stock would be entitled
        to receive out of assets of the Company available for distribution to its
        stockholders, before any distribution are made to holders of the common stock,
        liquidating distributions in an amount equal to $1,000 per share. After payment
        of the full amount of the liquidating distributions to which the holders
        of the
        Series A convertible preferred stock were entitled, holders of the Series
        A
        convertible preferred stock would receive liquidating distributions pro rata
        with holders of common stock, based on the number of shares of common stock
        into
        which the Series A convertible preferred stock was convertible at the conversion
        rate then in effect.
 
 Holders
        of Series A convertible preferred stock were not entitled to receive any
        dividends, except to the extent that any dividends are declared on the Company’s
        common stock, in which case holders of Series A convertible preferred stock
        would be entitled to receive such dividends on an as-if-converted
        basis.
 
 ***Warrants
        (Series A & B*** *)*
  Series
        A
        warrants to purchase 121,094 shares of common stock were issued to investors
        and
        Series B warrants to purchase 234,375 shares of common stock were issued
        to the
        placement agent and advisors, at an exercise price of $20.00 per share from
        the
        date of issuance until the fourth anniversary thereof. As a result of an
        adjustment pursuant to the anti-dilution protection associated with the
        warrants, for the Series A and Series B warrants the number of shares which
        could have been purchased was increased to 151,391 and 292,983 respectively,
        and
        the warrant exercise price was reduced to $16.00 per share.
  Pursuant
        to the Equity Restructuring, on July 25, 2007, the Series A and Series B
        warrants were exchanged for either common stock, Series C or Series D
        convertible preferred stock.
 
 ***Warrants
        (Series C)***
  Series
        C
        warrants to purchase 90,634 shares of common stock were issued to the placement
        agent and advisors at an exercise price of $16.00 per share from the date
        of
        issuance until the fourth anniversary thereof. These warrants could have
        been
        exercised upon surrender of the certificate therefore, accompanied by payment
        of
        the full exercise price for the number of warrants being exercised. The holder
        may also alternatively exercise these warrants on a cashless basis by
        surrendering the warrant with an executed notice of cashless exercise attached
        thereto, in which event the Company would issue to the holder the number
        of
        shares of stock determined following the formula contained therein.
 
 Pursuant
        to the Equity Restructuring, on July 25, 2007, the Series C warrants were
        exchanged for either common stock, Series C or Series D convertible preferred
        stock.
  F-48
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity, continued**
 
 ***Adjustments
        (applicable to Warrants - Series A, B and C)***
  In
        the
        event that the Company issued any shares of its common stock or common stock
        equivalents following in a private placement, secondary offering or shelf
        offering for cash consideration at a price less than $20.00 per share of
        common
        stock for Series A and B warrants or $16.00 per share of common stock for
        Series
        C warrants, respectively, (i) the number of shares of common stock for which
        each warrant was exercisable would be adjusted to equal that number which
        is the
        result of the original number of shares of common stock for which each warrant
        was exercisable multiplied by $20.00 per share of common stock for Series
        A and
        B warrants and $16.00 per share of common stock for Series C warrants, and
        divided by the price per share at which the Company would issue such common
        stock or common stock equivalents, but in no event would the denominator
        be less
        than $6.12 per share, and (ii) the exercise price of each warrant would be
        reduced to equal the price per share at which GlobalOptions Group issued
        such
        common stock or common stock equivalents, but in no event would the exercise
        price be reduced to less than $6.12 per share. Additionally, the warrants
        contained provisions that protected the holders thereof against dilution
        by
        adjustment of the purchase price in certain events, such as stock dividends,
        stock splits, and other similar events.
 
  During
        the year ended December 31, 2006, in connection with these warrant
        adjustment provisions, holders received the right to purchase for the Series
        A
        and Series B warrants, additional shares of common stock aggregating 30,297
        and
        58,608, respectively.
 
 The
        holders of any type of warrant will not possess any voting or other rights
        as a
        stockholder of the Company unless and until the holder exercises the warrant.
  A
        summary
        of the Company’s Series A, B, and C warrants outstanding and fully exercisable
        at December 31, 2006 is presented in the table below, after the effect of
        the dilutive adjustment during such year:
  **Exercise Price**
                **$16.00**Series
                  A
              
              
              151,391Series
                  B
              
              
              292,983Series
                  C
              
              
              90,634Outstanding
                  and Exercisable at December 31, 2006
              
              
              535,008
 
 ***Series
        B Convertible Preferred Stock***
  On
        June
        29, 2006, the Company authorized the designation of a total of 7,500 shares
        as
        Series B convertible preferred stock.
  On
        June
        29, 2006, in a private placement, notes in the amount of $45,811,000 and
        accrued
        interest of $339,731 were exchanged for 53,073 units, valued at $1,000 per
        unit
        for a total value of approximately $53,073,000.  Each unit consisted of one
        share of Series B convertible preferred stock and a detachable, transferable
        series B-1 warrant to purchase 22 shares of common stock at $17.20 per
        share and a detachable, transferable warrant series B-2 to purchase 22
        shares at $22.80 per share.
  Pursuant
        to the Equity Restructuring, all shares of Series A convertible preferred
        stock
        were retired on July 25, 2007. The Series A convertible preferred stock was
        eliminated on July 26, 2007.
  F-49
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity, continued**
 
 ***Series
        B Convertible Preferred Stock - Optional Conversion***
 
 Holders
        of Series B convertible preferred stock would be entitled to convert their
        shares into the Company’s common stock, without any further payment. Each share
        of Series B convertible preferred stock was initially convertible into 63
        shares
        of common stock at a conversion price of $16.00. The number of shares of
        the
        Company’s common stock issuable upon conversion of the Series B convertible
        preferred stock was subject to adjustment upon the occurrence of certain
        events,
        including, among others, a stock split, reverse stock split or combination
        of
        the Company’s common stock; an issuance of common stock or other securities of
        the Company as a dividend or distribution on the Company’s common stock; a
        reclassification, exchange or substitution of the Company’s common stock; or a
        capital reorganization of the Company. In the event that the Company issued
        any
        shares of common stock or common stock equivalents in a private placement,
        secondary offering or shelf offering for cash consideration at a price less
        than
        $16.00 per share of common stock, the conversion price would be reduced based
        on
        weighted average anti-dilution protections subject to customary carve outs,
        but
        in no event would the conversion price be less than $6.12 per
        share.
 
 ***Mandatory
        Conversion***
  Subject
        to an effective Registration Statement, beginning 12 months from the closing
        date of the offering of the Series B convertible preferred stock, if the
        closing
        bid price of the common stock exceeded $36.00 and trading volume of the
        Company’s common stock was not less than 12,500 shares for at least fifteen
        trading days out of a period of twenty (20) consecutive trading days, the
        Company could have required the conversion of the Series B convertible preferred
        stock into shares of common stock at the applicable conversion price.
 
 ***Voting
        Rights***
 
 Holders
        of Series B convertible preferred stock were entitled to vote their shares
        on an
        as-if-converted to common stock basis, up to a 4.99% of the then issued and
        outstanding shares of the Company's common stock, and would vote together
        with
        the holders of the common stock, and not as a separate class. Provided that
        at
        least 25% of the Series B convertible preferred stock remains outstanding,
        the consent of a majority of the outstanding Series B convertible preferred
        stock was required for (1) amendments of the Series B certificate of
        designation, (2) amendments of our certificate of incorporation or bylaws
        adversely affecting the Series B convertible preferred stock, (3) the
        authorization or issuance of any equity securities ranking pari passu with
        or
        senior to the Series B convertible preferred stock and (4) specified other
        corporate actions. Holders of Series B convertible preferred stock would
        also
        have any voting rights to which they are entitled by law.
 
 ***Liquidation
        Rights***
 
 In
        the
        event of any voluntary or involuntary liquidation, dissolution or winding-up
        of
        the Company, holders of Series B convertible preferred stock would be entitled
        to receive out of assets of the Company available for distribution to the
        Company’s stockholders, before any distribution was made to holders of the
        common stock, liquidating distributions in an amount equal to $1,000 per
        share. After payment of the full amount of the liquidating distributions
        to
        which the holders of the Series B convertible preferred stock are entitled,
        holders of the Series B convertible preferred stock would receive liquidating
        distributions pro rata with holders of the Company’s Series A convertible
        preferred stock and holders of the common stock, based on the number of shares
        of common stock into which the Series B convertible preferred stock is
        convertible at the conversion price then in effect.
  ***Dividends***
  Commencing
        18 months from the issuance date of June 29, 2006, dividends would have
        accumulated at the rate of 6% per annum for the first 12 months and 8% per
        annum
        thereafter. Dividends were payable in cash or in shares of common stock at
        the
        holder’s election. To the extent that any dividends would have been declared on
        the common stock, holders of Series B convertible preferred stock would have
        been entitled to receive such dividends on an as-if-converted basis. No
        dividends could have been or were declared or paid on junior securities until
        the dividend on the Series B convertible preferred stock was paid in
        full.
  F-50
 
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity, continued**
 
 ***Series
        B Convertible Preferred Stock - Beneficial Conversion Feature and Deemed
        Dividends***
 
 At
        June
        29, 2006, the date of issuance, the fixed conversion price of the Series
        B
        convertible preferred stock of $16.00 represented a discount to the market
        value
        of the Company’s common stock, which was at a quoted market price of $17.60 per
        share. In accordance with EITF 00-27 and EITF 98-5, the Company determined
        the
        relative fair value of the warrants and the Series B convertible preferred
        stock
        and allocated the proceeds received on a relative fair value basis. The fair
        value of the warrants was calculated using the Black-Scholes option pricing
        model with the following assumptions: dividend yield of 0%, expected volatility
        of 87%, risk-free interest rate of 5.21% and an expected term of two and
        a half
        years. Based upon this calculation, the effective conversion price of the
        Series
        B convertible preferred stock was determined to be $10.24 per common share,
        resulting in a beneficial conversion feature for a deemed dividend of
        $24,413,362 for the year ended December 31, 2006.
 
 ***Warrants
        (Series B-1 and Series B-2)***
 
 During
        the year ended December 31, 2007, as a result of adjustments with regard
        to
        anti-dilution protection, the number of outstanding Series B-2 warrants was
        increased from 1,160,906 to 1,185,872, and the warrant exercise price was
        reduced from $22.48 to $ 22.32.
 
 Each
        Series B-1 warrant, of which 1,160,906 were issued in the closing of the
        Company’s Series B convertible preferred stock offering, entitles the holder
        thereof to purchase shares of the Company’s common stock at an exercise price of
        $17.20 per share from the date of issuance until the fifth anniversary thereof.
        Each Series B-2 warrant, of which 1,160,906 were also issued in the closing
        of
        the Company’s Series B convertible preferred stock offering, entitled the holder
        thereof to purchase shares of the Company’s common stock at an exercise price of
        $22.80 per share from the date of issuance until the fifth anniversary thereof.
        As a result of an adjustment with regard to anti-dilution protection, the
        number
        of outstanding Series B-2 warrants was increased to 1,169,111 and the warrant
        exercise price was reduced to $22.64. In the aggregate, these warrants have
        a
        fair value of approximately $20,800,000 utilizing the Black-Scholes option
        pricing model with the following assumptions used: expected life 2.5 years,
        volatility 87%, 0% dividends and a risk-free interest rate 5.21%.
 
 A
        summary
        of the Company’s Series B-1 and B-2 warrants outstanding and fully exercisable
        at December 31, 2006 is presented in the table below, after the effect of
        the dilutive adjustment during such year:
 
 Exercise
                  Prices$17.20
              
              $22.64
              
              TotalSeries
                  B-1
              
              
              1,160,906
              
              
              -
              
              
              1,160,906Series
                  B-2
              
              
              -
              
              
              1,169,111
              
              
              1,169,111Outstanding
                  and exercisable
              
              
              1,160,906
              
              
              1,169,111
              
              
              2,330,017
 
 In
        connection with the Equity Restructuring, on July 25, 2007, the Series B-1
        and
        Series B-2 Warrants were exchanged for either common stock, Series C or Series
        D
        convertible preferred stock.
 
 ***Adjustments***
  Prior
        to
        the Equity Restructuring, in the event that the Company issued any shares
        of
        common stock or common stock equivalents in a private placement, secondary
        offering or shelf offering for cash consideration at a price less than the
        current warrant exercise price then in effect, the warrant exercise price
        would
        be reduced based on weighted average anti-dilution protections subject to
        customary carve outs. Additionally, the warrants contained provisions that
        protected the holders thereof against dilution by adjustment of the purchase
        price in certain events, such as stock dividends, stock splits, and other
        similar events.
 
 The
        holders of any type of warrant would not possess any voting or other rights
        as a
        stockholder of the Company unless and until the holder exercises the
        warrant.
  F-51
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity, continued**
 
 ***Exercise***
 
 The
        warrants could have been exercised upon surrender of the certificate therefore
        on or prior to the expiration date at the Company’s offices with the form of
“Election to Purchase” section of the warrant filled out and executed as
        indicated, accompanied by payment (in the form of certified or cashier’s check
        payable to the order of GlobalOptions Group, Inc., wire transfer or by cashless
        exercise) of the full exercise price for the number of warrants being exercised.
 
 ***Transfer,
        Exchange and Exercise***
 
 The
        warrants could have been exercised upon surrender of the certificate on or
        prior to the expiration date (as explained below) at the Company’s offices with
        the form of “Election to Purchase” section of the warrant filled out and
        executed as indicated, accompanied by payment (in the form of certified or
        cashier’s check payable to the order of GlobalOptions Group, Inc.) of the full
        exercise price for the number of warrants being exercised.
 
 ***Investor
        Rights Agreement***
 
 The
        Company entered into an Investor Rights Agreement, dated as of June 28,
        2006, with the purchasers of the Company’s Series B convertible preferred stock
        in which the Company agreed to register for resale all of the shares of common
        stock issued or issuable upon the conversion of the Series B convertible
        preferred stock and the exercise of the Series B-1 and Series B-2 warrants.
        The
        Company agreed to file a resale registration statement covering these shares
        by
        60 days following the closing date of the private placement (the “Filing Date”)
        and to use its best efforts to have the resale registration statement declared
        effective by 120 days following the closing date of the private placement
        (the
“Effectiveness Date”). The Company also agreed to use its best efforts to
        maintain the effectiveness of the resale registration statement until the
        earlier of the time when all of the registered shares have been sold or may
        be
        sold without restriction pursuant to Rule 144(k) under the Securities Act
        of
        1933. The Investor Rights Agreement obligates the Company to pay specified
        liquidated damages to the purchasers to the extent the Company does not meet
        these deadlines or maintain the effectiveness of the resale registration
        statement for the required time period, as well as for certain other events.
 
 On
        October 23, 2006, the Company and holders of a majority in interest of the
        Company’s Series B convertible preferred stock amended the Company's Investor
        Rights Agreement dated as of June 28, 2006 to amend and restate the
        definition of “Effectiveness Date” in the Investor Rights Agreement to read as
        follows: “Effectiveness Date” means the date that is one hundred and twenty
        (120) days following the closing date, provided that such date shall be
        tolled (i) for the duration of any blackout period, (ii) for periods
        of regulatory review exceeding customary periods, and (iii) for periods of
        regulatory review the resolution of which was outside the full control, power
        or
        authority of the Company or its agents, provided the Company has met comment
        response deadlines applicable to it (to the extent within its or its agents’
full control, power or authority) and was using its reasonable best efforts
        to
        cause the registration statement to be declared effective under the Securities
        Act.
  F-52
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  **Stockholders’
        Equity, continued**
 
 ***Investor
        Rights Agreement, continued***
 
 On
        February 21, 2007, the Company entered into agreements with three holders
        of Series B convertible preferred stock acknowledging the Company’s obligation
        under the Investor Rights Agreement to prepare and file with the SEC an
        additional registration statement (the “Additional Registration Statement”) to
        register shares that were not covered (the “Remaining Securities”) by the
        Company’s registration statement on Form SB-2 (File No. 333-136468) (the
“Existing Registration Statement”). The Company acknowledged that, as a result
        of its failure to file and cause a registration statement to become effective
        as
        to the Remaining Securities, liquidated damages with respect to such Remaining
        Securities (“Remaining Securities Liquidated Damages”) had accrued and continued
        to accrue, on and after February 2, 2007, the date on which the Existing
        Registration Statement was declared effective as outlined in the Investor
        Rights
        Agreement. Such holders agreed to waive, subject to the conditions set forth
        below, their right to payment of such liquidated damages resulting solely
        from
        the omission of the Remaining Securities from the Existing Registration
        Statement and any failure to file, or have declared effective, a registration
        statement with respect to the Remaining Securities by the Filing Date or
        the
        Effectiveness Date, as the case may be. The holders agreed that such waiver
        would continue in force and effect so long as the Company used its reasonable
        best efforts to file as promptly as practicable, and cause to be declared
        effective as promptly as practicable, the Additional Registration Statement
        with
        respect to the Remaining Securities as and to the extent permitted by applicable
        federal securities laws, rules, regulations and interpretations thereof.
        At such
        time as the Company failed to so use its reasonable best efforts, as and
        to the
        extent permitted by applicable federal securities laws, rules, regulations
        and
        interpretations thereof, the above waiver would be null and void and all
        payment
        obligations of the Company with respect to the Remaining Securities Liquidated
        Damages (but not liquidated damages with respect to the holders’ registered
        securities) and rights and remedies of the holders would be revived as if
        such
        waiver were not given.
 
 In
        connection with the Equity Restructuring, the Investor Rights Agreement was
        terminated on July 25, 2007.
 
 ***Registration
        Rights - Accounting Considerations***
 
 EITF
        Issue No. 05-4 “The Effect of a Liquidated Damages Clause on a Freestanding
        Financial Instrument Subject to EITF Issue No. 00-19”, “Accounting for
        Derivative Financial Instruments Indexed to, and Potentially Settled in,
        a
        Company’s Own Stock” (“EITF No. 05-4”) addresses financial instruments, such as
        stock purchase warrants, which are accounted for under EITF 00-19 that may
        be
        issued at the same time and in contemplation of a registration rights agreement
        that includes a liquidated damages clause. The consensus of EITF No. 05-4
        has
        not been finalized. On June 29, 2006, the Company completed a private placement
        of convertible notes and entered into registration rights and warrant agreement
        in connection with and following the private placement. The Company views
        its
        registration rights agreement as a free standing financial instrument that
        includes liquidated damages which could be deemed substantial. Accordingly
        the
        Company views that the interpretive guidance in EITF Issue No. 05-4, view
        C,
        provided the most appropriate measure and would require a company, in certain
        circumstances to record a derivative liability. However due to various factors
        including the good filing history of the Company, the lower likelihood of
        a
        penalty for liquidated damages relating to the requirement by the Company
        to
        file the registration statement related to the warrants, to have the
        registration statement declared effective (registration statement was declared
        effective, see below) and remain effective, the exposure to this registration
        rights damages was deemed to be de-minimus and therefore no liability was
        recorded in the consolidated financial statements at December 31,
        2006.
 
 FSP
        EITF
        00-19-2 specifies that the contingent obligation to make future payments
        or
        otherwise transfer consideration under a registration payment arrangement
        should
        be separately recognized and measured in accordance with SFAS No. 5,
“Accounting for Contingencies.” Although the registration rights agreement
        provides for the payment of liquidated damages under certain conditions,
        due to
        various factors, including the good filing history of the Company relating
        to
        the requirement by the Company to file the registration statement, to have
        the
        registration statement declared effective and remain effective, the imposition
        of a registration rights liquidated damages liability was deemed to be not
        probable and therefore non-accruable at December 31, 2007 and
        2006.
  F-53
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
  **14.**  ******  **Stockholders’
        Equity, continued**
  ***Series
        C Convertible Preferred Stock***
 
 On
        July
        25, 2007, the Company filed a certificate of designation with the State of
        Delaware authorizing the designation of a total of 60,000 shares of Series
        C
        convertible preferred stock.
 
