UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                                   (Mark One)

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

                   For the fiscal year ended December 31, 2004

   |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
    |_| For the transition period from _________________ to _________________
                        Commission file number 001-12536

                             SECURED SERVICES, INC.
        (Exact name of small business issuer as specified in its charter)

          Delaware                                        11-2964894
(State or other jurisdiction of                (IRS Employer Identification No.)
 Incorporation or organization)
                      1155 North Service Road West, Unit 8
                        Oakville, Ontario, Canada L6M 3E3
                    (Address of principal executive offices)
                                 (905) 339-2323
                           (Issuer's telephone number)



         Securities registered under Section 12(b) of the Exchange Act:
                                      None
         Securities registered under Section 12(g) of the Exchange Act:
                    Common Stock, par value $.0001 per share

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter  period that the  registrant  was required to file such reports) and (2)
has  been  subject  to  such  filing  requirements for the past 90 days. Yes |X|
No |_|

         Check if there no disclosure of delinquent  filers pursuant to Item 405
of Regulation S-B is contained herein, and will be contained, to the best of the
registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. |X|

         For the year ended  December 31, 2004,  the revenues of the issuer were
$2,193,999.

         The aggregate  market value of the voting and non-voting  common equity
held by  non-affiliates  of the issuer,  computed by  reference  to the price at
which the common  equity was sold,  or the  average  bid and asked price of such
common  equity,  on the OTC  Bulletin  Board,  on March  28,  2005 of $1.65  was
approximately $19,484,000.

         As of March 28, 2005 the registrant had a total of 17,396,587 shares of
Common Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

    Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|


<PAGE>



                          ANNUAL REPORT ON FORM 10-KSB

                              SECURED SERVICES INC

                          YEAR ENDED DECEMBER 31, 2004

                                TABLE OF CONTENTS

PART I                                                                      Page
Item 1.        Description of Business......................................   2
Item 2.        Description of Property......................................  10
Item 3.        Legal Proceedings............................................  10
Item 4.        Submission of Matters to a Vote of Security Holders..........  10

PART II

Item 5.        Market for Common Equity, Related Stockholder Matters
               and Small Business Issuer Purchases of Equity Securities ....  12
Item 6.        Management's Discussion and Analysis or Plan of Operation....  12
Item 7.        Financial Statements ........................................  17
Item 8         Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosure ....................................  17
Item 8A        Controls and Procedures......................................  17
Item 8B        Other Information............................................  17

PART III

Item 9.        Directors and Executive Officers, Promoters, and Control
               Person; compliance with section 16(a) of the Exchange Act ...  19
Item 10.       Executive Compensation.......................................  21
Item 11.       Security Ownership of Certain Beneficial Owners and
               Management and related Stockholder Matters...................  23
Item 12.       Certain Relationships and Related Transactions...............  24
Item 13.       Exhibits ....................................................  26
Item 14.       Principal Accountant Fees and Services.......................  26


                           FORWARD-LOOKING STATEMENTS

THIS REPORT AND THE DOCUMENTS INCORPORATED IN IT BY REFERENCE CONTAIN
FORWARD-LOOKING STATEMENTS ABOUT OUR PLANS, OBJECTIVES, EXPECTATIONS AND
INTENTIONS. YOU CAN IDENTIFY THESE STATEMENTS BY WORDS SUCH AS "EXPECT,"
"ANTICIPATE," "INTEND," "PLAN," "BELIEVE," "SEEK," "ESTIMATE," "MAY," "WILL" AND
"CONTINUE" OR SIMILAR WORDS. YOU SHOULD READ STATEMENTS THAT CONTAIN THESE WORDS
CAREFULLY. THEY DISCUSS OUR FUTURE EXPECTATIONS, CONTAIN PROJECTIONS OF OUR
FUTURE RESULTS OF OPERATIONS OR OUR FINANCIAL CONDITION OR STATE OTHER
FORWARD-LOOKING INFORMATION, AND MAY INVOLVE KNOWN AND UNKNOWN RISKS OVER WHICH
WE HAVE NO CONTROL. YOU SHOULD NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING
STATEMENTS. WE CANNOT GUARANTEE ANY FUTURE RESULTS, LEVELS OF ACTIVITY,
PERFORMANCE OR ACHIEVEMENTS. MOREOVER, WE ASSUME NO OBLIGATION TO UPDATE
FORWARD-LOOKING STATEMENTS OR UPDATE THE REASONS ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN FORWARD-LOOKING STATEMENTS, EXCEPT AS
REQUIRED BY LAW. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS INCLUDE THE
FACTORS DISCUSSED IN THIS REPORT IN PART I, ITEM 1., INCLUDING THE SECTION
CAPTIONED "RISK FACTORS THAT MAY AFFECT FUTURE RESULTS;" AND "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION."