 ***Optional
        Conversion***
 
 Subject
        to the beneficial ownership cap described below, holders of Series C convertible
        preferred stock are entitled at any time to convert their shares of Series
        C
        convertible preferred stock into common stock, without any further payment.
        Each
        share of Series C convertible preferred stock is initially convertible into
        66.67 shares of common stock, based on a conversion price of $15.00 per share.
        The number of shares of common stock issuable upon conversion of the Series
        C
        convertible preferred stock is subject to adjustment upon the occurrence
        of
        certain events, including, among others, stock dividends, subdivisions and
        combinations of the Company’s common stock. In the event that the Company issues
        any shares of common stock or common stock equivalents at an effective price
        less than $15.00 per share of common stock, the conversion price will be
        reduced
        based on weighted average anti-dilution protections, subject to customary
        carve-outs, but in no event will the conversion price be less than $7.50
        per
        share.
 
 ***Mandatory
        Conversion***
 
 Subject
        to an effective registration statement, beginning 12 months from the closing
        date of the Equity Restructuring, if the closing bid price of the Company’s
        common stock exceeds $22.50 for 20 consecutive trading days and the trading
        volume of the common stock is not less than 50,000 shares for at least 15
        of
        those 20 consecutive trading days, the Company may require the conversion
        of the
        Series C convertible preferred stock into shares of common stock at the
        applicable conversion price. In the event a holder of Series C convertible
        preferred stock is prohibited from converting into common stock under this
        provision due to the 4.99% beneficial ownership limitation discussed below,
        the
        excess portion of the Series C convertible preferred stock will be converted
        into Series D convertible preferred stock on a one-for-one basis.
  ***Series
        C Convertible Preferred Stock - Automatic Conversion***
 
 The
        Series C convertible preferred stock was automatically converted into common
        stock upon the consummation of the Qualified Public Offering. In the event
        a
        holder of Series C convertible preferred stock is prohibited from converting
        into common stock under this provision due to the 4.99% beneficial ownership
        limitation discussed below, the excess portion of the Series C convertible
        preferred stock will be converted into Series D convertible preferred stock
        on a
        one-for-one basis. Participants in the Equity Restructuring who elected to
        receive solely Series D convertible preferred stock in lieu of shares of
        common
        stock they would have otherwise received may also elect to receive solely
        Series
        D convertible preferred stock upon any optional, mandatory or automatic
        conversion of the Series C convertible preferred stock.
  ***Limitations
        on Conversion***
 
 The
        Series C convertible preferred stock is subject to a beneficial ownership
        cap
        providing that each holder of Series C convertible preferred stock may not
        convert his shares into common stock such that the number of shares of common
        stock issued after the conversion would exceed, when aggregated with all
        other
        shares of common stock owned by such holder and its affiliates at such time,
        in
        excess of 4.99% of the then issued and outstanding shares of the Company’s
        common stock. A holder may at any time waive this 4.99% cap upon 61 days’
notice.
  F-54
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity, continued**
  ******  ***Voting Rights***
 
 Subject
        to the beneficial ownership cap described above, holders of Series C convertible
        preferred stock were entitled to vote their shares on an as-converted to
        common
        stock basis, and will vote together with the holders of the common stock,
        and
        not as a separate class. Provided that at least 25% of the Series C convertible
        preferred stock remains outstanding, the consent of a majority of the
        outstanding Series C convertible preferred stock is required for
        (1) amendments of the Series C convertible preferred stock certificate of
        designation, (2) amendments of the Company’s certificate of incorporation
        or bylaws adversely affecting the Series C convertible preferred stock and
        (3) the authorization or issuance of any equity securities ranking pari
        passu with or senior to the Series C convertible preferred stock. Holders
        of
        Series C convertible preferred stock will also have any voting rights to
        which
        they are entitled by law.
  ***Liquidation
        Rights***
 
 In
        the
        event of any voluntary or involuntary liquidation, dissolution or winding-up
        of
        the Company, holders of Series C convertible preferred stock would be entitled
        to receive out of assets of the Company available for distribution to
        stockholders, before any distribution is made to holders of any junior preferred
        stock or common stock, liquidating distributions in an amount equal to $1,000
        per share. Upon completion of the liquidating distributions required to be
        made
        to holders of the Company’s preferred stock, holders of the Series C convertible
        preferred stock will be entitled to receive their pro rata share, on an
        as-converted to common stock basis, of any assets remaining available for
        distribution to stockholders.
  ***Dividends***
 
 Holders
        of Series C Preferred Stock were not entitled to receive any dividends.
 
 On
        October 29, 2007, upon the closing of the qualified public offering, the
        shares
        of Series C convertible preferred stock automatically converted to shares
        of
        Common Stock and in certain cases, Series D convertible preferred stock.
  ***Series
        D Convertible Preferred Stock***
 
 On
        July
        25, 2007, the Company filed a certificate of designation with the State of
        Delaware authorizing the designation of a total of 100,000 shares of Series
        D
        convertible preferred stock.
  ***Optional
        Conversion***
 
 Subject
        to the beneficial ownership cap described below, holders of Series D convertible
        preferred stock were entitled at any time to convert their shares of Series
        D
        convertible preferred stock into common stock, without any further payment.
        Each
        share of Series D convertible preferred stock was initially convertible into
        66.67 shares of common stock, based on a conversion price of $15.00 per share.
        The number of shares of common stock issuable upon conversion of the Series
        D
        convertible preferred stock was subject to adjustment in the event of a stock
        dividend, subdivision or combination of the Company’s common stock.
  ***Mandatory
        Conversion***
 
 To
        the
        extent that a holder of Series D convertible preferred stock falls below,
        or
        elects to waive, the 4.99% beneficial ownership limitation discussed below,
        subject to limited exceptions, the Company may require the conversion of
        the
        Series D convertible preferred stock into shares of common stock at the
        applicable conversion price.
  ***Limitations
        on Conversion***
 
 The
        Series D convertible preferred stock was subject to a beneficial ownership
        cap
        providing that each holder of Series D convertible preferred stock may not
        convert his shares into common stock such that the number of shares of common
        stock issued after the conversion had exceeded, when aggregated with all
        other
        shares of common stock owned by such holder and its affiliates at such time,
        in
        excess of 4.99% of the then issued and outstanding shares of the Company’s
        common stock. A holder may at any time waive this 4.99% cap upon 61 days’
notice.
  F-55
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity, continued**
  ***Voting
        Rights***
  Holders
        of Series D convertible preferred stock do not have any voting rights except
        to
        the extent required by law.
  ***Liquidation
        Rights***
 
 In
        the
        event of any voluntary or involuntary liquidation, dissolution or winding-up
        of
        the Company, holders of Series D convertible preferred stock will be entitled
        to
        receive out of assets of the Company available for distribution to stockholders,
        after distributions are made to holders of the Series C convertible preferred
        stock, but before distributions were made to holders of common stock,
        liquidating distributions in an amount equal to $0.001 per share. Upon
        completion of the liquidating distributions required to be made to holders
        of
        the Company’s preferred stock, holders of the Series D Preferred Stock would be
        entitled to receive their pro rata share, on an as-converted to common stock
        basis, of any assets remaining available for distribution to
        stockholders.
 
 ***Dividends***
 
 To
        the
        extent that any dividends were declared on the Company’s common stock, holders
        of Series D convertible preferred stock will be entitled to receive such
        dividends on an as-converted basis. Holders of Series D convertible
        preferred stock were not otherwise entitled to receive any
        dividends.
 
 ***Registration
        Rights - Series C and Series D Convertible Preferred
        Stock***
 
 The
        Company entered into a registration rights agreement, dated as of July 25,
        2007,
        with the participants in the Equity Restructuring in which the Company agreed
        to
        register for resale all of the shares of common stock issued or issuable
        upon
        the completion of the Equity Restructuring, the conversion of the Series
        C
        convertible preferred stock and the conversion of the Series D convertible
        preferred stock. The Company agreed to file a resale registration statement
        covering these shares by the earlier of 90 days following the closing of
        the
        Equity Restructuring and the filing date of a registration statement relating
        to
        a Qualified Public Offering and to use its best efforts to have the resale
        registration statement declared effective by the earlier of 150 days following
        the closing of the Equity Restructuring and the effective date of a registration
        statement relating to a Qualified Public Offering. The Company also agreed
        to
        use its best efforts to maintain the effectiveness of the resale registration
        statement until the earlier of the time when all of the registered shares
        have
        been sold or may be sold without restriction pursuant to Rule 144(k) under
        the
        Securities Act of 1933. The registration rights agreement obligates the Company
        to pay specified liquidated damages to the participants in the Equity
        Restructuring to the extent the Company does not meet these deadlines or
        maintain the effectiveness of the resale registration statement for the required
        time period, as well as for certain other events.
 
 ***Registration
        Statements***
 
 On
        November 1, 2005, the Company filed a registration statement on Form SB-2,
        as
        amended (File No. 333-129363), registering 948,750 shares of common stock,
        including shares of common stock then outstanding, and shares of common stock
        underlying the Company’s Series A convertible preferred stock and related
        warrants. This registration statement was declared effective on May 10, 2006.
        On
        August 9, 2006, the Company filed a supplement to the registration statement
        on
        Form 424(b)(3). On June 11, 2007, the Company filed a post-effective amendment
        to the registration statement deregistering the 888,509 shares of common
        stock
        remaining unsold under the registration statement. This post-effective amendment
        was declared effective on June 11, 2007.
  F-56
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.**  ******  **Stockholders’
        Equity, continued**
 
 ***Registration
        Statements, continued***
 
 On
        August
        9, 2006, the Company filed a registration statement on Form SB-2, as amended
        (File No. 333-136468), registering 4,218,413 shares of common stock, including
        shares of common stock underlying the Company’s Series B convertible preferred
        stock and related warrants, as well as certain warrants issued to the Company’s
        service providers. This registration statement was declared effective on
        February 2, 2007. On June 11, 2007, the Company filed a request for the
        withdrawal of the registration statement. This request for the withdrawal
        was
        declared effective on June 11, 2007.
  On
        August
        2, 2007, the Company filed a registration statement on Form SB-2, as amended
        (File No. 333-145053), registering 4,500,000 shares of common stock in
        connection with an underwritten public offering of such shares, and registering
        an additional 7,979,603 shares of common stock, including shares of common
        stock, and shares of common stock underlying the Company’s Series C convertible
        preferred stock and Series D convertible preferred stock, that were issued
        in
        connection with the Equity Restructuring. This registration statement was
        declared effective on October 23, 2007. On October 24, 2007, the Company
        filed a
        supplement to the registration statement on Form 424(b)(1) and a supplement
        to
        the registration statement on Form 424(b)(3). On February 2, 2008, in order
        to
        convert into a registration statement on Form S-3 the portion of the
        registration statement registering shares of common stock in connection with
        the
        Equity Restructuring issuances, the Company filed a post-effective amendment
        to
        the registration statement on a Form S-3 registration statement. This
        post-effective amendment was declared effective on February 14,
        2008.
 
 ***Nasdaq
        Capital Market Listing***
 
 On
        September 21, 2007, the Company was approved for listing on the Nasdaq Capital
        Market and on September 26, 2007, commenced trading on Nasdaq under the symbol
        “GLOI”.
 
 ***Underwritten
        Public Offering***
  On
        October 29, 2007, the Company completed an underwritten public offering of
        4,500,000 shares of its common stock receiving approximately $20.25 million
        in
        gross proceeds and, resulting in $18.2 million in net proceeds. In addition,
        the
        underwriters had an option for 30 days to purchase up to an additional 675,000
        shares of common stock to cover any over-allotments. The Company also registered
        approximately 8,000,000 shares of common stock for resale by existing
        stockholders under this registration statement.
 
 The
        Company used a portion of the net proceeds from the underwritten public offering
        to repay certain indebtedness and related accrued interest and intends to
        use
        the balance of the net proceeds for working capital, general corporate purposes,
        and potentially for strategic acquisitions and investments.
 
 In
        connection with this underwritten public offering, the Company entered into
        an
        October 29, 2007 agreement with Canaccord Adams Inc. and Morgan Keegan
& Company, Inc., as underwriters, who were paid aggregate fees of
        $1,418,000.
  The
        underwriters for the offering had a 30-day over-allotment option to purchase
        up
        to an additional 675,000 shares of common stock from GlobalOptions at the
        offering price pf $4.50 per share, but did not exercise the over-allotment
        option.
 
 ***Conversion
        of Series C Convertible Preferred Stock***
  Upon
        the
        closing of the underwritten public offering on October 29, 2007, the then
        outstanding 59,400 shares of Series C convertible preferred stock automatically
        converted into 1,541,167 shares of common stock and 36,282.8 shares of Series
        D
        convertible preferred stock, which are convertible into 2,418,975 shares
        of
        common stock, subject to the 4.99% beneficial ownership cap.
  F-57
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
  **14.**  ******  **Stockholders’
        Equity, continued**
 
 ***Amendments
        to Certificates of Incorporation***
 
 On
        November 8, 2007, GlobalOptions filed a certificate with the Secretary of
        the
        State of Delaware eliminating all matters related to their Series C convertible
        preferred stock. All formerly outstanding shares were converted to GlobalOptions
        Common Stock and in some cases Series D convertible preferred stock.
 
 **15.
        Stock Based Compensation**
 
 ***2002
        Stock Option Plan***
 
 On
        January 24, 2002, the Board of Directors and stockholders of GlobalOptions
        approved the 2002 Stock Option Plan (the “2002 Plan”). The Plan is administered
        by the Board of Directors (“the Board”) of GlobalOptions. Directors and
        stockholders, officers, employees, and consultants of the Company were eligible
        to participate. The Plan provided for the awards of incentive and non-statutory
        stock options. The Plan initially provided for 1,685,000 shares of common
        stock
        to be reserved for issuance under the Plan. On August 4, 2004, the Company
        authorized an additional 1,585,000 shares of common stock to be reserved
        for
        issuance under the Plan. The Committee determined the vesting schedule to
        be up
        to five years at the time of grant of any options under the Plan, and
        unexercised options will expire in ten years. The exercise price was equal
        to at
        least 100% of the fair market value of a share of common stock, as determined
        by
        the Committee, on the grant date.
 
 At
        the
        time of the reverse merger, GlobalOptions had outstanding stock options to
        purchase 4,450,721 shares of common stock, which outstanding options became
        stock options to purchase 327,259 shares of common stock of the Company after
        giving effect to the reverse merger exchange ratio and the March 6, 2007
        1 for 8
        stock split. The Company has assumed the stock options to purchase a total
        of
        327,259 shares of common stock, with exercise prices at the fair market value
        or
        in excess of the fair market value on the date of grant, under the 2005 Stock
        Option Plan.
 
 ***2005
        Stock Option Plan***
 
 On
        August
        5, 2005, the Board of Directors and stockholders of the Company approved
        the
        2005 Stock Option Plan (the “2005 Plan”), which replaced the 2002 Plan. The 2005
        Plan is administered by the Company’s compensation committee which originally
        provided for 812,500 shares of common stock to be reserved for issuance under
        the 2005 Plan, representing the number of options outstanding under that
        plan
        (see below). Directors, officers, employees, and consultants of the Company
        are
        eligible to participate. The 2005 Plan provides for the awards of incentive
        and
        non-statutory stock options. The Committee determined the vesting schedule
        to be
        up to five years at the time of grant of any options under the Plan, and
        unexercised options will expire in ten years. The exercise price is to be
        equal
        to at least 100% of the fair market value of a share of common stock, as
        determined by the Committee, on the grant date. The Board of Directors
        determined that the remaining shares reserved, but unissued, with respect
        to any
        awards under the Company’s 2005 Stock Option Plan were no longer available for
        grant.
 
 ***2006
        Stock Option Plan***
 
 On
        June
        12, 2006, the Board of Directors, and stockholders of the Company approved
        the
        adoption of the 2006 Stock Option Plan (the “2006 Plan”). The 2006 Plan is
        administered by the Company’s compensation committee (the Committee), and
        provides for up to 1,062,500 of the Company’s common stock to be reserved for
        issuance to directors, employees and consultants of the company and its
        subsidiaries, representing the number of options outstanding under that plan
        (see below). The 2006 Plan provides for the awards of incentive and
        non-qualified stock options. The exercise is to be not less than 100% of
        the
        fair market value of a share of common stock on the date the option is granted.
        Options expire in ten years, and are subject to the terms and conditions
        determined by the Committee at the time of grant. The Board of Directors
        determined that the remaining shares reserved, but unissued with respect
        to any
        awards under the Company’s 2006 Stock Option Plan were no longer available for
        grant.
  On
        August
        9, 2006, the Company filed form S-8 to register an aggregate of 6,500,000
        and
        8,500,000 shares of the Company’s common stock, $0.001 par value per share,
        issuable under the 2005 Plan and the 2006 Plan, respectively.
  F-58
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **15.
        Stock Based Compensation, continued**
 
 ***2006
        Long-Term Incentive Plan***
 
 On
        December 5, 2006 the stockholders adopted the 2006 Long-Term Incentive
        Plan (the "2006 Long-Term Incentive Plan").  The shares that may be
        issued under such plan shall not exceed an aggregate of 1,500,000 shares
        of
        common stock and the Board of Directors delegated to the compensation committee
        of the Board of Directors (the “Compensation Committee”) the authority to
        administer the 2006 Long-Term Incentive Plan. At December 31, 2007, there
        remain
        701,045 reserved but unissued shares under the 2006 Long-Term Incentive
        Plan.
 
 On
        December 15, 2006, the Company filed a registration statement on Form S-8
        under
        the Securities Act covering 12,000,000 shares of common stock reserved for
        issuance under the 2006 Long-Term Incentive Plan. The Form S-8 registration
        became effective immediately upon filing. Subject to the satisfaction of
        applicable exercise periods and Rule 144 volume limitations applicable to
        affiliates, shares of the Company common stock to be issued upon exercise
        of
        outstanding stock options granted pursuant to the Company’s 2006 Long-Term
        Incentive Plan are available for immediate resale in the public market.
 
 ***2006***  ****  ***Employee
        Stock Purchase Plan***
 
 On
        December 5, 2006 the stockholders adopted the 2006 Employee Stock Purchase
        Plan
        (the “Employee Stock Purchase Plan”). The shares that may be issued under such
        plan shall not exceed an aggregate of 2,000,000 shares of common stock and
        that
        the Board of Directors have delegated to the Compensation Committee the
        authority to administer the Employee Stock Plan.
  On
        December 15, 2006, the Company filed a registration statement on Form S-8
        covering 1,500,000 and 250,000 shares of common stock reserved for issuance
        under the Company’s 2006 Long-Term Incentive Plan and the Employee Stock
        Purchase Plan. ****
  F-59
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **15.
        Stock Based Compensation, continued**
 
 ***Stock-Based
        Compensation***
 
 On
        June
        24, 2005, the Company issued 18,125 shares of common stock at a value of
        $337,850 to an advisor for its services related to the reverse merger. This
        cost
        is reflected in general and administrative expenses in the consolidated
        statements of operations for the year ended December 31, 2005.
 
 On
        November 18, 2005, the Company granted an option Mr. Jeffrey Nyweide, the
        Company’s Chief Financial Officer, who served pursuant to a consulting agreement
        through July 31, 2007, to purchase 62,500 shares of common stock at $20.00
        per
        share. This option has a term of five years, is non-forteitable and vests
        over
        three years. This option was initially valued at approximately $867,000
        utilizing the Black-Scholes option pricing model and was amortized to
        stock-based compensation over the three year vesting period, through July
        31,
        2007, in accordance with Emerging Issues Task Force pronouncement
        No. 96-18—“Accounting for Equity Instruments That are Issued to Other than
        Employees for Acquiring, or in Conjunction with Selling, Goods or Services”
(“EITF 96-18”). On a quarterly basis, the Company adjusted the unvested value on
        a mark-to-market basis, and the cumulative effect of the adjustment amount
        on
        amortization is reflected in current period amortization. During the years
        ended
        December 31, 2007, 2006, and 2005 ($3,000), $132,000 and $17,000 respectively
        was amortized to stock-based compensation expense under EITF 96-18 related
        to
        this option and recorded within general and administrative expenses.
 
 On
        June
        12, 2006 the Company granted Mr. Nyweide an option to purchase 62,500 shares
        at
        $17.60 per share. This option has a term of five years, is non-forfeitable,
        vests over three years, and was initially valued at approximately $779,000,
        utilizing the Black-Scholes option pricing model. The value of the option
        was
        amortized to stock-based compensation over the three year vesting period,
        through July 31, 2007, in accordance with Emerging Issues Task Force
        pronouncement No. 96-18 - “Accounting for Equity Instruments That are Issued to
        Other than Employees for Acquiring, or in Conjunction with Selling, Goods
        or
        Services” (“EITF 96-18”). On a quarterly basis, the Company adjusted the
        unvested value of these options on a mark-to-market basis, and the cumulative
        effect of the adjustment amount on amortization has been reflected in current
        period amortization. For the year ended December 31, 2007 and 2006 $9,000
        and
        $77,000 respectively was amortized to stock based compensation under EITF
        96-18
        related to this option.
 
 During
        the years ended December 31, 2007 and 2006, the Company issued stock options
        to
        certain members of its advisory boards in exchange for their advisory services
        to the Company valued at $116,595 and $165,321, respectively. The fair value
        of
        the options granted during the year ended December 31, 2007 was calculated
        using
        the Black-Scholes option pricing model with the following assumptions: dividend
        yield of 0%, expected volatility of 87%, risk-free interest rate of 4.70%
        and an
        expected term of five years. The options granted during the year ended December
        31, 2005 were valued under EITF No. 96-18 at the arm’s length cash equivalent
        value of the related compensation.
 
 During
        April 2006 and June 2006, the Company issued 7,317 shares of common stock
        valued
        at $117,078 to consultants who have provided prior services to the Company.
 
 Prior
        to
        January 1, 2006, the Company accounted for the stock option plans under the
        recognition and measurement provisions of Accounting Principles Board Opinion
        No. 25 ("APB 25"). Accordingly, the Company would recognize employee stock
        based
        compensation expense only if it granted options at a price lower than the
        closing price on the date of grant. Any resulting compensation expense would
        then have been recognized ratably over the associated service period.  No
        stock-based employee compensation expense relating to the Company’s stock option
        plans was reflected in net loss available to common stockholders for the
        year
        ended December 31, 2005, as all options granted under its plans had an exercise
        price equal to or greater than the market value of the underlying common
        stock
        on the date of grant. Prior to January 1, 2006, the Company provided pro-forma
        disclosure amounts in accordance with Statement of Financial Accounting
        Standards No. 148, "Accounting for Stock-Based Compensation-Transition and
        Disclosure" ("SFAS 148"), as if the fair value method defined by SFAS 123
        had
        been applied to its stock-based compensation.
  F-60
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **15.
        Stock Based Compensation, continued**
 
 ***Stock-Based
        Compensation, continued***
 
 Effective
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        SFAS 123R, using the modified prospective transition method and therefore
        has
        not restated prior years results. Under this transition method, employee
        stock-based compensation expense for the year ended December 31, 2006 included
        compensation expense for all stock-based compensation awards granted, but
        not
        yet fully vested, prior to January 1, 2006.  The fair value of the options
        granted was determined at the original grant date in accordance with the
        provisions of SFAS 123R.  Stock-based compensation expense for all
        share-based payment awards granted after December 31, 2005 is based on the
        grant-date fair value estimated in accordance with the provisions of SFAS
        123R.
        The Company recognizes these compensation costs over the requisite service
        period of the award, which is generally the vesting term of the options
        associated with the underlying employment agreement, where
        applicable.
 
 As
        a
        result of adopting SFAS 123R, the impact to the consolidated financial
        statements for the year ended December 31, 2006 was to record an expense
        of
        approximately $2,258,000 greater than if the Company had continued to account
        for stock-based compensation under APB 25 and is reflected within general
        and
        administrative expenses. The impact of the adoption of SFAS 123R on both
        basic
        and diluted net loss per share for the year ended December 31, 2006 was
        $1.01.
 
 In
        addition, SFAS No. 123(R) requires forfeitures to be estimated at the
        time of grant and revised, if necessary, in subsequent periods if actual
        forfeitures differ from those estimates. Forfeitures were estimated based
        on
        historical experience. Prior to the adoption of SFAS No. 123(R), the
        Company accounted for forfeitures as they occurred.
  The
        Company accounts for equity instruments issued to non-employees in accordance
        with the provisions of SFAS 123 and the Emerging Issues Task Force (“EITF”)
        Issue No.  96-18,  “Accounting  for  Equity 
Instruments  That Are Issued to Other Than  Employees  for 
Acquiring,  or In  Conjunction  with Selling,  Goods or
        Services” (“EITF 96-18”) which requires that such equity instruments are
        recorded at their fair value on the measurement date, which is typically
        the date the services are performed.  Stock based compensation for
        non-employees accounted for under EITF 96-18 was approximately $64,000, $853,000
        and $662,000 for the years ended December 31, 2007, 2006 and 2005, respectively,
        and is reflected within general and administrative expenses.
 
 Option
        valuation models require the input of highly subjective assumptions including
        the expected life of the option. Because the Company's employee stock options
        have characteristics significantly different from those of traded options,
        and
        because changes in the subjective input assumptions can materially affect
        the
        fair value estimate, in management's opinion, the existing models do not
        necessarily provide a reliable single measure of the fair value of its employee
        stock options.
 
 The
        fair
        value of each option grant during the years ended December 31, 2007, 2006
        and
        2005 was estimated on the date of grant using the Black-Scholes option pricing
        model with the following assumptions used:
  Year
                  Ended December 31,2007
              
              2006
              
              2005Dividend
                  yield
              
              
              0
              %
              
              0
              %
              
              0
              %Expected
                  volatility
              
              
              87
              %
              
              87
              %
              
              87
              %Risk-free
                  interest rate
              
              
              4.3
              %
              
              5.0
              %
              
              3.0
              %Expected
                  lives
              
              
              5
                  years
              
              
              5
                  years
              
              
              3
                  years
 
 The
        Company has determined that the expected life of options granted is the same
        as
        the contractual term.
 
 The
        weighted average fair value of the options on the date of grant, using the
        fair
        value based methodology for years ended December 31, 2007, 2006 and 2005
        was
        $6.05, $12.16 and $13.84, respectively.
 
 For
        the
        year ended December 31, 2005, under APB 25, no stock-based employee compensation
        expense relating to the Company’s stock option plans was reflected in net loss
        available to common stockholders, as all options granted under its plan had
        an
        exercise price equal to or greater than the market value of the underlying
        common stock on the date of grant.
  F-61
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **15.
        Stock Based Compensation, continued**
 
 ***Stock-Based
        Compensation, continued***
 
 The
        following table illustrates the effect on net loss available to common
        stockholders and net loss per share available to common stockholders
        for the year ended December 31, 2005 if the Company had applied the fair
        value
        recognition method under the provisions of SFAS 123.
 
 (All
                  numbers in 000’s except per share data.)
              
              For
                  the Year
                Ended
                December
                31,
                  2005Net
                  loss available to common stockholders, as reported
              
              $
              (4,550
              )Deduct:
                  total stock-based employee compensation expense determined under
                  fair
                  value based method for all awards, net of related tax effects,
                  if
                  any
              
              
              377Pro-forma
                  net loss
              
              $
              (4,927
              )Net
                  loss per share available to common stockholders - basic and
                  diluted:As
                  reported
              
              $
              (3.03
              )Pro
                  forma
              
              $
              (3.28
              )
  F-62
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **14.
        Stock Based Compensation, continued**
 
 ***Stock-Based
        Compensation, continued***
 
 On
        March
        10, 2006, in connection with the Company’s purchase of JLWA, the Company issued
        102,459 shares of common stock, valued at $2,000,000 (See Note 4) and granted
        27,778 options for the purchase of common stock at an exercise price of $18.00
        per share to various former employees of JLWA. The options have a five year
        term
        and vest ratably upon the first, second, third and fourth anniversaries of
        the
        date of grant and have a value of approximately $351,000 utilizing the
        Black-Scholes option pricing model with the following assumptions used: expected
        life of five years, volatility of 87%, dividends of 0%, and a risk free interest
        rate of 4.95%.
 
 On
        April
        27, 2006, the Company granted, in the aggregate, options for the purchase
        of
        15,375 shares of GlobalOptions Group common stock at an exercise price of
        $17.60
        per share, consisting of options for the purchase of 2,125 shares granted
        to
        certain employees of GlobalOptions and options for the purchase of 13,250
        shares
        granted to certain members of the Company’s advisory boards in exchange for
        services. The options granted to the members of the advisory boards have
        a five
        year term and vest ratably at the end of each of the four quarterly periods
        following the date of grant and have an aggregate value of approximately
        $213,000 utilizing the Black-Scholes option pricing model with the following
        assumptions used: expected life of five years, volatility of 87%, dividends
        of
        0%, and a risk free interest rate of 4.95%.
  On
        May
        12, 2006, the Company granted, in the aggregate, options for the purchase
        of
        60,634 and 46,642 shares of GlobalOptions Group common stock at an exercise
        price of $16.08 per share, from the 2005 Plan, to employees and officers
        of
        Safir and Secure Source, respectively.  These options have a five year term
        and for Safir, vest ratably upon the first, second, third and fourth
        anniversaries of the date of grant and for Secure Source, vest ratably upon
        the
        first, second and third anniversaries of the date of grant and have a value
        of
        approximately $1,224,000 utilizing the Black-Scholes option pricing model
        with
        the following assumptions used: expected life of five years, volatility of
        87%,
        dividends of 0%, and a risk free interest rate of 5.08%.
 
 On
        December 19, 2006, the Company awarded 175,000 shares of restricted stock
        to two
        senior officers under the terms of the renewal of their respective employment
        and consulting agreements. On December 13, 2007, the Compensation Committee
        determined that, effective January 1, 2008, 10,939 shares shall
        vest.
 
 During
        the year ended December 31, 2007, in connection with expected performance
        under
        a bonus program for senior executives, stock-based compensation of approximately
        $677,000 was recognized for the estimated pro rata vesting of restricted
        stock.
        Of this amount, $474,000 is associated with the amortization over the derived
        service period of the $1,303,000 grant date value, as derived by a third
        party
        valuation firm, of a restricted stock award that is based on the achievement
        of
        certain common stock market price milestones. The remaining amount of $203,000
        is associated with the amortization over the service period of the probable
        outcome at each reporting date of a restricted stock award that is based
        on the
        achievement of certain performance criteria.
  F-63
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **15.
        Stock Based Compensation, continued**
 
 ***Stock-Based
        Compensation, continued***
 
 On
        June
        12, 2006, GlobalOptions Group granted, in the aggregate, from the 2006 Plan,
        options for the purchase of 167,500 shares of GlobalOptions Group common
        stock
        at an exercise price of $17.60 per share, consisting of options for the purchase
        of an aggregate of 125,000 shares granted to the Company’s Chief Executive
        Officer and 42,500 shares to members of the Company’s Board of Directors. 
The options granted to the Company’s Chief Executive Officer have a five year
        term and vest ratably upon the first, second and third anniversary of the
        date
        of grant.   The options granted to the members of the officer and
        the Board of Directors have a five year term and vest ratably at the end of
        each of the four quarterly periods following the date of grant. In aggregate,
        the options for the Chief Executive Officer and the Board of Directors had
        a
        value of approximately $2,091,000 utilizing the Black-Scholes option pricing
        model with the following assumptions used: expected life of five years,
        volatility of 87%, dividends of 0%, and a risk free interest rate of
        4.95%.
 
 On
        August
        10, 2006, the Company granted, in the aggregate, options for the purchase
        of
        30,488 shares of common stock at an exercise price of $16.40 per share, from
        the
        2006 Plan, to employees and officers of Hyperion Risk.  These options have
        a five year term and vest ratably upon the first, second and third anniversaries
        of the date of grant and have a value of approximately $332,000 utilizing
        the
        Black-Scholes option pricing model with the following assumptions used: expected
        life of five years, volatility of 87%, dividends of 0%, and a risk free interest
        rate of 4.86%.
 
 On
        January 1, 2007, the Company issued 100 shares of its Company common stock
        valued in the aggregate at $42,000 to 267 full time employees under the 2006
        Long-Term Incentive Plan.
 
 On
        January 1, 2007, the Company granted, in the aggregate, options for the purchase
        of 18,750 shares of its common stock at an exercise price of $12.00 per share,
        under the 2006 Long-Term Incentive Plan, to three members of the Board of
        Directors. The options have a five year term and vest ratably at the end
        of each
        of the four quarterly periods following the date of grant. In the aggregate,
        these options have a value of approximately $159,000 utilizing the Black-Scholes
        option pricing model with the following assumptions used: expected life of
        five
        years, volatility of 87%, dividends of 0%, and a risk free interest rate
        of
        4.70%.
 
 On
        January 1, 2007, the Company issued stock options for the purchase of 13,750
        shares of its common stock at an exercise price of $12.00 per share, under
        the
        2006 Long-Term Incentive Plan to certain members of its advisory boards for
        their advisory services to the Company.   The options have a five
        year term and vest ratably at the end of each of the four quarterly periods
        following the date of grant. In the aggregate, these options have a value
        of
        approximately $117,000 utilizing the Black-Scholes option pricing model with
        the
        following assumptions used: expected life of five years, volatility of 87%,
        dividends of 0%, and a risk free interest rate of 4.70%.
 
 On
        January 9, 2007, the Company granted, in the aggregate, options for the purchase
        of 26,423 shares of its common stock at an exercise price of $11.36 per share
        under the 2006 Long-Term Incentive Plan to employees and officers of On Line
        Consulting.   The options have a five year term and vest ratably
        upon the first, second and third anniversaries of the date of grant and have
        a
        value of approximately $212,000 utilizing the Black-Scholes option pricing
        model
        with the following assumptions used: expected life of five years, volatility
        of
        87%, dividends of 0%, and risk free interest rate of 4.65%.
 
 On
        February 28, 2007, the Company granted, in the aggregate, options for the
        purchase of 38,894 shares of its common stock at an exercise price of $10.80
        per
        share under the 2006 Long-Term Incentive Plan to employees and officers of
        Facticon.   The options have a five year term and vest ratably
        upon the first, second and third anniversaries of the date of grant and have
        a
        value of approximately $296,000 utilizing the Black-Scholes option pricing
        model
        with the following assumptions used: expected life of five years, volatility
        of
        87%, dividends of 0%, and a risk free interest rate of 4.52%.
  F-64
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **15.
        Stock Based Compensation, continued**
 
 ***Stock-Based
        Compensation, continued***
 
 On
        February 28, 2007, the Company granted, in the aggregate, options for the
        purchase of 62,504 shares of its common stock at an exercise price of $10.80
        per
        share under the 2006 Long-Term Incentive Plan to employees and officers of
        Bode.   The options have a five year term and vest ratably upon
        the first, second and third anniversaries of the date of grant and have a
        value
        of approximately $476,000 utilizing the Black-Scholes option pricing model
        with
        the following assumptions used: expected life of five years, volatility of
        87%,
        dividends of 0%, and a risk free interest rate of 4.52%.
 
 Effective
        August 1, 2007, the Company terminated its consulting agreement and entered
        into
        an employment agreement with Mr. Nyweide. The unvested portion of Mr. Nyweide’s
        options as of August 1, 2007 was valued at $125,447 and $143,381 respectively,
        and is being amortized to stock based compensation expense over the remaining
        vesting periods in accordance with SFAS 123R due to his change in status
        from
        consultant to employee. During the year ended December 31, 2007, $72,329
        was
        amortized to stock based compensation under SFAS 123R related to these
        options.
 
 On
        September 28, 2007, the Company granted, in the aggregate, options for the
        purchase of 300,000 shares of its common stock at an exercise price of $7.24
        to
        the Chief Executive Officers of the Preparedness Services Unit, the Fraud
        and
        SIU Services Unit, and the Security Consulting and Investigations Unit. The
        options were granted under the 2006 Long-Term Incentive plan. The options
        have a
        five year term, and vest ratably upon the first second and third anniversaries
        of the date of grant and have a value of approximately $1,526,000 utilizing
        the
        Black-Scholes option pricing model with the following assumptions used: expected
        life of five years, volatility of 87%, dividends of 0%, and a risk free interest
        rate of 4.22%.
 
 At
        December 31, 2007 and 2006, the unamortized value of employee stock options
        under SFAS 123R was approximately $4,671,000 and $4,718,000, respectively.
        The
        unamortized portion will be expensed over a weighted average period of 1.6
        years. For the years ended December 31, 2007 and 2006 costs of approximately
        $2,480,000 and $2,258,000, respectively, were recognized in connection with
        the
        vesting of these employee stock options.
 
 A
        summary
        of the status of the Company’s stock option plans and the changes during the
        years ended December 31, 2007 2006 and 2005, respectively, is presented in
        the
        table below:
 
 Number
                of
                  Options
              
              Weighted
                Average
                Exercise
                  Price
              
              Weighted
                Average
                remaining
                contractual
                lifeOptions
                  outstanding at January 1, 2005
              
              
              249,451
              
              $
              3.37Granted
              
              
              372,553
              
              
              16.76Forfeited
              
              
              (736
              )
              
              5.44Options
                  outstanding at December 31, 2005
              
              
              621,268
              
              $
              11.39Granted
              
              
              410,952
              
              
              17.16Forfeited
              
              
              (3,427
              )
              
              16.20Options
                  outstanding at December 31, 2006
              
              
              1,028,793
              
              $
              13.68Granted
              
              
              460,321
              
              
              8.60Exercised
              
              
              (198,530
              )
              
              2.91Forfeited
              
              
              (98,919
              )
              
              11.24Options
                  outstanding at December 31, 2007
              
              
              1,191,665
              
              $
              13.72
              
              
              3.6Exercisable,
                  December 31, 2007
              
              
              447,223
              
              
              16.31
              
              
              3.0
 
 The
        aggregate intrinsic value of outstanding and exercisable stock options was
        $0 and $0 at December 31, 2007 and $2,649,214 and $2,467,523 at December
        31,
        2006, respectively.
  F-65
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **15.
        Stock Based Compensation, continued**
 
 ***Stock-Based
        Compensation, continued***
 
 A
        summary
        of the Company’s stock options outstanding and exercisable by range of exercise
        price at December 31, 2007 is presented in the table below:
 
 Options
                  Outstanding
              
              Options
                  ExercisableRange
                  of
                Exercise
                price
              
              Number
                  of
                options
              
              Weighted
                Average
                Remaining
                Life
                  in Years
              
              Number
                of
                options
              
              Weighted
                Average
                Remaining
                Life
                  in Years$4.80
              
              
              18,644
              
              
              1.0
              
              
              18,644
              
              
              1.0$5.44
              
              
              57,507
              
              
              2.2
              
              
              38,718
              
              
              2.2$6.80
              
              
              307,353
              
              
              4.8
              
              
              7,353
              
              
              5.6$10.80
                  - $12.00
              
              
              145,484
              
              
              4.1
              
              
              28,750
              
              
              4.0$16.08
                  - $20.00
              
              
              662,677
              
              
              3.2
              
              
              353,758
              
              
              3.11,191,665
              
              
              
              
              
              447,223
 
 **16.   Client
        and Segment Data**
 
 The
        Company’s reportable operating segments consist of the following three
        business segments: Preparedness Services, Fraud and SIU Services, and Security
        Consulting and Investigations. The Company’s reportable segments are
        organized, managed and operated along key product and service lines. These
        product and service lines are provided to similar clients, are offered together
        as packaged offerings, generally produce similar margins and are managed
        under a
        consolidated operations management.
 
 The
        Preparedness Services segment develops and implements crisis management and
        emergency response plans for disaster mitigation, continuity of operations
        and
        other emergency management issues for governments, corporations and individuals.
 
 The
        Fraud
        and SIU Services segment provides investigative surveillance, anti-fraud
        solutions and business intelligence services to the insurance industry, law
        firms and multinational organizations. The results of the Company’s
        International Strategies business unit, on the basis of its relative
        materiality, are included in the Fraud and SIU Services segment.
 
 The
        Security Consulting and Investigations segment delivers specialized security
        and
        investigative services to governments, corporations and individuals.
 
 The
        Company’s reportable segments have changed from the prior year, to accommodate
        the acquisitions that were consummated.
 
 Total
        revenues by segment include revenues to unaffiliated clients. The Company
        evaluates performance based on income (loss) from operations. Operating
        income (loss) is gross profit less operating expenses.
  F-66
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **16.   Client
        and Segment Data, continued**
 
 The
        following tables summarize financial information about the Company’s business
        segments for the years ended December 31, 2007, 2006 and 2005 (in thousands).
        The Company’s segment information for the year ended December 31, 2007 is
        presented on a basis different than for the years ended December 31, 2006
        and
        2005.
 