<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

OVERVIEW

         Secured Services, Inc. ("Secured Services") is the first single-vendor
provider of Secured User Management solutions, which is the name we have given
to our approach to enable large organizations to administer, control, and audit
all user logins and access privileges for their entire complement of enterprise
applications.

         Every organization is challenged with managing users' digital
identities, in order to effectively control access to and use of its IT
applications and information. Disjointed identity management approaches create a
significant set of operational, security, and regulatory compliance problems.
The Company's Secured User Management strategy is to provide a comprehensive
security solution that concurrently addresses this trio of problems.

         The Identiprise(TM) software platform provides organizations of all
sizes the combined benefits of (i) complete, end-to-end functionality for
management and auditing of digital identities and (ii) an architecture design
that overcomes traditional barriers to identity management deployments. This
yields a solution that deploys rapidly, non-disruptively, and comprehensively
within complex IT environments, for all users and across all application types.

         In addition, complementary professional services assist clients in
understanding their regulatory and security requirements, designing appropriate
policies, and developing plans and budgets to support the implementation of an
enterprise-wide security solution. During Identiprise implementations, Secured
Services provides project management, training and services to ensure successful
roll-out of the Secured User Management solution.

         Secured Services' target customers include large to medium size
organizations in the financial services, health care, and government markets,
primarily in North America. Secured Services employs a multi-channel approach to
reach these vertical markets.

FORMATION IN 2003

         On July 18, 2003, Secured Services, Inc. ("SSI") completed a merger
(the "Merger") with Southern Software Group, Inc. ("SSGI"), a publicly-held
company with no operating business activities as of that date. SSI was a
privately-held company that had been formed on April 28, 2003 to acquire two
operating businesses. SSI had no operating business activities until it
completed those acquisitions on, effectively, July 18, 2003 as described below
and in Note 3 to the financial statements. The Merger was effected pursuant to
an Agreement and Plan of Merger (the "Merger Agreement") that was also executed
on July 18, 2003 by and between SSGI, SSGI Acquisition Corp. ("Newco"), a
newly-formed, wholly-owned subsidiary of SSGI, and SSI. Pursuant to the Merger
Agreement, Newco merged with and into SSI; SSI became the surviving corporation;
SSI changed its name to SSI Operating Corp.; SSGI became authorized to issue
shares of Series A Convertible Preferred Stock; and SSGI changed its name to
Secured Services, Inc.

         SSGI issued shares of common and voting preferred stock to the
stockholders of SSI in order to complete the Merger. Prior to the completion of
the Merger, SSGI had 508,934 outstanding shares of common stock. The
stockholders of SSI before the Merger owned approximately 94% and the
stockholders of SSGI before the Merger owned approximately 6% of the voting
securities of the combined companies following the closing of the Merger.

         As conditions for the completion of the Merger, SSI was required to
have consummated the acquisition of the operating assets related to, and the
business operations of, the VACMAN Enterprise product line ("Vacman") of Vasco
Data Security International, Inc. ("Vasco"), the acquisition of certain assets
related to, and the business operations of, Dolfin.com, Inc. ("Dolfin") and a
private offering of its common stock from which it would have received at least
$1,000,000. Those acquisitions and the private placement were also completed on
or about July 18, 2003 (see Notes 3 and 7 to the financial statements). Vacman
designed, developed, marketed and supported security products and services that
manage user access and single sign-on to web, client/server and legacy
applications in one integrated system for corporate and government customers.
Dolfin marketed and supported security products and services that manage data
security across integrated systems of corporate customers. Both of these
entities were instrumental parts in developing and re-branding our products and
services.