 For
        the Year Ended December 31, 2007
 
 Preparedness
                Services
              
              Fraud & SIU
                Services-
              
              Security
                Consulting &
                Investigations
              
              Corporate
              
              ConsolidatedRevenues
              
              $
              30,823
              
              $
              24,493
              
              $
              31,815
              
              $
              -
              
              $
              87,131Loss
                  fromOperations
              
              $
              (8,057
              )
              $
              (11,543
              )
              $
              (
                  7,112
              )
              $
              -
              
              $
              (26,712
              )Identifiable
                  Assets
              
              $
              13,882
              
              $
              17,250
              
              $
              34,811
              
              $
              -
              
              $
              65,943Depreciation
                  andAmortization
              
              $
              1,244
              
              $
              1,313
              
              $
              1,360
              
              $
              -
              
              $
              3,917Interest
                  Expense
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              813
              
              $
              813Other
                  Income
              
              $
              100
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              100Prepayment
                  Premium
              
              $
              800
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              800Capital
                  Expenditures
              
              $
              8
              
              $
              1,055
              
              $
              1,376
              
              $
              -
              
              $
              2,439
  F-67
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **16.**
              **Client
                  and Segment Data,
                  continued**
 
 For
        the Year Ended December 31, 2006
 Preparedness
                  Services
                
                Fraud & SIU
                  Services-
                
                Security
                  Consulting &
                  Investigations
                
                Corporate
                
                ConsolidatedRevenues
                
                $
                37,556
                
                $
                16,550
                
                $
                7,818
                
                $
                -
                
                $
                61,924Income
                    (loss) fromOperations
                
                $
                7,631
                
                $
                (12,409
                )
                $
                (2,675
                )
                $
                -
                
                $
                (7,453
                )Identifiable
                    Assets
                
                $
                13,150
                
                $
                3,280
                
                $
                3,489
                
                $
                49,307
                
                $
                69,226Depreciation
                    andAmortization
                
                $
                1,025
                
                $
                604
                
                $
                481
                
                $
                -
                
                $
                2,110Interest
                    Expense
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                653
                
                $
                653Amortization
                    of DebtDiscounts
                    onConvertible
                    NotesPayable
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                7,523
                
                $
                7,523Amortization
                    ofDeferred
                    FinancingCosts
                
                $
                -
                
                $
                -
                
                $
                -
                
                $
                2,695
                
                $
                2,695Capital
                    Expenditures
                
                $
                25
                
                $
                291
                
                $
                36
                
                $
                -
                
                $
                352
  F-68
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **16** . **Client
        and Segment Data, continued**
 
 For
        the Year Ended December 31, 2005
  Preparedness
                Services
              
              Fraud
                  & SIU
                Services-
              
              Security
                Consulting
                  &
                Investigations
              
              Corporate
              
              ConsolidatedRevenues
              
              $
              1,260
              
              $
              6,970
              
              $
              798
              
              $
              -
              
              $
              9,028Loss
                  fromOperations
              
              $
              (687
              )
              $
              (2,635
              )
              $
              (201
              )
              $
              -
              
              $
              (3,523
              )Depreciation
                  andAmortization
              
              $
              29
              
              $
              161
              
              $
              18
              
              $
              -
              
              $
              208Interest
                  Expense
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              65
              
              $
              65Capital
                  Expenditures
              
              $
              4
              
              $
              23
              
              $
              3
              
              $
              -
              
              $
              30
  F-69
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **17.
        Major Clients**
  Revenues
        from the Company’s services to a limited number of clients have accounted for a
        substantial percentage of the Company’s total revenues. The Company’s three
        largest clients accounted for approximately 29%, 9% and 3% of the Company’s
        revenues for the year ended December 31, 2007 of which the 29% of revenue
        client represented work performed under government contracts. For the year
        ended
        December 31, 2006, the Company’s three largest clients accounted for 51%, 11%
        and 4% of the Company’s revenues, of which the 51% and 4% of revenue clients
        represent work performed under government contracts. For the year ended December
        31, 2005, the Company’s three largest clients accounted for 27%, 11% and 7% of
        our revenues, none of which are under government contracts.
  For
        the
        year ended December 31, 2007, within the Preparedness Services segment, the
        two
        largest clients represented 29% and 1% of the Company’s overall revenues, within
        the Fraud and SIU services segment, the two largest clients represented 9%
        and
        3% of the Company’s overall revenues and within the Security Consulting Segment
        the two largest clients represent 3% and 2% of the Company’s overall
        revenues.
  For
        the
        year ended December 31, 2006, within the Preparedness
        Services segment, the three largest clients within the segment represented
        51%, 4% and 1% of the Company’s overall revenue. Within the Fraud and SIU
        services segment, the two largest clients within the segment represented
        11% and
        2% of the Company’s overall revenues for the year ended December 31, 2006
        and within the Security Consulting and Investigations segment, the largest
        client represented 1% of the Company’s overall revenue for the year ended
        December 31, 2006. For the year ended December 31, 2005, within the Fraud
        and
        SIU Services segment, the largest client represented 27% of the Company’s
        overall revenue.
 
 For
        the
        years ended December 31, 2007, 2006 and 2005, government contracts
        represented 48%, 57% and 0% of the Company’s net revenues, respectively, the
        most significant of which, in 2007 and 2006, represented 91% and 94%,
        respectively, of the Company’s net revenues within the Preparedness Services
        segment.
  During
        the year ended December 31, 2006, a client that represented approximately
        19% of revenues for the year ended December 31, 2005 elected not to renew
        its relationship with the Company.
  There
        was
        no foreign revenue for the year ended December 31, 2007. Revenue from foreign
        clients represented 1% and 24% of total revenue for the years ended
        December 31, 2006 and 2005, respectively. These foreign clients
        operate primarily in Russia and the Caribbean. For each of these foreign
        clients, the Company is paid in U.S. dollars.
  **18.**  **Related
        Party Transactions**
  **Transactions
        with The QuanStar Group, LLC**
 
 The
        Company was a party to an advisory agreement with the QuanStar Group, LLC
        ("QuanStar Group”), pursuant to which QuanStar Group rendered strategic and
        consulting services to the Company, particularly in the areas of corporate
        finance and strategic acquisitions, and was paid a monthly retainer of $15,000.
        During the year ended December 31, 2005 the Company incurred costs of $165,000
        under the agreement.  The advisory agreement was entered into as of August
        2004 and was terminated during November 2005. Harvey W. Schiller, Ph.D.,
        the
        Company's Chairman and Chief Executive Officer is a partner in the QuanStar
        Group. Per Olof Lööf, the Company's Vice Chairman of the Board is a former
        partner of the Quanstar Group.
 
 The
        Company also had a rental agreement with the QuanStar Group that expired
        during
        2006. The Company incurred rent with the QuanStar Group of approximately
        $27,100
        and $77,400 for the years ended December 31, 2006 and 2005, respectively,
        for
        the Company’s administration headquarters.
  On
        May
        12, 2006, in connection with the Company’s acquisition of Safir, the Company
        paid QuanStar Group a finder’s fee of $200,000 in cash and 10,883 shares of
        common stock valued at $175,000. Dr.
        Schiller and Mr. Lööf are former partners in QuanStar Group. Arnold Burns and
        Andrew J. Kaslow, members of the Company’s business advisory board, are the
        Chairman and a partner in QuanStar Group, respectively.
  F-70
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **18.**  **Related
        Party Transactions, continued**
  **Equity
        Restructuring**
 
 On
        July
        25, 2007, upon the completion of the Equity Restructuring, (1) Dr. Schiller
        received 22 shares of Series C convertible preferred stock and 688 shares
        of
        common stock in consideration of the cancellation of his shares of Series
        A
        preferred stock and related warrants, (2) Lööf Holdings received 11 shares of
        Series C convertible preferred stock and 344 shares of common stock in
        consideration of the cancellation of its shares of Series A preferred stock
        and
        related warrants, (3) Integris Funds Ltd. received 1,500 shares of Series
        C
        convertible preferred stock and 46,875 shares of common stock in consideration
        of the cancellation of its shares of Series A Preferred Stock and related
        warrants, (4) Bayshore Merchant Services, Inc. received 2,344 shares of common
        stock in consideration of the cancellation of its Series B warrants, (5)
        John
        Oswald received 7,032 shares of common stock in consideration of the
        cancellation of his warrants, (6) Capital Trust Investments Limited received
        500
        shares of Series C convertible preferred stock and 15,625 shares of common
        stock
        in consideration of the cancellation of its Series A Preferred Stock and
        related
        warrants and (7) Verus International Group, Ltd. received 358 shares of Series
        C
        convertible preferred stock and 11,188 shares of common stock in consideration
        of the cancellation of its Series A Preferred stock and related
        warrants.
  On
        October 29, 2007, upon the automatic conversion of Series C convertible
        preferred stock immediately following the consummation of the Company’s
        underwritten public offering, (1) Dr. Schiller received 1,467 shares of common
        stock in exchange for the cancellation of his 22 shares of Series C convertible
        preferred stock, (2) Lööf Holdings received 734 shares of common stock in
        exchange for the cancellation of its 11 shares of Series C convertible preferred
        stock, (3) Integris Funds Ltd. received 100,000 shares of common stock in
        exchange for the cancellation of its 1,500 shares of Series C convertible
        preferred stock, (4) Capital Trust Investments Limited received 33,334 shares
        of
        common stock in consideration of the cancellation of its 500 shares of Series
        C
        convertible preferred stock, and (5) Verus International Group, Ltd. received
        23,867 shares of common stock in consideration of the cancellation of its
        358
        shares of Series C convertible preferred stock.
  **Acquisitions**
 
 On
        March 10, 2006, the Company acquired JLWA for an aggregate purchase price
        of $8,403,540. Of this amount, Mr. Witt, the former Chairman and
        Chief Executive Officer of JLWA, directly received $2,187,000 in cash at
        closing, 62,244 shares of common stock valued at $1,215,000, $243,000 in
        the
        form of a 4.6% promissory note, which was paid in March 2007, and $331,695
        in
        cash as a result of a working capital adjustment, which was paid in June
        2006.
        Mr. Witt became the Chief Executive Officer of the Company’s Preparedness
        Services unit as a result of the transaction.
  On
        May 11, 2007, the Company entered into the JLWA Modification Agreement with
        the JLWA Sellers. Under the modification, the Company agreed to make additional
        payments in the form of cash, promissory notes and common stock to the JLWA
        Sellers in exchange for eliminating the earnout provisions of the JLWA asset
        purchase agreement, which provided for a maximum additional payout of
        $15,400,000. The additional payments under the JLWA Modification Agreement
        consist of (i) a cash payment of $2,000,000, which was paid on May 14,
        2007, (ii) a promissory note in the principal amount of $4,500,000,
        accruing interest at 5.65% per annum, due on January 15, 2008, subject
        to a 5% penalty fee if not paid on that due date, (iii) 300,000 shares of
        common stock valued at $2,880,000 and (iv) a promissory note in the
        principal amount of $4,300,000, accruing interest at 11.0% per annum, due
        on August 11, 2008. Of these amounts, Mr. Witt directly received $1,286,364
        in cash, $3,001,363 in principal amount of the 5.65% promissory note and
        $2,765,682 in principal amount of the 11% promissory note, and James L. Witt
        Revocable Trust U/A/D 12/28/05, of which Mr. Witt is trustee, received 182,250
        of the 300,000 shares of common stock issued on January 30, 2008. In addition,
        Mr. Witt directly received approximately $3.5 million of the JLWA note
        prepayment and prepayment premium. On October 20, 2007, the Company reached
        an agreement with the JLWA Sellers under which the JLWA Sellers agreed to
        the
        prepayment of the principal and accrued interest on a $4.5 million promissory
        note, originally due on January 15, 2008, that the Company had issued to
        them pursuant to the terms of the JLWA Modification Agreement. In connection
        with this acceleration, on October 29, 2007, the Company made a negotiated
        prepayment premium of $800,000 to compensate the JLWA Sellers for, among
        other
        things, foregone interest and the cost of accelerated tax payments. The JLWA
        Sellers could request acceleration of the $4,300,000 promissory note upon
        the
        consummation of a Qualified Public Offering or any other qualified capital
        raise. The JLWA Sellers requested acceleration of this promissory note in
        connection with the Company’s separate Qualified Public Offering, as a result of
        which Mr. Witt directly received approximately $2.8 million.
  F-71
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **18.**  **Related
        Party Transactions, continued**
  On
        May 12, 2006, the Company acquired Safir for an aggregate purchase price of
        $15,315,649. Of this amount, Mr. Safir, the former Chairman and
        Chief Executive Officer of Safir, directly received 203,895 shares of common
        stock valued at $3,262,000, $3,262,320 in the form of an 8% promissory note,
        which was paid in June 2006, and $543,720 in the form of a 4% promissory
        note,
        which was paid in May 2007. Mr. Safir became the Chief Executive Officer
        of the
        Company’s Security Investigations and Consulting unit as a result of the
        transaction.
  **Issuances
        to Verus International Group, Ltd.**
  On
        September 25, 2007, pursuant to a stock purchase agreement dated March 1,
        2007
        by and between the Company and Versus Support Services, Inc., Verus
        International Group, Ltd. received 850 shares of common stock in consideration
        of services performed from July 2006 through September 2006.
  On
        February 25, 2008, pursuant to a stock purchase agreement dated February
        1, 2008
        by and between the Company and Versus Support Services, Inc., Verus
        International Group, Ltd. received 1,567 shares of common stock in consideration
        of services performed from April 2007 through June 2007.
 
 **19. 
        Defined Contribution Plan**
 
 The
        Company has a 401(k) profit sharing plan (the “401(k) Plan”), covering employees
        who have completed three months of service and meet certain other eligibility
        requirements. The 401(k) Plan provides for a discretionary matching contribution
        by the Company, based on employee elective deferrals, determined each payroll
        period. The 401(k) Plan also provides for an employer discretionary profit
        sharing contribution. Employees vest at a rate of 25% per year in discretionary
        employer contributions. The 401(k) Plan expense amounted to approximately
        $290,000, $120,000 and $18,000 for the years ended December 31, 2007, 2006
        and
        2005, respectively.
 
 **20.**
              **Subsequent
                  Events**
 
 On
        December 19, 2006, the Company awarded 100,000 and 75,000 shares of restricted
        stock valued at $12.40 per share to Dr. Harvey Schiller and Mr. Jeffrey Nyweide,
        respectively, in connection with the extension of their respective employment
        and consulting agreements. On December 12, 2007, the Compensation Committee
        determined that, effective January 1, 2008, 6,250 shares and 4,687 shares
        of
        restricted stock held by Dr. Schiller and Mr. Nyweide, respectively were
        no
        longer subject to forfeiture. Dr. Schiller and Mr. Nyweide elected to have
        the
        Company withhold 2,278 and 1,585 shares, respectively, in satisfaction of
        their
        tax obligations in connection with the vesting of their restricted stock.
        Such
        withheld shares valued at $10,251 and $7,133, respectively, are reflected
        as
        treasury shares in the Company’s books and records. As a result of the
        withholding of shares, Dr. Schiller and Mr. Nyweide received 3,972 and 3,102
        shares, respectively.
 
 Effective
        on January 1, 2008, the Company granted, in the aggregate, options for the
        purchase of 75,000 shares of its common stock at an exercise price of $4.50
        per
        share, under the 2006 Long-Term Incentive Plan, to three members of the Board
        of
        Directors. The options have a five year term, vest ratably at the end of
        each of
        the four quarterly periods following the date of grant and have a value of
        $235,000 utilizing the Black Scholes option pricing model with the following
        assumptions used: expected life of five years, volatility of 87%, dividends
        of
        0% and a risk free interest rate of 3.45%.
 
 Effective
        on January 1, 2008, the Company issued stock options for the purchase of
        100,000
        shares of its common stock at an exercise price of $4.50 per share, under
        the
        2006 Long-Term Incentive Plan to certain members of its advisory boards for
        their advisory services to the Company.   The options have a five
        year term, vest ratably at the end of each of the four quarterly periods
        following the date of grant and have a value of $314,000 utilizing the Black
        Scholes option pricing model with the following assumptions used: expected
        life
        of five years, volatility of 87%, dividends of 0% and a risk free interest
        rate
        of 3.45%.
 
 On
        January 7, 2008 the Company repaid $450,000 in satisfaction of a note payable
        issued in connection with the purchase of On Line Consulting (See Notes 4
        and
        11).
 
 On
        January 24, 2008, Daniel L. Burstein resigned from the Board of Directors
        of the
        Company and was appointed to the Company’s Senior Advisory
        Board.
  F-72
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Consolidated Financial Statements
 
 **20.**
              **Subsequent
                  Events, continued**
 
 On
        January 28, 2008, in order to fill the vacancy created by Mr. Burstein’s
        resignation, John P. Oswald was unanimously elected to the Board of Directors
        by
        the remaining Directors to serve until the next annual meeting of the Company’s
        stockholders and until his successor is duly elected and
        qualifies.  The Board of Directors appointed Mr. Oswald Chairman of
        each of the Compensation Committee and Nominating Committee of the Board
        of
        Directors.
 
 On
        January 30, 2008, the Company issued 300,000 shares of common stock to the
        JLWA
        sellers including 225,000 shares of common stock, in full satisfaction of
        the
        $2,160,000 obligation to issue common stock. The cost of the remaining shares
        75,000 shares shall be recorded as earn-out expense upon the expiration of
        the
        12 months clawback period (See Note 10).
 
 On
        February 2, 2008, the Company filed a post-effective amendment converting
        the
        Company’s registration statement on SB-2, as amended (File No.
        333-145053, initially filed on August 2, 2007)   to a Form
        S-3 registration statement.  This post-effective amendment was declared
        effective on February 14, 2008.
 
 On
        February 14, 2008, the Company registered for resale a total of 1,223,565
        shares
        of its common stock, 300,000 shares of which were required to be registered
        pursuant to the second amendment, dated May 11, 2007, to the Company’s asset
        purchase agreement with the JLWA sellers, and the remainder of which were
        held
        by the Company’s employees, directors, or their affiliates.
  On
        February 13, 2008, the Company granted, in the aggregate, options for the
        purchase of 295,000 shares of its common stock at an exercise price of $1.70
        per
        share under the 2006 Long-Term Incentive Plan to certain of its officers
        and
        employees.   The options have a five year term, vest ratably upon
        the first, second and third anniversaries of the date of grant and have a
        value
        of $346,635 utilizing the Black Scholes option pricing model with the following
        assumptions used: expected life of five years, volatility of 87%, dividends
        of
        0% and a risk free interest rate of 2.71%.
 
 On
        February 15, 2008, the Company issued 21,843 shares of common stock, valued
        at
        $152,500 for services rendered during the year ended December 31, 2007, and
        5,141 shares of common stock valued at $15,000 for services rendered during
        January and February 2008, to a group of the Company’s service providers
        including Verus, of which John Oswald, Director, is Chief Executive
        Officer.
 
 On
        March
        5, 2008, the Company granted, an option for the purchase of 50,000 shares
        of its
        common stock at an exercise price of $1.86 under the 2006 Long-Term Incentive
        Plan to an officer of Bode.   The option has a five year term,
        vests ratably upon the first, second, third, and fourth anniversaries of
        the
        date of grant, certain vesting is accelerated upon the achievement of certain
        performance based criteria and upon a change in control all such options
        vest
        immediately. The options have a value of $64,000 utilizing the Black Scholes
        option pricing model with the following assumptions used: expected life of
        five
        years, volatility of 87%, dividends of 0% and a risk free interest rate of
        2.59%.
  F-73




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





None.





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





*Disclosure
      Controls and Procedures*





Disclosure
      controls and procedures (as defined in Rule 13(a) -15(e)) are controls and
      other
      procedures that are designed to ensure that information required to be disclosed
      by a public company in the reports that it files or submits under the Exchange
      Act is recorded, processed, summarized and reported within the time periods
      specified in the SEC’s rules and forms. Disclosure controls and procedures
      include, without limitation, controls and procedures designed to ensure that
      information required to be disclosed by a public company in the reports that
      it
      files or submits under the Exchange Act is accumulated and communicated to
      the
      company’s management, including its principal executive and principal financial
      officers, or persons performing similar functions, as appropriate to allow
      timely decisions regarding required disclosure. Disclosure controls and
      procedures include many aspects of internal control over financial reporting.





*Management’s
      Report on Internal Control over Financial Reporting*




Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rule 13a-15(f) under the Exchange
      Act. Internal control over financial reporting refers to a process designed
      by,
      or under the supervision of, our Chief Executive Officer and Chief Financial
      Officer and effected by our Board, management and other personnel, to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance with
      generally accepted accounting principles, including those policies and
      procedures that:





·
            pertain
                to the maintenance of records that, in reasonable detail, accurately
                and
                fairly reflect the transactions and dispositions of our assets;





·
            provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with generally
                accepted
                accounting principles, and that our receipts and expenditures are
                being
                made only in accordance with authorizations of our management and
                directors; and





·
            provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use or disposition of our assets that could
                have
                a material effect on our consolidated financial statements.





Because
      of its inherent limitations, internal control over financial reporting cannot
      provide absolute assurance of the prevention or detection of misstatements.
      In
      addition, projections of any evaluation of effectiveness to future periods
      are
      subject to the risk that controls may become inadequate because of changes
      in
      conditions, or that the degree of compliance with the policies or procedures
      may
      deteriorate.





In
      connection with the preparation of this Annual Report on Form 10-K for the
      year
      ended December 31, 2007, management, with the participation of our Chief
      Executive Officer and Chief Financial Officer, has evaluated the effectiveness
      of our disclosure controls and procedures and internal controls over financial
      reporting, pursuant to Rule 13a-15 under the Exchange Act. The scope of
      management’s evaluation excluded Bode, which we acquired on February 28, 2007,
      pursuant to Frequently Asked Question No. 3 (October 6, 2004) regarding Release
      No. 34-47986, “Management’s Report on Internal Control Over Financial Reporting
      and Certification of Disclosure in Exchange Act Periodic Reports” (June 5,
      2003). Accordingly, management’s assessment of our internal control over
      financial reporting does not include internal control over financial reporting
      of Bode, which represented 23.1% of our consolidated total assets at December
      31, 2007, and 16.3% of our consolidated revenues for the year then
      ended.





In
      their
      evaluation, our Chief Executive Officer and Chief Financial Officer have identified
      the following matters that would constitute a material weakness (as that term
      is
      defined under the Public Company Accounting Oversight Board Auditing Standard
      No. 5): our financial closing process, a lack of segregation of financial
      responsibilities and the need for additional qualified financial accounting
      personnel.




39




To
      address these issues, we have taken the following remediation measures which
      have either been implemented, are in process of being implemented or are planned
      for the 2008 fiscal year:




·
            effective
                in January 2008, we created the new position of Senior Vice President
                of
                Finance and Chief Accounting Officer, who reports to the Chief Financial
                Officer. We also are committed to reassess our staffing levels in
                2008 to
                determine if other accounting resources should be added to our team
                to
                handle the growing workload due to the acquisitions, provide extra
                technical depth and further promote segregation of
                duties;





·
            management
                commenced a comprehensive review, with the assistance of independent
                counsel of our governance activities and as a result amended and
                rolled
                out in the Fourth Quarter of 2007 a revised Employee Handbook,
                whistleblower reporting hotline, and other related measures;





·
            in
                connection with the filing of this Form 10-K, we established a more
                formal disclosure process for the Board and management so that there
                is
                more detailed chronology and documentation of the discussions and
                analyses
                that take place along with a checklist of items we routinely consider,
                such as variances between financial results and forecasts, changes
                in
                relationships with key vendors, customers, lenders etc., company-wide
                initiatives, transactions not previously disclosed in prior filings,
                related party issues, new/emerging risks, credit agreement covenant
                adherence, tax, accounting, internal controls, governmental or other
                investigations, Management Discussion and Analysis discussion, and
                other
                matters. In addition, sub-certifications are being adopted to ensure
                accountability by the controllers and executives of each of our business
                units;





·
            we
                implemented various revenue-related processes in the fourth quarter
                of
                2007 that we are now monitoring for compliance and are continuing
                to
                redesign our controls to ensure a routine, repeatable closing process
                that
                allows time for review and more in-depth analysis at both the corporate
                consolidation and business unit levels. We have established a closing
                schedule that should provide time for account analyses and reconciliation,
                instituted procedures for journal entry approval, financial data
                flow
                between the business unit timekeeping systems, outsourced payroll
                processor and the general ledger;





·
            during
                November 2007, management retained an independent third party consulting
                firm to assist with our preparation, documentation and testing of
                our
                compliance efforts with Section 404 of the Sarbanes Oxley Act. 
                Starting in the first quarter of 2008, testing will be performed
                to
                sustain compliance on a quarterly basis that will both expand the
                depth of
                our coverage in complex areas (e.g. intangibles, equity, revenue
                and
                financial reporting) and breadth by incorporating acquisitions subject
                to
                exemption in 2007; and





·
            during
                the fourth quarter of 2007, we adopted formal policy and procedure
                guidelines related to Information Technology practices, covering
                systems
                development and change management, security authentication and related
                measures and operational activities. We continue to work on implementing
                these practices, where feasible, given the different applications
                and
                platforms supporting our business units. We also retained system
                consultants to evaluate and upgrade our technical infrastructure
                for our
                general ledger financial systems.





As
      a
      result of the material weaknesses identified above, our Chief Executive Officer
      and Chief Financial Officer have concluded that the design and operation of
      our
      disclosure controls and procedures and our internal controls and procedures
      are
      not effective as of December 31, 2007. Management believes, however, that as
      a
      result of the remediation measures described above, we have made significant
      improvement over prior periods and believe we will continue to improve and
      refine our internal controls processes over the next fiscal year.





This
      Annual Report on Form 10-K does not include an attestation report of Marcum
      & Kliegman LLP, our independent registered public accounting firm, regarding
      internal control over financial reporting. Management's report was not subject
      to attestation by our registered public accounting firm pursuant to temporary
      rules of the Securities and Exchange Commission that permit us to provide only
      management's report in this Annual Report on Form 10-K.




**Item
      9B. Other Information.**





There
      are
      no items required to be disclosed on Current Report on Form 10-K during the
      year
      ended December 31, 2007 that were not so reported.


40





**PART
      III**





**Item
      10.**  **Di** r **ectors,
      Executive Officers, and Corporate Governance.**





The
      following table sets forth information regarding the members of our Board of
      Directors and our executive officers. Harvey W. Schiller, Ph.D., Per-Olof Lööf,
      and Ronald M. Starr became directors and officers on June 24, 2005. John P.
      Bujouves was subsequently appointed to the Board of Directors on June 27, 2005
      and John P. Oswald on January 28, 2008. All directors hold office until the
      next
      annual meeting of shareholders and the election and qualification of their
      successors. Officers are elected annually by the Board of Directors and serve
      at
      the discretion of the Board.





**Name**
            
            **Age**
            
            **Position****Executive
                Officers and Directors**Harvey
                W. Schiller, Ph.D.
            
            68
            
            Chairman
                of the Board of Directors and Chief Executive OfficerJeffrey
                O. Nyweide
            
            51
            
            Chief
                Financial Officer, Executive Vice President-Corporate Development,
                Treasurer and SecretaryThomas
                P. Ondeck
            
            61
            
            President,
                International Strategies UnitHalsey
                Fischer
            
            58
            
            Chief
                Executive Officer, Fraud and SIU Services UnitJames
                Lee Witt
            
            63
            
            Chief
                Executive Officer, Preparedness Services UnitHoward
                Safir
            
            62
            
            Chief
                Executive Officer, Security Consulting and Investigations
                UnitPer-Olof
                Lööf
            
            57
            
            Vice
                Chairman of the Board of DirectorsJohn
                P. Oswald
            
            49
            
            Director
                and Chairman of the Compensation and the Nominating
                CommitteesRonald
                M. Starr
            
            38
            
            Director
                and Chairman of the Audit CommitteeJohn
                P. Bujouves
            
            45
            
            Director**Key
                Employees**General
                Wesley Clark (ret.)
            
            63
            
            Senior
                Vice President, Domestic and International SecurityRodney
                Slater
            
            53
            
            Senior
                Vice President, Transportation and Critical
                Infrastructure





The
      business experience for the past five years (and, in some instances, for prior
      years) of each of our directors, officers and key employees are as
      follows:





***Harvey
      W. Schiller*** , ***Ph.D.*** has been
      Chairman of our Board of Directors since February 2004 and became our Chief
      Executive Officer in June 2005. Dr. Schiller oversees our administrative
      headquarters with a focus on our strategy and new business development. Prior
      to
      joining GlobalOptions, Dr. Schiller served as Chairman of Assante U.S., a
      provider of financial and life management products and services, from 2002
      to
      2004. Prior to joining Assante, he was Chairman and Chief Executive Officer
      of
      YankeeNets from 1999 to 2002. His previous experience includes President of
      Turner Sports, Inc., Executive Director and Secretary General of the United
      States Olympic Committee and Commissioner of the Southeastern Conference. Prior
      to joining the United States Olympic Committee, Dr. Schiller served for
      more than 25 years in the United States Air Force, achieving the rank of
      Brigadier General. Dr. Schiller is a former partner in QuanStar Group, a
      management consulting firm in New York, and a former advisory partner of
      Millennium Technology Value Partners, L.P.


41




***Jeffrey
      O. Nyweide*** has
      been
      our Chief Financial Officer and Executive Vice President-Corporate Development
      since April 2003 and was appointed Secretary in June 2005. Mr. Nyweide has
      been a successful entrepreneur and executive for the past 20 years.
      Mr. Nyweide has also been a Venture Partner with Millennium Technology
      Ventures, L.P., a New York-based venture capital firm, since 2001. From 1987
      to
      2000, he co-founded and then grew Dataware Technologies, Inc., a software and
      services company, as Director, President and Chief Operating Officer and took
      the company public. In 1995, he helped found Northern Light Technology LLC.
      Mr. Nyweide has significant experience in mergers and acquisitions, finance
      and operations as well as with establishing international business in Europe
      and
      Asia from prior experience as a founder and managing director of Quantum
      Management in Greenwich, Connecticut and Munich, Germany. In this role he worked
      with European and United States investment banks and corporations
      developing merger and acquisition strategies as well as strategic alliances.
      His
      previous experience in the services and solutions business also includes sales,
      marketing and operating experience as an executive with The Service Bureau
      Company, a subsidiary of Control Data Corporation, in Chicago, Atlanta and
      Greenwich.




***Thomas
      P. Ondeck*** had
      been
      President of privately-held GlobalOptions, Inc. since January 1999 and became
      President of our International Strategies unit upon its inception in June 2006.
      Mr. Ondeck heads the multi-disciplinary crisis management teams comprised
      of investigatory, legal, government relations and public relations experts.
      He
      has dealt with national and international crises, including assisting companies
      besieged by activist and hate groups, plaintiffs’ product liability litigation
      campaigns, the financial impact of violence in Southeast Asia, threats against
      multinational businesses by organized criminal elements in the former Soviet
      Union, extortive litigation involving misuse of the United States civil RICO
      statute by business competitors and asset looting in Latin America.
      Mr. Ondeck also heads our investigations and business intelligence practice
      areas. He supervises our litigation support investigations for law firms.
      Mr. Ondeck also spearheads our investigative services for corporations,
      including due diligence investigations in connection with corporate acquisitions
      and internal corporate investigations into potential theft of assets, identity
      misrepresentation and fraud. Mr. Ondeck was previously a litigation partner
      in two international law firms and served in the White House as an aide to
      former President Richard M. Nixon.




***Halsey
      Fischer*** became
      the Chief Executive Officer of our Fraud and SIU Services unit upon our
      acquisition of CBR in August 2005. Mr. Fischer oversees our national
      investigations practice. Mr. Fischer served as the President and Chief
      Executive Officer of CBR from its founding in 1998 until its acquisition. During
      his tenure at CBR, Mr. Fischer built an investigations firm with eight
      offices in the United States through acquisitions and organic growth. Under
      Mr. Halsey’s leadership, CBR developed a state-of-the-art Internet case
      management system for use by remote offices and its clients. Prior to forming
      CBR, Mr. Fischer was Senior Vice President, U.S. Investigations for
      Pinkerton Consulting & Investigations, Inc., since acquired by
      Securitas AB, and was responsible for each of its 28 profit centers across
      the
      United States. Prior to Pinkerton, Mr. Fischer was Group President of
      Security Consulting and Investigations for Business Risks International, the
      predecessor to Pinkerton’s investigations unit.




***James
      Lee Witt*** became
      the Chief Executive Officer of our Preparedness Services unit upon our
      acquisition of JLWA in March 2006. As the President and Chief Executive Officer
      of JLWA from 2002 until its acquisition in March 2006, Mr. Witt provided
      consulting and crisis management services to state and local governments,
      educational institutions, the international community and corporations. From
      2003 to 2006, Mr. Witt was the Chief Executive Officer of the International
      Code Council, a 50,000 member association dedicated to building safety that
      develops the codes used to construct residential and commercial buildings,
      including homes and schools. Mr. Witt has over 25 years of disaster
      management experience, culminating in his appointment as the Director of FEMA,
      where he served from 1993 to 2001. Mr. Witt was appointed by President
      Clinton and confirmed by the U.S. Senate as Director of FEMA in April 1993.
      In
      February 1996, President Clinton elevated Mr. Witt to cabinet status, a
      first for a FEMA Director. As FEMA Director, Mr. Witt coordinated federal
      disaster relief on behalf of President Clinton, including the response and
      recovery activities of 28 federal agencies and departments, the American Red
      Cross and other voluntary agencies. He also oversaw the National Flood Insurance
      Program, the U.S. Fire Administration and other pro-active mitigation activities
      to reduce loss of life and property from all types of hazards. Mr. Witt
      directed 2,500 employees located in Washington, D.C. and 10 regional offices.
      Mr. Witt’s professional career includes the formation of Witt Construction,
      a commercial and residential construction company. After 12 years as a
      successful businessman and community leader, he was elected County Judge for
      Yell County, serving as the chief elected official for the county, with judicial
      responsibilities for county and juvenile court. At age 34, he was the youngest
      elected official in Arkansas, and was later honored for his accomplishments
      by
      the National Association of Counties. After being re-elected six times to the
      position, Mr. Witt was appointed by then Governor Bill Clinton to assume
      leadership of the Arkansas Office of Emergency Services (OES). He served as
      the
      Director of the Arkansas OES for four years.




42


***Howard
      Safir*** became
      the Chief Executive Officer of our Security Consulting and Investigations unit
      upon our acquisition of Safir in May 2006. Mr. Safir served as Chairman and
      Chief Executive Officer of Safir from December 2001 until its acquisition.
      Prior
      to that time, Mr. Safir was Vice Chairman of IPSA International, a provider
      of
      investigative and security consulting services. From 1996 to 2000, Mr. Safir
      served as Police Commissioner of New York City. From 1994 to 1996, Mr. Safir
      served as New York City’s Fire Commissioner. Mr. Safir began his law enforcement
      career in 1965 as a special agent assigned to the New York office of the Federal
      Bureau of Narcotics, a forerunner of the Drug Enforcement Administration (DEA).
      From 1977 to 1978, Mr. Safir served as Assistant Director of the DEA. From
      1978
      to 1990, Mr. Safir worked for the United States Marshals Service where he served
      as Director of the Witness Protection Program and Assistant Director for
      Operations. Mr. Safir is currently on the boards of GVI Security Solutions
      (Chairman) and Verint Systems, Inc. Mr. Safir also serves as chief executive
      officer of the November Group, through which he provides, to a limited extent,
      technical and management consulting services to various companies, including
      ChoicePoint, and as the Chairman of the Board of Directors of National Security
      Solutions Inc., a newly organized blank check company organized for the purpose
      of effecting a business combination, including with entities involved in the
      security and homeland defense industries.




***Per-Olof
      Lööf*** has been
      Vice Chairman of our Board of Directors since August 2004. Mr. Lööf has
      been the Chief Executive Officer and a director of Kemet Corporation, a
      standardized-components supplier, since April 2005 and a director of Devcon
      International Corp., a company with operating divisions in security services,
      materials and construction, since 2004. Prior to joining Kemet, Mr. Lööf
      was Managing Partner of QuanStar Group from 2003 to 2004. Mr. Lööf has
      significant experience in acquisition integration efforts through past positions
      at Sensormatic Electronics Corporation, a manufacturer and provider of
      electronic article surveillance systems and accessories, where he was President
      and Chief Executive Officer from 1999 until its acquisition by Tyco
      International, Ltd. in 2003. Prior to Sensormatic, Mr. Lööf was Senior Vice
      President at NCR Corporation and Chief Executive Officer of AT&T ISTEL. He
      also worked for 12 years at Digital Equipment Corporation as Vice President
      of
      Sales and Marketing.




***John
      P. Oswald*** became a
      member of our board of directors on January 28, 2008 and has been appointed
      Chairman of the Compensation Committee and the Nominating Committee. Mr. Oswald
      has been the President and CEO of the Capital Trust Group, an international
      merchant/investment bank with offices in London, New York, Washington, D.C.
      and
      Beirut since 1993. Mr. Oswald is responsible for the U.S. operations of Capital
      Trust Group and it’s worldwide investment banking operations. His
      responsibilities have included managing a number of private equity funds, both
      in the U.S. and European markets which have focused on mezzanine and equity
      investments ranging from approximately $10 million to $100 million in middle
      market, private and public companies with revenues from $20-$1 billion. Since
      1993 Mr. Oswald has also managed an extensive portfolio of U.S. real estate
      comprised of office/retail space primarily in suburban areas in the U.S. and
      Europe. The investment banking/advisory function of Capital Trust Group includes
      advising clients with respect to mergers and acquisitions, financings and
      dispositions of holdings in the oil and gas, real estate, entertainment,
      education, construction, media and communications areas. Mr. Oswald has also
      been responsible for completing numerous public debt offerings and public
      issuances of stock for the Capital Trust Group’s portfolio companies and
      clients. Since December 1, 2006 Mr. Oswald has also been the president and
      CEO
      of Verus International Group, Ltd., an international merchant bank with offices
      in New York and Barbados. From 1986 to 1996, Mr. Oswald was a partner in the
      international law firm of Lord Day & Lord. He began his career as an
      accountant at Arthur Andersen & Co. and he is a certified public accountant.
      Mr. Oswald serves as a director for Preem Holdings AB, the largest downstream
      refining operation in Europe, Samir, the third largest public company and the
      only downstream oil refinery in Morocco, and numerous privately held companies.




***Ronald
      M. Starr*** has
      been
      a director since November 1998. Mr. Starr has been a Managing Director at
      Starr & Company, LLC, an accounting and business management firm for
      high net worth individuals, since 1996. Mr. Starr was a member of the
      General Partner of Millennium Technology Ventures, L.P. from 1999 to 2001 and
      has been the Chief Financial Officer and General Counsel of the venture capital
      funds PS Capital Holdings, L.P. and PS Capital Ventures, L.P., where his
      duties included negotiating and structuring the funds’ venture capital
      investments, since 1996 and 1997, respectively. Prior to working at Millennium
      Technology Ventures, PS Capital and Starr & Company, Mr. Starr was
      an attorney in the tax department at Proskauer Rose LLP, a New York City law
      firm. Mr. Starr is an advisory partner of Millennium Technology Value Partners,
      L.P.


43




***John
      P. Bujouves*** has
      been
      a director since June 2005. Mr. Bujouves has been the President and a
      director of Bayshore Asset Management Inc., a provider of asset management
      services, since 2003 and the Chief Executive Officer of Integris Funds Ltd.,
      a
      Cayman Islands based mutual fund company, since 1999. Mr. Bujouves has
      served as a director of Nationwide Credit Inc., one of the ten largest account
      receivable companies in the United States, since 2003. He also serves as
      Chairman of Globacor Capital Inc., a Canadian private equity investment firm,
      and Bayshore Bank & Trust Corp., one of Barbados’ largest private
      banks, and is a director and former Chairman of the Ontario Arthritis Society.
      Mr. Bujouves’ past experience includes directing CIBC’s International
      Private Banking group in Canada, where he provided leadership and technical
      expertise to a professional consulting group on the uses of international
      banking and trust services. Prior to that, as Managing Partner for Royal Trust
      International, Mr. Bujouves launched Royal Trust Corporation’s first two
      locations in the United States.