         Since the stockholders of SSI received a substantial majority of the
voting securities of the merged companies and SSI had acquired the operating
businesses, the Merger was accounted for, effective as of July 18, 2003, as a
"reverse acquisition" in which SSI (the legal acquiree) was the accounting
acquirer and SSGI (the legal acquirer) was the accounting acquiree. Since SSGI
was inactive, the reverse acquisition was accounted for effectively, as a
recapitalization of SSI as of July 18, 2003 with SSGI's assets and liabilities
recorded at their historical carrying values which approximated their fair
values.

         The acquisitions of the businesses of Vacman and Dolfin were also
accounted for as purchases by SSI under accounting principles generally accepted
in the United States of America and, accordingly, their assets and liabilities
were recorded as of the acquisition date at their respective fair values. Under
the purchase method of accounting, the results of operations of SSGI, Vacman and
Dolfin were combined with the results of operations of SSI commencing on July 1,
2003, which was deemed to be the effective date for the completion of the
acquisitions for accounting purposes.

2004 HIGHLIGHTS

CORPORATE

o    On November 1, 2004 we purchased the assets of Cybrix Corporation, a
     Minnesota Company. Cybrix is a security services Company based in
     Minneapolis and the acquisition broadens both our skill set and geographic
     coverage. The purchase price, of approximately $188,000, was paid by the
     issuance of 125,000 shares of common stock and is to be subject to an
     earnout calculation that is dependant upon the fulfillment of all of the
     Cybrix's financial projections.

o    In September 2004 we acquired a twenty-five year license to market and
     sub-license the VisualGold(R) Securetrack software product from Visual
     Gold.com, Inc. for a one time fee of $200,000.

o    In May 2004, we completed a $7.4 million equity financing to institutional
     investors. As a result the Company issued a total of 7,831,090 shares of
     common stock and warrants to purchase 1,993,246 shares of common stock. The
     proceeds from this financing are being used to implement our sales and
     marketing plan.

                                       2
<PAGE>

PRODUCT

o    In February 2004 we completed the re-branding of Identiprise. The new
     branding reflects refreshed and expanded product and vision to provide
     enhanced and comprehensive identity-focused security for all applications
     within the enterprise.

o    In March 2004 we announced the establishment of our on-demand service
     offering based on Identiprise. Managed Service Providers can now provide
     the benefits of Identiprise Secured User Management, as a managed service
     offering to their customers.

o    In December 2004, strong focus on product development and delivery resulted
     in the release of Version 6.0 of Identiprise.


CUSTOMER DRIVERS

         All organizations seek to enhance business performance, protect
intellectual assets, and achieve and maintain compliance to legal and regulatory
mandates. Information Technology (IT) plays a key role in fulfilling these
objectives. Corporations have recognized the critical role that Secured User
Management plays in this regard.

         Today's business practices demand that organizations make computer
applications and the information they produce accessible to an increasing number
of users - whether employees, outside business partners, or clients. This
accessibility, however, must be achieved without compromising the
confidentiality of client information or the security of the applications and
overall network. The most common way for granting access in a controlled and
secure fashion is through the use of the username/password mechanism. But, as
most people have experienced, there has been and continues to be an explosion in
the number of usernames and passwords that users and administrators alike have
had to contend with.

         Within an organization, where it is estimated that the average worker
has twelve username/password identities, this is clearly becoming unwieldy and
burdensome for the user, costly to administer and support, prone to security
breaches, and practically impossible to audit.

         To use the industry vernacular, "identity and access management" (IAM)
is the challenge. IAM is concerned with how to grant, modify, and revoke the
access rights given to an individual, as well as how to control and audit the
use of such access rights.

         Disjointed (or non-existent) identity management practices within
organizations create a set of problems of an operational, security, and
compliance nature. Operational problems include productivity costs of users
having to personally manage the myriad of usernames and passwords, help desk
support costs involved in helping users reset passwords every time they forget
one, and the inefficiency involved in creating a new account every time a user
requests access rights to a new application. Security problems include the risks
of identity theft that can come about when users write down or share usernames
and passwords, or when accounts whose rightful owner has long left are left
active in the system, to be exploited by internal or external hackers. Finally,
regulatory compliance dictates that companies be able to report on who accessed
what information and when, as well as prove that effective process controls have
been implemented to prevent unauthorized access to accounts and information.