***General
      Wesley Clark (ret.)*** became
      our Senior Vice President of Domestic and International Security upon our
      acquisition of JLWA in March 2006 and had served as Vice Chairman and Senior
      Advisor of JLWA from August 2004 until its acquisition. General Clark is a
      retired General from the United States Army, who served from 1997 to 2000 as
      a
      four-star general and NATO Supreme Allied Commander and Commander in Chief
      of
      the United States European Command. From 1996 to 1997, General Clark served
      as
      Commander in Chief of the United States Southern Command, Panama, and from
      1994
      to 1996 as Director for Strategic Plans and Policy for the Joint Chiefs of
      Staff. During his 34-year career in the military, General Clark received
      numerous military awards, including five awards of the Defense Distinguished
      Service Medal, the Silver Star, Bronze Star and Purple Heart. General Clark
      also
      received honorary Knighthoods from the British and Dutch government and was
      made
      a commander of the French Legion of Honor. In August 2000, General Clark was
      awarded the Presidential Medal of Freedom, the nation’s highest civilian honor.
      After his retirement from the army, General Clark became an investment banker,
      commentator and in 2003 was a candidate for the Democratic nomination for the
      U.S. Presidency. In 2004 he returned to investment banking and is also Chairman
      and Chief Executive Officer of Wesley K. Clark & Associates, a
      strategic advisory and consulting firm.




***Rodney
      Slater*** became
      our Senior Vice President of Transportation and Critical Infrastructure upon
      our
      acquisition of JLWA on March 10, 2006 and has served as: former United
      States Secretary of Transportation; former head of the Federal Highway
      Administration; former Director of Government Relations at Arkansas State
      University; former Executive Assistant for Economic and Community Programs
      for
      then-Governor Bill Clinton; former Governor’s Special Assistant for Community
      and Minority Affairs; former Assistant Attorney General-Litigation Division
      of
      the Arkansas State Attorney General’s Office; and former chairman of the
      Arkansas State Highway Commission. Mr. Slater joined the law firm Patton
      Boggs LLP in 2001 as a partner in its public policy practice group and head
      of
      its transportation practice group in Washington, D.C.




**Family
      Relationships**




There
      are
      no family relationships among our executive officers and directors.




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




Section
      16(a) of the Securities and Exchange Act of 1934, as amended, requires our
      directors, executive officers and holders of more than 10% of our common stock
      to file with the SEC initial reports of ownership and reports of changes in
      the
      ownership of our common stock and other equity securities of ours. Such persons
      are required to furnish us copies of all Section 16(a) filings.





Based
      solely upon a review of the copies of the forms furnished to us, we believe
      that
      our officers and directors complied with all applicable filing requirements
      during the 2007 fiscal year.




**Board
      Committees**





Our
      Board of Directors has three standing committees to assist it with its
      responsibilities. These committees are described below.




44




**The
      Audit Committee** ,
      which
      is comprised solely of directors who satisfy the SEC audit committee membership
      requirements, is governed by a board-approved charter that contains, among
      other
      things, the committee’s membership requirements and responsibilities. The Audit
      Committee oversees our accounting, financial reporting process, internal
      controls and audits, and consults with management and the independent registered
      public accounting firm (the “independent auditors”) on, among other items,
      matters related to the annual audit, the published financial statements and
      the
      accounting principles applied. As part of its duties, the Audit Committee
      appoints, evaluates and retains our independent auditors. It maintains direct
      responsibility for the compensation, termination and oversight of our
      independent auditors and evaluates the independent auditors’ qualifications,
      performance and independence. The committee also monitors compliance with our
      policies on ethical business practices and reports on these items to the board.
      The Audit Committee has established policies and procedures for the pre-approval
      of all services provided by the independent auditors. Our Audit Committee is
      comprised of Messrs. Starr, Bujouves and Lööf, and Mr. Starr is the chairman of
      the committee.




The
      Board
      of Directors has determined that Mr. Ronald M. Starr, who currently is a member
      of the Board of Directors and chairman of the Audit Committee, is the Audit
      Committee financial expert, as defined under the Securities Exchange Act of
      1934, as amended, and is independent as defined by the rules of NASDAQ. The
      Board of Directors made a qualitative assessment of Mr. Starr’s level of
      knowledge and experience based on a number of factors, including his formal
      education and experience as an Attorney for more than 15 years.




**The
      Compensation Committee** ,
      which
      is comprised solely of independent directors, determines all compensation for
      our chief executive officer; reviews and approves corporate goals relevant
      to
      the compensation of our chief executive officer and evaluates our chief
      executive officer’s performance in light of those goals and objectives; reviews
      and approves objectives relevant to other executive officer compensation;
      reviews and approves the compensation of other executive officers in accordance
      with those objectives; administers our stock option plans; approves severance
      arrangements and other applicable agreements for executive officers; and
      consults generally with management on matters concerning executive compensation
      and on pension, savings and welfare benefit plans where Board of Directors
      or
      stockholder action is contemplated with respect to the adoption of or amendments
      to such plans. The committee makes recommendations on organization, succession,
      the election of officers, consultantships and similar matters where board
      approval is required. Our Compensation Committee is comprised of Messrs. Oswald,
      Starr and Lööf. Mr. Oswald is the chairman of the committee.




**The
      Nominating Committee** ,
      considers and makes recommendations on matters related to the practices,
      policies and procedures of the Board of Directors and takes a leadership role
      in
      shaping our corporate governance. As part of its duties, the committee assesses
      the size, structure and composition of the Board of Directors and Board of
      Director committees, coordinates evaluation of board performance and reviews
      board compensation. The committee also acts as a screening and nominating
      committee for candidates considered for election to the Board of Directors.
      In
      this capacity it concerns itself with the composition of the Board of Directors
      with respect to depth of experience, balance of professional interests, required
      expertise and other factors. The committee evaluates prospective nominees
      identified on its own initiative or referred to it by other Board of Director
      members, management, stockholders or external sources and all self-nominated
      candidates. The committee uses the same criteria for evaluating candidates
      nominated by stockholders and self-nominated candidates as it does for those
      proposed by other Board of Director members, management and search companies.
      Our nominating committee is comprised of Messrs. Lööf, Bujouves and Oswald. Mr.
      Oswald is the chairman of the committee.





**Code
      of Business Conduct and Ethics**





We
      have
      adopted a Code of Business Conduct and Ethics applying to all of our directors,
      officers and employees. The Code is reasonably designed to deter wrongdoing
      and
      promote (i) honest and ethical conduct, including the ethical handling of actual
      or apparent conflicts of interest between personal and professional
      relationships, (ii) full, fair, accurate, timely and understandable disclosure
      in reports and documents filed with, or submitted to, the SEC and in other
      public communications made by us, (iii) compliance with applicable governmental
      laws, rules and regulations, (iv) the prompt internal reporting of violations
      of
      the code to appropriate persons identified in the code, and (v) accountability
      for adherence to the Code. A copy of the code is available in the Investor
      Relations; Corporate Governance portion of our website,
      http://www.globaloptions.com. Additional copies of the Code may be obtained
      without charge, from us by writing or calling: 75 Rockefeller Plaza, 27th Floor,
      New York, New York 10019, Attn: Chief Financial Officer, tel: (212)
      445-6261.


45





**Item
      11. Executive Compensation**





*Summary
      Compensation Table*





The
      following table sets forth information with respect to compensation earned
      by
      the named executive officers:




**Name
                  and Principal**
                **Position**
              
              **Year**
              
              **Salary**
                **($)**
              
              **Bonus**
                **($)**
              
              **Stock
                  Awards**
              
              **Option
                  Awards**
                **($)**
              
              **All
                  Other**
                **Compensation
                  ($)**
              
              **Total**
                **($)**Harvey
                  W. Schiller, Ph.D.
              
              
              2007
              
              
              375,000
              
              
              100,000
              (1)
              
              13
              (2)
              
              -
              
              
              15,622
              (3)
              
              490,622Chairman
                  and Chief Executive Officer
              
              
              2006
              
              
              300,000
              
              
              750,000
              
              
              100,000
              (4)
              
              1,558,800
              (5)
              
              12,244
              (6)
              
              2,721,041Jeffrey
                  O. Nyweide
              
              
              2007
              
              
              325,000
              
              
              75,000
              (1)
              
              -
              
              
              -
              
              
              70,661
              (7)
              
              470,661Chief
                  Financial Officer and Executive Vice President
              
              
              2006
              
              
              300,000
              
              
              450,000
              
              
              75,000
              (4)
              
              779,400
              (8)
              
              -
              
              
              1,529,400James
                  Lee Witt
              
              
              2007
              
              
              500,000
              
              
              100,000
              
              
              13
              (2)
              
              572,400
              (9)
              
              16,597
              (10)
              
              1,188,997Chief
                  Executive Officer of Preparedness Services unit
              
              
              2006
              
              
              305,000
              
              
              125,000
              
              
              -
              
              
              -
              
              
              10,901
              (11)
              
              440,901





(1)
            Amount
                represents bonus earned in accordance with annual performance criteria
                established by the compensation committee. The bonus amount was approved
                by the compensation committee on December 12, 2007, and was paid
                on
                January 11, 2008.





(2)
            On
                January 1, 2007, certain of our employees were awarded 13 shares
                of our
                common stock under our 2006 long-term incentive
                plan.





(3)
            Amount
                includes payments of $11,422 toward health, life and disability insurance
                benefits.




(4)
            Dr. Schiller
                and Mr. Nyweide were granted 100,000 shares and 75,000 shares of
                restricted stock, respectively, which is subject to vesting starting
                in
                2007 in accordance with annual performance criteria established by
                the
                Compensation Committee. None of this restricted stock was vested
                in either
                2006 or 2007. On December 12, 2007, our Compensation Committee determined
                that 6,250 shares and 4,687 shares of restricted stock held by Dr.
                Schiller and Mr. Nyweide, respectively, effective on January 1, 2008,
                were
                no longer subject to forfeiture. Dr. Schiller and Mr. Nyweide elected
                to
                have the Company withhold 2,278 and 1,585 shares, respectively, in
                satisfaction of their tax obligations in connection with the vesting
                of
                their restricted stock. Such withheld shares are reflected as treasury
                shares in the Company’s books and records. As a result of the withholding
                of shares, Dr. Schiller and Mr. Nyweide received 3,972 and 3,102
                shares,
                respectively.





(5)
            On
                June 12, 2006, Dr. Schiller received a stock option to purchase
                125,000 shares of our common stock at an exercise price of $17.60
                per
                share. The option vests ratably upon the first, second and third
                anniversaries of the date of grant.




(6)
            Amount
                includes payments of $10,404 towards health
                insurance.





(7)
            Amount
                includes payments of a $45,000 housing allowance for the rental of
                an
                apartment in New York City,as
                well as $16,661 towards health, life and disability insurance
                benefits.





(8)
            On
                June 12, 2006, Mr. Nyweide received a stock option to purchase
                62,500 shares of our common stock at an exercise price of $17.60
                per
                share. The option vests ratably upon the first, second and third
                anniversaries of the date of grant.





(9)
            On
                September 28, 2007, Mr. Witt was awarded options to purchase 112,500
                shares of our common stock at an exercise price of $7.24 per share.
                The
                option vests ratably upon the first, second and third anniversaries
                of the
                date of grant.


46





(10)
            Amount
                includes payments of $14,077 towards health, life and disability
                insurance
                benefits.





(11)
            Amount
                includes payments of $6,983 towards health, life and disability insurance
                benefits.





***Employment
      Agreements and Potential Payments Upon Termination or Change In
      Control***




*Harvey
      W. Schiller, Ph.D.*




We
      entered into a three-year employment agreement with Dr. Schiller, our Chairman
      and Chief Executive Officer, in January 2004. On December 19, 2006, the
      agreement was amended to extend the term through January 31, 2010. The agreement
      is subject to automatic one-year extensions, unless either party provides notice
      to the other party of its intention not to renew the agreement. The amendment
      provides for an annual base salary of $375,000, $400,000 and $425,000 starting
      January 1, 2007, 2008 and 2009, respectively, as well as an annual performance
      bonus payable 50% in cash and 50% in restricted stock which will vest upon
      the
      achievement of goals agreed upon mutually between Dr. Schiller and the
      Compensation Committee. In connection with the extension of the term of his
      employment agreement, Dr. Schiller was awarded a one-time grant of 100,000
      shares of restricted common stock, subject to vesting in accordance with
      performance criteria established by the Compensation Committee.




In
      the
      event of death or disability, Dr. Schiller (or his estate) will be entitled
      to
      salary and pro rata bonus until termination, and 90 days from termination to
      exercise vested options; unvested options will be forfeited. If terminated
      for
      cause, Dr. Schiller will forfeit all unexercised options. In the event Dr.
      Schiller terminates his employment agreement for good reason or the employment
      agreement is terminated without cause, 50% of his unvested stock options will
      vest and all vested options will remain exercisable for a period of 90 days
      from
      termination. The employment agreement contains non-compete and non-solicitation
      provisions for 12 months following termination, as well as confidentiality
      provisions. Upon a change in control, all such options and restricted stock
      will
      immediately vest, all performance conditions will deemed to have been met and
      the exercise term of any stock options will equal the term of such options
      as
      originally granted.




*Jeffrey
      O. Nyweide*




We
      were a
      party to a consulting agreement with Mr. Nyweide providing for his service
      as
      our Chief Financial Officer and Executive Vice President-Corporate Development
      for a monthly fee of $25,000, subject to adjustment based upon the services
      performed by Mr. Nyweide. On December 19, 2006, the Compensation Committee
      amended the terms of this consulting agreement, extending its term through
      January 2010. The amendment provided for an increase in the monthly fee to
      $27,083, $29,167 and $31,250 for the years 2007, 2008 and 2009, respectively.
      In
      connection with the extension, Mr. Nyweide was awarded a one-time grant of
      75,000 shares of restricted common stock, subject to vesting in accordance
      with
      performance criteria established by the Compensation Committee.




Effective
      as of August 1, 2007, Mr. Nyweide and we terminated his consulting agreement
      and
      entered into an employment agreement providing for Mr. Nyweide’s service as our
      Chief Financial Officer, Executive Vice President—Corporate Development,
      Treasurer and Secretary, reporting to the Chairman of the Board. The employment
      agreement is for an initial term commencing on August 1, 2007 and terminating
      on
      January 31, 2010, subject to one-year extensions. Under the employment
      agreement, Mr. Nyweide’s salary for the remainder of 2007 will be $27,083.33 per
      month and his annual base salary for 2008 will be $350,000 and for 2009 will
      be
      $375,000. In addition, Mr. Nyweide will receive $9,000 per month to help defray
      his cost of living in New York City. Mr. Nyweide will also be entitled to annual
      bonuses payable 50% in cash and 50% in restricted stock subject to vesting
      according to mutually agreed goals, established by the Compensation Committee.
      The employment agreement provides that all options to purchase common stock
      and
      the 75,000 shares of restricted stock, subject to vesting as described above,
      granted to Mr. Nyweide pursuant to his consulting agreement, will remain in
      full
      force and effect. Upon a change in control, all such options and restricted
      stock will immediately vest, all performance conditions will deemed to have
      been
      met and the exercise term of any stock options will equal the term of such
      options as originally granted. In addition, we have agreed to provide Mr.
      Nyweide with all employee benefit plans and programs that we offer for our
      senior management, including 401(k) plans and group life, disability, health,
      medical and dental insurance plans.




47




In
      the
      event that we terminate Mr. Nyweide’s employment with cause or Mr. Nyweide
      resigns without good reason, our obligations are limited generally to paying
      Mr.
      Nyweide his base salary through the termination date. In the event that we
      terminate Mr. Nyweide’s employment without cause or Mr. Nyweide resigns with
      good reason, we are generally obligated to continue to pay 50% of Mr. Nyweide’s
      compensation for the remainder of the term of the employment agreement and
      his
      rights to his options and shares of restricted stock will be determined in
      accordance with the plans pursuant to which such options or shares were granted.
      The employment agreement also contains non-compete and non-solicitation
      provisions for 12 months following termination, as well as confidentiality
      provisions.




*James
      Lee Witt*




Concurrently
      with our acquisition of JLWA in March 2006, we entered into a four-year
      employment agreement with Mr. Witt, the former President and Chief Executive
      Officer of JLWA. On May 11, 2007, the agreement was amended and restated.
      Pursuant to the amended and restated agreement, Mr. Witt became the Chief
      Executive Officer of our Preparedness Services unit and agreed to perform such
      other duties and responsibilities as the Board of Directors may assign. Mr.
      Witt
      agreed to devote his full time to us at a salary of $300,000 per year and a
      discretionary annual bonus. In addition, Mr. Witt receives annual compensation
      of $200,000 as consideration for his resignation from the International Code
      Council. We may terminate Mr. Witt’s employment agreement for cause, upon the
      death or disability of Mr. Witt or upon 30 days’ notice by either party. In the
      event we terminate the employment agreement without cause, we are required
      to
      pay Mr. Witt his base salary and certain benefits for 12 months following
      termination. If Mr. Witt terminates the agreement without good reason, he will
      be obligated to reimburse us in an amount equal to (i) 25% of the number of
      shares issued to the JLWA Sellers in the 12 months preceding the termination
      and
      (ii) 25% of the base salary paid to Mr. Witt in the 12 months preceding the
      termination. The employment agreement also contains non-compete and
      non-solicitation provisions for 12 months following termination, as well as
      confidentiality provisions.




**Benefit
      Plans**





*2005
      Stock Option Plan*





Our
      2005
      Stock Option Plan was adopted as of August 5, 2005. We had reserved a total
      of
      6,500,000 shares of our common stock for issuance under the 2005 Stock Option
      Plan, had granted options to purchase a total of 769,358 shares of our common
      stock and, as of October 1, 2007, have options to purchase 500,704 shares of
      common stock outstanding under this plan. On October 17, 2006, our Board of
      Directors approved, and stockholders later ratified, that the remaining shares
      reserved, but unissued, with respect to any awards under the 2005 Stock Option
      Plan were unreserved and that no new awards were to be issued under the 2005
      Stock Option Plan.





The
      2005
      Stock Option Plan is administered by the Compensation Committee. Stock options
      granted under the 2005 Stock Option Plan were either incentive stock options,
      as
      defined in Section 422A of the Internal Revenue Code of 1986, or non-qualified
      stock options. Stock options granted under the 2005 Stock Option Plan are
      generally not transferable and are exercisable during the lifetime of the
      optionee only by the optionee.





The
      2005
      Stock Option Plan may be amended, altered, suspended, discontinued or terminated
      by the Board of Directors without further stockholder approval, unless
      stockholder approval is required by law or regulation or under the rules of
      the
      stock exchange or automated quotation system on which our common stock is then
      listed or quoted. Thus, stockholder approval will not necessarily be required
      for amendments that might increase the cost of the 2005 Stock Option Plan,
      except that no amendment or alteration to the 2005 Stock Option Plan may be
      made
      without the approval of stockholders that would:




·
            materially
                increase the benefits accruing to plan participants;
                or


·
            materially
                decrease the exercise price of any options;
                or


·
            extend
                the term of any option.





Unless
      otherwise provided, the 2005 Stock Option Plan will remain in effect for a
      period of nine years from the date adopted unless terminated earlier by the
      Board of Directors, and all stock options then outstanding under the 2005 Stock
      Option Plan will remain in effect until they have expired or been
      exercised.


48





*2006
      Long-Term Incentive Plan*





The
      purpose of our 2006 Long-Term Incentive Plan, which was adopted by stockholders
      on December 5, 2006, is to promote our long-term financial interest, including
      growth in the value of our equity and enhancement of long-term stockholder
      return, by: (i) attracting and retaining persons eligible to participate in
      the
      plan; (ii) motivating plan participants, by means of appropriate incentives,
      to
      achieve long-range goals; (iii) providing incentive compensation opportunities
      that are competitive with those of other similar companies; and (iv) further
      aligning plan participants’ interests with those of other stockholders through
      compensation that is based on our common stock. Awards under this plan include
      stock options, stock appreciation rights, stock awards, performance awards
      and
      other stock-based awards. We have reserved 1,500,000 shares of our common stock
      for issuance under the 2006 Long-Term Incentive Plan and, as of December 31,
      2007, options to purchase a total of 620,484 shares of our common stock, 175,000
      shares of restricted common stock and 3,471 shares of unrestricted common stock
      were outstanding under this plan.





The
      2006
      Long-Term Incentive Plan is administered by the Compensation Committee. The
      Compensation Committee has the power to determine the terms of any awards
      granted under the 2006 Long-Term Incentive Plan, including the exercise price,
      the number of shares subject to the stock award and conditions of exercise,
      terms of restriction and vesting, as applicable.





Stock
      options granted under this plan may be either incentive stock options, as
      defined in Section 422A of the Internal Revenue Code of 1986, or non-qualified
      stock options. The exercise price of all incentive stock options granted under
      the 2006 Long-Term Incentive Plan must be at least equal to the fair market
      value of the shares of our common stock on the date of the grant. With respect
      to any participant who owns stock possessing more than 10% of the voting power
      of all classes of our stock, the exercise price of any incentive stock option
      granted must be equal to at least 110% of the fair market value on the grant
      date. Stock options granted under the 2006 Long-Term Incentive Plan are
      generally not transferable and are exercisable during the lifetime of the
      optionee only by the optionee.





The
      2006
      Long-Term Incentive Plan may be amended, altered, suspended, discontinued or
      terminated by the Board of Directors without further stockholder approval,
      unless stockholder approval is required by law or regulation or under the rules
      of the stock exchange or automated quotation system on which our common stock
      is
      then listed or quoted. Thus, stockholder approval will not necessarily be
      required for amendments that might increase the cost of the 2006 Long-Term
      Incentive Plan or broaden eligibility, except that no amendment or alteration
      to
      the 2006 Long-Term Incentive Plan may be made without the approval of
      stockholders that would:




·
            materially
                increase the number of options that may be granted under the 2006
                Long-Term Incentive Plan; or


·
            materially
                increase the benefits accruing to the 2006 Long-Term Incentive Plan
                participants; or


·
            materially
                modify the 2006 Long-Term Incentive Plan participation eligibility
                requirements; or


·
            materially
                decrease the exercise price of any options;
                or


·
            extend
                the term of any option.





Unless
      otherwise provided, the 2006 Long-Term Incentive Plan will remain in effect
      for
      a period of 10 years from the date adopted unless terminated earlier by the
      Board of Directors, and all stock options then outstanding under the 2006
      Long-Term Incentive Plan will remain in effect until they have expired or been
      exercised.





*2006
      Stock Option Plan*





Our
      2006
      Stock Option Plan was adopted as of June 12, 2006. We had reserved a total
      of
      8,500,000 shares of our common stock for issuance under the 2006 Stock Option
      Plan, had granted options to purchase a total of 258,667 shares of our common
      stock and, as of October 1, 2007, have options to purchase 254,339 shares of
      our
      common stock outstanding under this plan.





On
      October 17, 2006, our Board of Directors approved, and stockholders later
      ratified, that the remaining shares reserved, but unissued, with respect to
      any
      awards under the 2006 Stock Option Plan were unreserved and that no new awards
      were to be issued under the 2006 Stock Option Plan.





The
      2006
      Stock Option Plan is administered by the Compensation Committee. Stock options
      granted under the 2006 Stock Option Plan are generally not transferable and
      are
      exercisable during the lifetime of the optionee only by the
      optionee.


49





The
      2006
      Stock Option Plan may be amended, altered, suspended, discontinued or terminated
      by the Board of Directors without further stockholder approval, unless
      stockholder approval is required by law or regulation or under the rules of
      the
      stock exchange or automated quotation system on which our common stock is then
      listed or quoted. Thus, stockholder approval will not necessarily be required
      for amendments that might increase the cost of the 2006 Stock Option Plan,
      except that no amendment or alteration to the 2006 Stock Option Plan may be
      made
      without the approval of stockholders that would:




·
            materially
                increase the benefits accruing to plan participants;
                or


·
            materially
                decrease the exercise price of any options;
                or


·
            extend
                the term of any option.





Unless
      otherwise provided, the 2006 Stock Option Plan will remain in effect for a
      period of 10 years from the date adopted unless terminated earlier by the Board
      of Directors, and all stock options then outstanding under the 2006 Stock Option
      Plan will remain in effect until they have expired or been
      exercised.





*2006
      Employee Stock Purchase Plan*





The
      purpose of the 2006 Employee Stock Purchase Plan, which was adopted by
      stockholders on December 5, 2006, is to provide an incentive for our employees.
      The plan permits our employees to acquire or increase their proprietary
      interests in our company through the purchase of shares of our common stock,
      thereby creating a greater community of interest between our stockholders and
      employees. The plan is intended to qualify as an “Employee Stock Purchase Plan”
under Sections 421 and 423 of the Internal Revenue Code of 1986. We have
      reserved 250,000 shares of our common stock for issuance under the 2006 Employee
      Stock Purchase Plan.





The
      2006
      Employee Stock Purchase Plan is administered by the Compensation Committee.
      The
      Compensation Committee has the authority to make rules and regulations for
      the
      administration of the 2006 Employee Stock Purchase Plan. All employees are
      eligible to participate in the 2006 Employee Stock Purchase Plan.




*2007
      Executive Compensation Plan*





On
      December 5, 2006, the Compensation Committee approved the establishment of
      our
      2007 Executive Compensation Plan, which links base salary, benefits and
      short-term and long-term incentives within the total compensation framework.
      The
      committee also extended the agreements with Dr. Schiller and Mr. Nyweide until
      January 31, 2010. The 2007 Executive Compensation Plan provides for cash awards
      and vesting of restricted stock, based on the achievement of performance targets
      set by the Compensation Committee.





Bonus
      awards granted under the 2007 Executive Compensation Plan have two components:
      an annual (single-year) incentive plan component, which is 20% of the bonus
      target, and a multi-year incentive plan component, which is 80% of the bonus
      target. Single-year performance targets are established at the end of the
      immediately preceding year and are monitored throughout the year. The annual
      incentive plan provides upside potential when organizational goals are exceeded
      and less when goals are missed. Multi-year performance metrics include
      components that related to increasing stockholder value.





*2008
      Executive Compensation Plan*





On
      December 12, 2007, the Compensation Committee approved the establishment of
      our
      2008 Executive Compensation Plan, which links base salary, benefits and
      short-term and long-term incentives within the total compensation framework.
      The
      2008 Executive Compensation Plan provides for cash awards and vesting of
      restricted stock, based on the achievement of performance targets set by the
      Compensation Committee.





Bonus
      awards granted under the 2008 Executive Compensation Plan have two components:
      an annual (single-year) incentive plan component, which is 20% of the bonus
      target, and a multi-year incentive plan component, which is 80% of the bonus
      target. Single-year performance targets are established at the end of the
      immediately preceding year and are monitored throughout the year. The annual
      incentive plan provides upside potential when organizational goals are exceeded
      and less when goals are missed. Multi-year performance metrics include
      components that related to increasing stockholder value.


50


**Outstanding
      Equity Awards at Fiscal Year-End**





The
      following table presents information regarding unexercised options, stock that
      has not vested, and equity incentive plan awards for each named executive
      officer as of the end of the fiscal year ended December 31, 2007:






Option
                Awards
            
            Stock
                AwardsName
            
            Number
                of Securities Underlying Unexercised Options
              (#) Exercisable
            
            Number
                of Securities Underlying Unexercised Options(1)
              (#) Unexercisable
            
            Option
              Exercise Price
              ($)
            
            Option
              Expiration
              Date
            
            Equity Incentive
                Plan Awards: Number of Unearned
              Shares that have
                not vested(1)
              (#)
            
            Equity
              Incentive Plan
                Awards:
              Market value
              at December
              31, 2007 of
                Unearned
              shares that
              have not
              vested ($)Harvey
                Schiller(2)
            
            
            110
              110
              111
              111
              111
              24,510
              83,333
              41,667
            
            
            -
              -
              -
              -
              -
              12,255
              41,667
              83,333
            
            $
              $
              $
              $
              $
              $
              $
              $
            4.80
              4.80
              4.80
              4.80
              4.80
              5.44
              20.00
              17.60
            
            
            4/22/08
              7/22/08
              10/24/08
                12/16/08
              1/16/09
              03/23/10
                11/18/10
              6/12/11
            
            
            100,000
            (3)
            $
            421,875Jeffrey
                O. Nyweide
            
            
            1,226
              41,667
              20,833
            
            
            613
              20,833
              41,667
            
            $
              $
              $
            5.44
              20.00
              17.60
            
            
            3/23/10
              11/18/10
              6/12/11
            
            
            75,000
            (3)
            $
            316,400James
                Lee Witt
            
            
            -
            
            
            112,500
            
            $
            7.24
            
            
            9/26/12
            
            
            -
            
            
            -





(1)
            Pursuant
                to the terms of their respective employment and consulting agreements,
                all
                of Dr. Schiller’s and Mr. Nyweide’s stock options and restricted stock
                will vest immediately upon change in control of the company, and
                all
                performance conditions for any performance stock options or restricted
                stock will be deemed to be met.





(2)
            On
                February 1, 2007 Dr. Schiller exercised options to purchase110,294
                shares
                of our common stock, on a cashless basis, and after deductions for
                tax
                withholding and exercise price, was issued 39,706 shares of common
                stock.





(3)
            Amounts
                represent shares of restricted stock valued at $12.40 per share,
                which
                were granted in connection with the extension of Dr. Schiller’s and Mr.
                Nyweide’s agreements on December 19, 2006, and are subject to vesting in
                accordance with performance criteria established by the Compensation
                Committee. None of this restricted stock vested in 2006. On December
                12,
                2007, our Compensation Committee determined that, effective January
                1,
                2008, 6,250 shares and 4,687 shares of restricted stock held by Dr.
                Schiller and Mr. Nyweide, respectively, were no longer subject to
                forfeiture. Dr. Schiller and Mr. Nyweide elected to have the Company
                withhold 2,278 and 1,585 shares, respectively, in satisfaction of
                their
                tax obligations in connection with the vesting of their restricted
                stock.
                Such withheld shares are reflected as treasury shares in the Company’s
                books and records. As a result of the withholding of shares, Dr.
                Schiller
                and Mr. Nyweide received 3,972 and 3,102 shares,
                respectively.


51


**DIRECTOR
      COMPENSATION**





The
      following table sets forth information with respect to compensation earned
      by or
      awarded to each Director of the Corporation who is not a named executive officer
      and who served on the Board of Directors during the fiscal year ended December
      31, 2007:





**Name**
            
            **Fees Earned or
                Paid in Cash**
              **($)**
            
            **Stock**
              **Awards**
            
            **Option**
              **Awards****(1)**
              **($)**
            
            **All
                Other Compensation**
              **($)**
            
            **Total**
              **($)**Per-Olof
                Lööf
            
            
            20,000
            
            
            
            
            
            52,998
            (2)
            
            
            
            
            72,998Ronald
                Starr
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            -John
                Bujouves
            
            
            20,000
            
            
            
            
            
            52,998
            (3)
            
            
            
            
            72,998John
                P. Oswald(4)
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            -Daniel
                Burstein(5)
            
            
            27,500
            
            
            
            
            
            52,998
            (6)
            
            
            
            
            80,498





(1)
            Amount
                represents the value of stock options granted to members of the Board
                of
                Directors in 2007.





(2)
            On
                January 1, 2007, an option to purchase 6,250 shares was granted to
                Mr.
                Lööf under the 2006 Long Term Incentive Plan.





(3)
              On
                  January 1, 2007 an option to purchase 6,250 shares of our common
                  stock was
                  granted to Mr. Bujouves under the 2006 Long-Term Incentive Plan.




(4)
                Mr.
                    Oswald was appointed to our Board of Directors on January 28,
                    2008. The
                    compensation he received during the fiscal year ended December
                    31, 2007,
                    which consisted of $10,000 in cash fees paid, and an option to
                    purchase
                    1,250 shares, valued at $10,600, was for his service on our Senior
                    Advisory Board and is not included in this
                    table.





(5)
            Mr.
                Burstein resigned from our Board of Directors on January 24,
                2008.




(6)
                On
                    January 1, 2007, an option to purchase 6,250 shares of our common
                    stock
                    was granted to Mr. Burstein under the 2006 Long-Term Incentive
                    Plan.


52


***2007
      Director’s Plan***





A
      compensation plan for our Board of Directors was in place for 2007. Following
      the Directors Plan, each non-employee member of our Board of Directors is
      entitled to receive an annual stock option grant for attending board meetings
      and serving on and chairing board committees. One of our directors declined
      such
      a grant. All stock options were made exercisable at the then prevailing market
      price on the date of grant. No other fees were paid to members of our
      board.




On
      January 1, 2007, we granted options to purchase 18,750 shares, in the aggregate,
      to three of the four independent members of the Board of Directors, to purchase
      shares of our common stock under the 2006 Long-Term Incentive Plan. These
      options were granted at an exercise price based upon the closing price of the
      common stock on the date of grant, have a term of five years and vest in equal
      installments, 25% at March 31, 2007, 25% at June 30, 2007, 25% at September
      30,
      2007 and 25% at December 31, 2007.





***2008
      Director’s Plan***





A
      compensation plan for our Board of Directors is in place for 2008. Following
      the
      Directors Plan, each non-employee member of our Board of Directors is entitled
      to receive an annual stock option grant for attending board meetings and serving
      on and chairing board committees. One of our directors declined such a grant.
      All stock options were made exercisable at the then prevailing market price
      on
      the date of grant. No other fees were paid to members of our board.




On
      January 1, 2008, we granted options to purchase 75,000 shares, in the aggregate,
      to three of the four independent members of the Board of Directors, to purchase
      shares of our common stock under the 2006 Long-Term Incentive Plan. These
      options were granted at an exercise price based upon the closing price of the
      common stock on the date of grant, have a term of five years and vest in equal
      installments, 25% at March 31, 2008, 25% at June 30, 2008, 25% at September
      30,
      2008 and 25% at December 31, 2008.


53





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




The
      following table sets forth information regarding the number of shares of our
      common stock beneficially owned on March 20, 2008 by:




•
            
            each
                person who is known by us to beneficially own 5% or more of our common
                stock;




•
            
            each
                of our directors and named executive officers; and




•
            
            all
                of our directors and executive officers, as a group.




Except
      as
      otherwise set forth below, the address of each of the persons listed below
      is
      GlobalOptions Group, Inc., 75 Rockefeller Plaza, 27 th Floor,
      New York, New York 10019. Unless otherwise indicated, the common stock
      beneficially owned by a holder includes shares owned by a spouse, minor children
      and relatives sharing the same home, as well as entities owned or controlled
      by
      the named person, and also includes options to purchase shares of our common
      stock exercisable within 60 days which have been granted under the 2005 Stock
      Option Plan, the 2006 Stock Option Plan and the 2006 Long-Term Incentive Plan.




**Name
                and Address of Beneficial Owner**
            
            **Common
                Stock**
              **Beneficially
                Owned**(1)**Shares**
            
            **%***5%
                or Greater Stockholders:*James
                L. Witt Revocable Trust U/A/D 12/28/05(2)
            
            
            802,318
            
            
            8.0Julius
                Baer Investment Management LLC(3)
            
            
            695,150
            
            
            7.0*Directors
                and Named Executive Officers:*Harvey
                W. Schiller, Ph.D.(4)
            
            
            424,
                525
            
            
            4.2Jeffrey
                O. Nyweide(5)
            
            
            137,755
            
            
            1.4James
                Lee Witt(6)
            
            
            858,351
            
            
            8.6Per-Olof
                Lööf(7)
            
            
            46,
                125
            
            
            *Ronald
                M. Starr(8)
            
            
            28,
                663
            
            
            *John
                P. Bujouves(
                9)
            
            
            273,
                594
            
            
            2.7John
                P. Oswald(10)
            
            
            97,742
            
            
            1.0All
                executive officers and directors as a group (10 persons)(11)
            
            
            2,247,939
            
            
            21.7




*
            Less
                than 1% of outstanding shares.




_______________________________________




(1)
            Based
                upon 9,983,390 shares of our common stock outstanding on March 26,
                2008
                and, with respect to each individual holder, rights to acquire our
                common
                stock exercisable within 60 days of March 26, 2008. The number of
                shares
                and ownership percentages do not include shares of common stock issuable
                upon the conversion of our Series D Preferred Stock, as the Series
                D
                Preferred Stock is non-voting and is subject to a beneficial ownership
                limitation that restricts its conversion into common
                stock.





(2)
            Consists
                of shares of our common stock.Shares of our common stock held by the James L. Witt Revocable Trust
                U/A/D
                12/28/05 may be deemed to be controlled by its trustee, Mr. James
                Lee
                Witt.




(3)
            Consists
                of shares of common stock. The business address of Julius Baer Investment
                Management LLC is 330 Madison Avenue, Suite 12A, New York, NY
                10017.




(4)
            Consists
                of 261,984 shares of our common stock and 162,541 shares of our common
                stock issuable upon exercise of stock
                options.




54




(5)
            Consists
                of 73,415 shares of our common stock and 64,340 shares of our common
                stock
                issuable upon exercise of stock
                options.




(6)
            Consists
                of 56,033 shares of our common stock held by Mr. Witt individually,
                and
                802,318 shares of our common stock held by the James L. Witt Revocable
                Trust U/A/D 12/28/05, of which Mr. Witt is the trustee. Mr. Witt may
                be deemed to be the beneficial owner of the shares of our common
                stock
                held by the James L. Witt Revocable Trust U/A/D 12/28/05.




(7)
            Consists
                of24,375
                shares of our common stock issuable upon exercise of stock options
                held by
                Mr. Lööf individually, and 21,750
                shares of our common stock held by Lööf Holdings, LLC, a limited liability
                company controlled by Mr. Lööf. Mr. Lööf may be deemed to be the
                beneficial owner of the shares of our common stock held by Lööf Holdings,
                LLC.




(8)
            Consists
                of 23,108 shares of our common stock issuable upon exercise of stock
                options held by Mr. Starr individually, and 5,555 shares held by
                Mr.
                Starr’s spouse. Mr. Starr may be deemed to be the beneficial owner of the
                shares of our common stock held by his
                spouse.




(9)
            Consists
                of 24,375 shares of our common stock issuable upon exercise of stock
                options held by Mr. Bujouves individually, 2,344 shares of our common
                stock held by Bayshore Merchant Services, Inc., 146,875 shares of
                our
                common stock held by Integris Funds Ltd., and 100,000 shares of our
                common
                stock held by Lauriston Nominees Inc. Mr. Bujouves is the President
                and a director of Bayshore Asset Management, Inc., which is an affiliate
                of Bayshore Merchant Services, Inc., the Chief Executive Officer
                of
                Integris Funds Ltd., and Lauriston Nominees Inc. is the nominee of
                Bayshore Bank and Trust Corp., of which Mr. Bujouves is Chairman.
                Mr. Bujouves may be deemed to be the beneficial owner of the shares
                of our common stock held by Bayshore Merchant Services, Inc., Integris
                Funds Ltd., and Lauriston Nominees Inc. Mr. Bujouves disclaims beneficial
                ownership of such shares, except to the extent of his pecuniary interest
                therein.




(10)
            Consists
                of 7,032 shares of our common stock and 1,250 shares of our common
                stock
                issuable upon exercise of stock options held by Mr. Oswald individually,
                and 48,959 shares of our common stock held by Capital Trust Investments
                Limited, of which Mr. Oswald is a director, and 40,501 shares of
                our
                common stock held by Verus International Group, Ltd., of which Mr.
                Oswald
                is Chief Executive Officer. Mr. Oswald may be deemed to be the beneficial
                owner of the shares of our common stock held by Capital Trust Investments
                Limited and Verus International Group, Ltd. Mr. Oswald disclaims
                beneficial ownership of such shares, except to the extent of his
                pecuniary
                interest therein.




(11)
            Consists
                of 1,881,853 shares of our common stock and 366,086 shares of our
                common
                stock issuable upon exercise of stock options. Included in the above
                calculations are 315,087 shares of our common stock and 66,097 shares
                of
                our common stock issuable upon exercise of stock options beneficially
                owned by three executive officers who are not named executive officers
                and
                are therefore not specifically identified in the above
                table.




**Equity
      Compensation Plan Information**




See
      Part
      II, Item 5, “Securities Authorized for Issuance Under Equity Compensation Plans”
for information regarding our equity compensation plans.