                                       3
<PAGE>

THE SECURED SERVICES SOLUTION. Identiprise

         Secured Services has taken a comprehensive and holistic approach, which
we call Secured User Management, to addressing the set of problems described in
the previous section. The Identiprise software platform is the product that
embodies this philosophy, to deliver a comprehensive solution for the
administration, control, and auditing of digital identities within the complex
IT environments of enterprises and government entities alike.

         Identiprise is unique in the marketplace in that it offers the combined
advantages of:

     o   COMPLETE DIGITAL IDENTITY LIFE CYCLE MANAGEMENT.
         Identiprise incorporates comprehensive identity administration, access
         control, and audit management functionality, BUILT ON A SINGLE,
         INTEGRATED PLATFORM. This makes for unique cohesiveness and
         seamlessness in managing the entire life cycle of an identity (i.e.
         grant, use, modify, revoke, and audit).

     o   TRUE, ENTERPRISE-WIDE REACH.
         Identiprise establishes a single identity management system that spans
         all users and application types, whether Web-based, client/server, or
         legacy mainframe. The realization of TRUE SINGLE SIGN-ON, seamlessly
         integrated with user account provisioning processes, is unique to the
         industry.

     o   EASE OF DEPLOYMENT.
         Identiprise overcomes traditional barriers to IAM deployments by
         adhering to three architecture design principles of Span, Speed and
         Scale. This yields a solution that is highly flexible, deploys rapidly
         and non-disruptively, and is radically less risky and complex to
         implement, relative to competing approaches.

COMPETITION

         The identity management market is highly fragmented, with no one vendor
dominating the space. Market consolidation continues. At this time, Secured
Services regards the marketplace as consisting of two general classes of
competitors: (i) "Suite" providers and (ii) "Point Product" providers.

         The Suite providers seek to provide breadth of functionality through a
set of distinct software products that can be purchased a-la-carte and
integrated by customers to form a complete identity life cycle management
system. IBM, Computer Associates, and Sun Microsystems are examples of such
providers.

         Point Product providers offer product(s) that are specifically targeted
at one function within identity life cycle management, such as account
provisioning, or single sign-on, or password management. Point Product providers
typically engage in OEM or alliance approaches with complementary Point Product
providers in order to offer customers the complete identity life cycle
management solution. Point Product providers include such companies as RSA
Security, Thor Technologies, Oblix, Imprivata, and Protocom Technology
Corporation.

         Secured Services regards both classes of providers as competitors,
depending on the customer situation, although the Suite providers are generally
our primary competitors. Thanks to Identiprise's functional breadth, level of
inherent platform integration, and ease of deployment, Secured Services believes
that we compete favorably against our competitors. However, some of our
competitors have longer operating histories, greater name recognition, stronger
relationships with channel partners, and/or greater financial, technical and
marketing resources. These factors may provide our competitors with an advantage
in penetrating markets with their competing products and services.

                                       4
<PAGE>

PROFESSIONAL SERVICES

         To complement our Secured User Management product focus, Secured
Serivces provides a range of identity and security-focused professional
services. These include:

     o   Assisting clients in understanding their regulatory and security
         requirements.

     o   Designing security and identity management policies.

     o   Developing plans and budgets to support the implementation of
         enterprise-wide security solutions.

     o   Providing project management, training and implementation services for
         Identiprise roll-outs.

         Secured Services' professional services capabilities were greatly
expanded with the acquisition of Cybrix Corporation. Cybrix provides our
professional services group a pool of senior security consultants whose
expertise can be leveraged to address a broad range of security challenges faced
by existing and prospective customers. Our consultative approach is integral in
meeting the evolving needs of our customers, as they move toward an Identiprise
solution.

MARKETING AND SALES STRATEGY

         Our marketing activities were organized and significantly expanded in
2004 in order to develop the corporate brand and to establish penetration into
key markets and accounts. The marketing team engaged the Horn Group in New York
to develop and execute a public relations strategy in June 2004. Our corporate
messaging was solidified and an active campaign initiated to promote our brand
and our solutions. The program to date has involved engaging industry analysts
and media sources as part of a twelve-month strategy that commenced in
September. This activity is expected to lead to positive press which may be
utilized by prospective customers to validate the Secured Services offerings. A
corporate web site was revised in June of this year to reflect the new corporate
branding and to better articulate the direction of the Company.