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




**Equity
      Restructuring**





On
      July
      25, 2007, upon the completion of our Equity Restructuring, (1) Dr. Schiller
      received 22 shares of our Series C Preferred Stock and 688 shares of our common
      stock in consideration of the cancellation of his shares of Series A Preferred
      Stock and related warrants, (2) Lööf Holdings received 11 shares of our Series C
      Preferred Stock and 344 shares of our common stock in consideration of the
      cancellation of its shares of Series A Preferred Stock and related warrants,
      (3)
      Integris Funds Ltd. received 1,500 shares of our Series C Preferred Stock and
      46,875 shares of our common stock in consideration of the cancellation of its
      shares of Series A Preferred Stock and related warrants, (4) Bayshore Merchant
      Services, Inc. received 2,344 shares of our common stock in consideration of
      the
      cancellation of its Series B warrants, (5) John Oswald received 7,032 shares
      of
      our common stock in consideration of the cancellation of his warrants, (6)
      Capital Trust Investments Limited received 500 shares of our Series C Preferred
      Stock and 15,625 shares of our common stock in consideration of the cancellation
      of its Series A Preferred Stock and related warrants, and (7) Verus
      International Group, Ltd. received 358 shares of our Series C Preferred Stock
      and 11,188 shares of our common stock in consideration of the cancellation
      of
      its Series A Preferred stock and related warrants.


55





On
      October 29, 2007, upon the automatic conversion of our Series C Preferred Stock
      immediately following the consummation of the Company’s underwritten public
      offering, (1) Dr. Schiller received 1,467 shares of our common stock in exchange
      for the cancellation of his 22 shares of our Series C Preferred Stock, (2)
      Lööf
      Holdings received 734 shares of our common stock in exchange for the
      cancellation of its 11 shares of our Series C Preferred Stock, (3) Integris
      Funds Ltd. received 100,000 shares of our common stock in exchange for the
      cancellation of its 1,500 shares of our Series C Preferred Stock, (4) Capital
      Trust Investments Limited received 33,334 shares of our common stock in
      consideration of the cancellation of its 500 shares of our Series C Preferred
      Stock, and (5) Verus International Group, Ltd. received 23,867 shares of our
      common stock in consideration of the cancellation of its 358 shares of our
      Series C Preferred Stock.




**Acquisitions**





On
      March 10, 2006, we acquired JLWA for an aggregate purchase price of
      $8,403,540. Of this amount, Mr. Witt, the former Chairman and
      Chief Executive Officer of JLWA, directly received $2,187,000 in cash at
      closing, 62,244 shares of our common stock valued at $1,215,000, $243,000 in
      the
      form of a 4.6% promissory note, which was paid in March 2007, and $331,695
      in
      cash as a result of a working capital adjustment, which was paid in June 2006.
      Mr. Witt became the Chief Executive Officer of our Preparedness Services
      unit as a result of the transaction.




On
      May 11, 2007, we entered into the JLWA Modification Agreement with the JLWA
      Sellers. Under the modification, we agreed to make additional payments in the
      form of cash, promissory notes and common stock to the JLWA Sellers in exchange
      for eliminating the earnout provisions of the JLWA asset purchase agreement,
      which provided for a maximum additional payout of $15,400,000. The additional
      payments under the JLWA Modification Agreement consist of (i) a cash
      payment of $2,000,000, which was paid on May 14, 2007, (ii) a
      promissory note in the principal amount of $4,500,000, accruing interest at
      5.65% per annum, due on January 15, 2008, subject to a 5% penalty fee
      if not paid on that due date, (iii) 300,000 shares of common stock valued
      at $2,880,000 and (iv) a promissory note in the principal amount of
      $4,300,000, accruing interest at 11.0% per annum, due on August 11,
      2008. Of these amounts, Mr. Witt directly received $1,286,364 in cash,
      $3,001,363 in principal amount of the 5.65% promissory note and $2,765,682
      in
      principal amount of the 11% promissory note, and James L. Witt Revocable Trust
      U/A/D 12/28/05, of which Mr. Witt is trustee, received 182,250 of the 300,000
      shares of our common stock issued on January 30, 2008. In addition, Mr. Witt
      directly received approximately $3.5 million of the JLWA note prepayment and
      prepayment premium. On October 20, 2007, the Company reached an agreement
      with the JLWA Sellers under which the JLWA Sellers agreed to the prepayment
      of
      the principal and accrued interest on a $4.5 million promissory note, originally
      due on January 15, 2008, that the Company had issued to them pursuant to
      the terms of the JLWA Modification Agreement. In connection with this
      acceleration, on October 29, 2007, the Company made a negotiated prepayment
      premium of $800,000 to compensate the JLWA Sellers for, among other things,
      foregone interest and the cost of accelerated tax payments. The JLWA Sellers
      could request acceleration of the $4,300,000 promissory note upon the
      consummation of a Qualified Public Offering or any other qualified capital
      raise. The JLWA Sellers requested acceleration of this promissory note in
      connection with our separate Qualified Public Offering, as a result of which
      Mr. Witt directly received approximately $2.8 million.




On
      May 12, 2006, we acquired Safir for an aggregate purchase price of
      $15,315,649. Of this amount, Mr. Safir, the former Chairman and
      Chief Executive Officer of Safir, directly received 203,895 shares of our common
      stock valued at $3,262,000, $3,262,320 in the form of an 8% promissory note,
      which was paid in June 2006, and $543,720 in the form of a 4% promissory note,
      which was paid in May 2007. Mr. Safir became the Chief Executive Officer of
      our
      Security Investigations and Consulting unit as a result of the
      transaction.





**Issuances
      to Verus International Group, Ltd.**




On
      September 25, 2007, pursuant to a stock purchase agreement dated March 1, 2007
      by and between Verus Support Services, Inc. and us, Verus International Group,
      Ltd. received 850 shares of our common stock in consideration of services
      performed from July 2006 through September 2006.




On
      February 25, 2008, pursuant to a stock purchase agreement dated February 1,
      2008
      by and between Verus Support Services, Inc. and us, Verus International Group,
      Ltd. received 1,567 shares of our common stock in consideration of services
      performed from April 2007 through June 2007.


56


**Director
      Independence**





Our
      Board
      of Directors has determined that each of our directors, except for Dr. Schiller,
      is “independent” under Nasdaq’s independence standards. The Board of Directors
      considered the following relationships in determining that Messrs. Bujouves,
      Oswald, Lööf and Starr meet the independence standards of Nasdaq. The Board of
      Directors considered that Mr. Bujoves is the Chief Executive Officer of Integris
      Funds Ltd., a former 5% owner of our Series A Preferred Stock, and determined
      it
      would not interfere with his independence, as defined by Nasdaq’s rules and
      regulations. The Board of Directors considered Mr. Lööf’s prior relationship
      with QuanStar Group and determined it would not interfere with his independence,
      as defined by Nasdaq’s rules and regulations. The Board of Directors considered
      that Mr. Starr is a Managing Director at Starr & Company, LLC, an accounting
      and business management firm for high net worth individuals, of which a number
      of our stockholders are clients, and determined it would not interfere with
      his
      independence, as defined by Nasdaq’s rules and regulations.





**ITEM
      14.**  **Principal
      Accounting Fees and Services**




***Audit
      Fees.*** The
      aggregate fees billed for professional services rendered was $653,000 and
      $564,000 for the audits of the Company’s annual financial statements for the
      fiscal years ended December 31, 2007 and 2006, respectively, which services
      included the cost of the reviews of the condensed consolidated financial
      statements for the years ended December 31, 2007 and 2006, and other periodic
      reports for each respective year.




***Audit-Related
      Fees.*** The
      aggregate fees billed for professional services categorized as Audit-Related
      Fees rendered was $391,000 and $123,000 for the years ended December 31, 2007
      and 2006, respectively, relating principally to registration statements and
      mergers and acquisitions.




***Tax
      Fees*** **.** For
      the
      years ended December 31, 2007 and 2006, the principal accountant billed $130,000
      and $121,000, respectively, for tax compliance.




***All
      Other Fees*** **.** Other
      than the services described above, the aggregate fees billed for services
      rendered by the principal accountant which were $0 and $0, respectively, for
      the
      fiscal years ended December 31, 2007 and 2006.




***Audit
      Committee Policies and Procedures.*** The
      Audit Committee must pre-approve all auditing services and permitted non-audit
      services (including the fees and terms thereof) to be performed for the Company
      by its independent auditors, subject to the de-minimus exceptions for non-audit
      services described in Section 10A(i)(1)(B) of the Securities Exchange Act of
      1934, which should be nonetheless be approved by the Board of Directors prior
      to
      the completion of the audit. Each year the independent auditor’s retention to
      audit our financial statements, including the associated fee, is approved by
      the
      Audit Committee before the filing of the previous year’s Annual Report on Form
      10-K. At the beginning of the fiscal year, the Audit Committee will evaluate
      other known potential engagements of the independent auditor, including the
      scope of work proposed to be performed and the proposed fees, and approve or
      reject each service, taking into account whether the services are permissible
      under applicable law and the possible impact of each non-audit service on the
      independent auditor’s independence from management. At each such subsequent
      meeting, the auditor and management may present subsequent services for
      approval. Typically, these would be services such as due diligence for an
      acquisition, that would not have been known at the beginning of the
      year.




Since
      May
      6, 2003, the effective date of the SEC rules stating that an auditor is not
      independent of an audit client if the services it provides to the client are
      not
      appropriately approved, each new engagement of Marcum & Kliegman LLP, has
      been approved in advance by the Board of Directors, and none of those
      engagements made use of the de-minimus exception to the pre-approval contained
      in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934.


57


**PART
      IV**





**ITEM
      15. Exhibits, Financial Statement Schedules**





**Exhibit
                No.**
            
            **Description**3.1
            
            Certificate
                of Incorporation of GlobalOptions Group, Inc. (11)3.2
            
            Certificate
                of Amendment to Certificate of Incorporation. (14)3.3
            
            Certificate
                of Designations, Powers, Preferences and Other Rights and Qualifications
                of Series D Convertible Preferred Stock. (18)3.4
            
            Bylaws.
                (11)3.5
            
            Amendment
                to Bylaws. (17)10.1
            
            Restructuring
                Agreement, dated as of July 25, 2007, by and among GlobalOptions
                Group,
                Inc. and certain holders of the Company’s securities. (18)10.2
            
            Restructuring
                Registration Rights Agreement, dated as of July 25, 2007, by and
                among
                GlobalOptions Group, Inc. and certain holders of the Company’s securities.
                (18)10.3
            
            2005
                Stock Option Plan. (2)10.4
            
            2006
                Stock Option Plan. (8)10.5
            
            2006
                Long-Term Incentive Plan. (11)10.6
            
            2006
                Employee Stock Purchase Plan. (11)10.7
            
            Asset
                Purchase Agreement by and among GlobalOptions, Inc., Confidential
                Business
                Resources, Inc., Halsey R. Fischer and Fischer & Associates, Inc.
                (3)10.8
            
            Amendment
                to Asset Purchase Agreement by and among GlobalOptions, Inc., Confidential
                Business Resources, Inc., Halsey R. Fischer and Fischer & Associates,
                Inc., dated as of June 14, 2005. (3)10.9
            
            Second
                Amendment to Asset Purchase Agreement by and among GlobalOptions,
                Inc.,
                Confidential Business Resources, Inc., Halsey R. Fischer and Fischer
&
                Associates, Inc., dated as of July 29, 2005. (3)10.10
            
            Asset
                Purchase Agreement, dated as of January 13, 2006, by and between
                GlobalOptions Group, Inc. and James Lee Witt Associates, LLC.
                (4)10.11
            
            First
                Amendment to Asset Purchase Agreement, dated as of February 28, 2006,
                by
                and between GlobalOptions Group, Inc. and James Lee Witt Associates,
                LLC.
                (6)10.12
            
            Second
                Amendment to Asset Purchase Agreement, dated as of May 11, 2007,
                by and
                between GlobalOptions Group, Inc. and James Lee Witt Associates,
                LLC.
                (19)10.13
            
            Asset
                Purchase Agreement, dated as of January 27, 2006, by and between
                GlobalOptions Group, Inc. and Safir Rosetti, LLC. (5)10.14
            
            First
                Amendment to Asset Purchase Agreement by and between GlobalOptions
                Group,
                Inc. and Safir Rosetti, LLC, dated as of May 12, 2006. (6)10.15
            
            Asset
                Purchase Agreement, dated as of May 12, 2006, by and between GlobalOptions
                Group, Inc., Secure Source, Inc., Marian E. Nicastro and David W.
                Nicastro. (7)10.16
            
            Asset
                Purchase Agreement, dated as of August 10, 2006, by and between
                GlobalOptions Group, Inc. and Hyperion Risk, Inc. (9)10.17
            
            Asset
                Purchase Agreement, dated as of January 9, 2007, by and between
                GlobalOptions Group, Inc. and On Line Consulting Services, Inc.
                (13)10.18
            
            Stock
                Purchase Agreement, dated as of February 28, 2007, by and among
                GlobalOptions Group, Inc., ChoicePoint Government Services, Inc.
                and
                Choice Point Inc. (15)10.19
            
            Asset
                Purchase Agreement, dated February 28, 2007, by and between GlobalOptions
                Group, Inc. and Facticon, Inc. (16)




58





10.20
            
            Third
                Amended and Restated Loan and Security Agreement dated as of May
                14, 2007,
                by and between GlobalOptions, Inc. and Silicon Valley Bank.
                (17)10.21
            
            Second
                Amendment to Third Amended and Restated Loan and Security Agreement
                dated
                as of November 6, 2007, by and between Silicon Valley Bank and
                GlobalOptions, Inc. and The Bode Technology Group, Inc. (22)10.22
            
            Unconditional
                Guaranty by GlobalOptions Group, Inc. in favor of Silicon Valley
                Bank.
                (10)10.23
            
            Amended
                and Restated Security Agreement, dated as of October 12, 2006, by
                and
                between GlobalOptions Group, Inc. and Silicon Valley Bank.
                (10)10.24
            
            Employment
                Agreement, dated as of January 29, 2004, between Harvey W. Schiller,
                Ph.D.
                and GlobalOptions, Inc. (1)10.25
            
            Letter
                Agreement among GlobalOptions Group, Inc., GlobalOptions, Inc. and
                Harvey
                W. Schiller, Ph.D. pursuant to which GlobalOptions Group, Inc. assumed
                Dr.
                Schiller’s original employment agreement with GlobalOptions, Inc.
                (1)10.26
            
            Amendment
                to Employment Agreement of Harvey W. Schiller, Ph.D. with GlobalOptions
                Group, Inc. dated as of December 19, 2006. (12)10.27
            
            Agreement
                between BKS Advisors and GlobalOptions Group, Inc. dated as of January
                8,
                2003. (19)10.28
            
            BKS
                Assignment to Jeffrey O. Nyweide dated as of June 1, 2005.
                (19)10.29
            
            Amendment
                to Agreement of Jeffrey O. Nyweide with GlobalOptions Group, Inc.
                dated as
                of December 19, 2006. (12)10.30
            
            Employment
                Agreement, dated July 30, 2007, between Jeffrey O. Nyweide and
                GlobalOptions Group, Inc. (20)10.31
            
            Amended
                and Restated Employment Agreement by and between GlobalOptions Group,
                Inc.
                and James Lee Witt. (19)10.32
            
            Employment
                Agreement by and between GlobalOptions Group, Inc. and Howard Safir.
                (19)10.33
            
            Employment
                Agreement by and between GlobalOptions, Inc. and Halsey Fischer.
                (19)10.34
            
            Employment
                Agreement, dated as of January 24, 2002, between Thomas P. Ondeck
                and
                GlobalOptions, Inc. (19)10.35
            
            First
                Amendment to Employment Agreement of Thomas P. Ondeck. (19)10.36
            
            Amendment
                to Employment Agreement of Thomas P. Ondeck. (19)10.37
            
            Professional
                Services Agreement between the Military Department, State of Louisiana
                and
                James Lee Witt Associates LLC, dated August 29, 2005. (19)10.38
            
            Consulting
                Services Contract between the State of Louisiana Governor’s Office of
                Homeland Security and Emergency Preparedness and GlobalOptions Group,
                Inc., dated as of August 29, 2007. (21)21.1
            
            Subsidiaries
                of GlobalOptions Group, Inc.*23.1
            
            Consent
                of Marcum & Kliegman, LLP *31.1
            
            Certification
                of Principal Executive Officer pursuant to Section 302(a) of the
                Sarbanes-Oxley Act of 2002*31.2
            
            Certification
                of Principal Financial Officer pursuant to Section 302(a) of the
                Sarbanes-Oxley Act of 2002*32.1
            
            Certification
                of Principal Executive Officer of Periodic Report Pursuant to Section
                906
                of Sarbanes-Oxley Act of 2002*32.2
            
            Certification
                of Principal Financial Officer of Periodic Report Pursuant to Section
                906
                of Sarbanes-Oxley Act of 2002*




___________




*
            Filed
                herewith




59




(1)
            Incorporated
                by reference to the exhibits included with our Current Report on
                Form 8-K
                filed with the SEC on June 30, 2005, as
                amended.




(2)
            Incorporated
                by reference to the exhibits included with our Current Report on
                Form 8-K
                filed with the SEC on August 11,
                2005.




(3)
            Incorporated
                by reference to the exhibits included with our Current Report on
                Form 8-K
                filed with the SEC on August 18,
                2005.




(4)
            Incorporated
                by reference to the exhibits included with our Current Report on
                Form 8-K
                filed with the SEC on January 18,
                2006.




(5)
            Incorporated
                by reference to the exhibits included with our Current Report on
                Form 8-K
                filed with the SEC on February 1,
                2006.




(6)
            Incorporated
                by reference to the exhibits included with our Current Report on
                Form 8-K
                filed with the SEC on March 16, 2006, as
                amended.




(7)
            Incorporated
                by reference to the exhibits included with our Current Report on
                Form 8-K
                filed with the SEC on May 16, 2006, as
                amended.




(8)
            Incorporated
                by reference to the exhibits included with our Current Report on
                Form 8-K
                filed with the SEC on June 16,
                2006.




(9)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on August 15, 2006, as
                amended.




(10)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on October 27,
                2006.




(11)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on December 11,
                2006.




(12)
            Incorporated
                by reference to the exhibits included with our current report on Form 8-K
                filed with the SEC on December 22,
                2006.




(13)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on January 10,
                2007.




(14)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on February 23,
                2007.




(15)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on March 1,
                2007.




(16)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on March 1,
                2007.




(17)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on May 16, 2007.




(18)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on July 26,
                2007.




(19)
            Incorporated
                by reference to the exhibits included with our registration statement
                on
                Form SB-2, as amended, originally filed with the SEC on August 2,
                2007.




(20)
            Incorporated
                by reference to the exhibits included with our quarterly report on
                Form
                10-QSB filed with the SEC on August 14,
                2007.




(21)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on September 26,
                2007.




(22)
            Incorporated
                by reference to the exhibits included with our current report on
                Form 8-K
                filed with the SEC on November 13,
                2007.


60





**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.





GLOBALOPTIONS
                GROUP, INC.Dated:March 28, 2008
            By:
            /s/
                Harvey W. SchillerHarvey
                W. Schiller
              Chairman,
                Chief Executive Officer
              and
                Director
              (Principal
                Executive Officer)Dated:March 28, 2008
            By:
            /s/
                Jeffrey O. NyweideJeffrey
                O. Nyweide
              Executive
                Vice President-Corporate Development,
              Chief
                Financial Officer, Secretary
              (Principal
                Financial Officer and
              Principal
                Accounting 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.





Signatures
            
            Title
            
            Date/s/
                Harvey W. Schiller
            
            Chairman,
                Chief Executive Officer
              and
                Director
              (Principal
                Executive Officer)
            
            March
                28, 2008Harvey
                W. Schiller/s/
                Jeffrey O. Nyweide
            
            Executive
                Vice President – Corporate
              Development,
                Chief Financial Officer,
              Secretary
              (Principal
                Financial Officer and
              Principal
                Accounting Officer)
            
            March
                28, 2008Jeffrey
                O. Nyweide/s/
                Per-Olof Lööf
            
            Director
            
            March
                28, 2008Per-Olof
                Lööf/s/
                John P. Oswald
            
            Director
            
            March
                28, 2008John
                P. Oswald
              
              /s/
                Ronald M. Starr
            
            Director
            
            March
                28, 2008Ronald
                M. Starr
              
              /s/
                John P. Bujouves
            
            Director
            
            March
                28, 2008John
                P. Bujouves




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