         The sales strategy has been to target specific market verticals in
financial services, health care, government and utilities where we have a proven
track record of success. Expansion of the sales team was started in June 2004,
with the goal of providing coverage for the mid to eastern part of the United
States and Canada. The initial expansion was completed by October 2004. To
support lead and account management, a team of pre-sales engineers has been
established to support sales initiatives.

         The sales cycle for Identiprise continues to be long but this is
shortening as the market becomes more aware of their need for a Secured User
Management solution. Many opportunities are developing from customers that have
become disillusioned with failed previous attempts at solving their identity
management challenges. Our marketing and sales team is focusing on this market
discontent by providing a working alternative. For this skeptical customer base,
a sophisticated product demonstration has been established to show customers our
ability to address their needs. In addition, a strategy of offering onsite
proof-of-concept implementations has been established to provide customers with
tangible evidence of Identiprise's ease of deployment within their environment.

PARTNERS

         In 2004, we started to lay the foundations for a significant partner
program. Initial steps consisted of strengthening existing relationships with
Integic Corporation and Perimeter Internetworking. These partnerships provided
an opportunity for increased revenue in 2004. Development of an on-demand
offering for Identiprise also opened up the opportunities for Managed Service
Providers to deliver the benefits of Identiprise as a managed service. Further
development and formalization of the partner program will be seen in 2005.

                                       5
<PAGE>

INTELLECTUAL PROPERTY

         Our success depends significantly upon our proprietary software
technology. We rely on a combination of contractual rights, trademarks, trade
secrets, copyrights and licensing agreements we enter into confidentiality
agreements with our customers to establish and protect proprietary rights to our
software. However, these protections may be inadequate or competitors may
independently develop technologies or products that are substantially equivalent
or superior to our products.

PRODUCT RESEARCH AND DEVELOPMENT

         Our development objectives for Identiprise have been focused on
extending the functionality of the product and furthering its ease-of-use and
ease of deployment. We believe that our development efforts are to accurately
reflect the demands of our customers. To that end, (i) we established a product
steering committee in September 2004 to provide direction and prioritize the
investments we make on our products; and (ii) we moved our product development
team to new facilities in Baltimore, Maryland.

         Considerable strides were made in enhancing core functionality of
Identiprise and in the development of an out of the box solution. The release of
Identiprise Version 6.0 in 2004 reflects the successful efforts of the
development team.

CUSTOMER SUPPORT

         We believe that high quality customer support and professional services
are requirements for continued growth and increased sales of our products. As a
result, we made a significant investment in our support and services
organization in the past and plan to continue to do so in the future. Customer
support personnel provide technical support by telephone, email and fax, and
maintain our Web site to complement these services. Product upgrades and
enhancements are provided at no extra charge to our maintenance customers as
part of their maintenance subscriptions

EMPLOYEES

         At December 31, 2004, we had sixty-two full time employees, with eight
engaged in research and development, twenty-two engaged in service delivery,
twenty-one in sales and marketing and eleven in administration, finance and
business development. None of our employees are represented by a labor union and
we consider the relationships with our employees to be positive. Competition for
qualified management and technical personnel is intense in the software
industry. Our continued success depends in part upon our ability to attract and
retain qualified personnel. To date, we believe that we have been successful in
recruiting qualified employees, but there is no assurance that we will continue
to be successful in the future.

                   RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

         WE ARE DEPENDENT ON OUR ABILITY TO MARKET OUR SERVICES.

         Our success is dependent mainly on our ability to market, and the
market's acceptance of, the product Identiprise together with related
implementation services. Our success and the success of our business partners in
marketing our products and services and in developing a significant market
acceptance of the product and services is not certain. If our products and
services does not achieve sufficient market acceptance, our business, financial
condition and results of operations would be materially and adversely affected.

                                       6
<PAGE>

         WE HAVE INCURRED, AND WILL CONTINUE TO INCUR SIGNIFICANT LOSSES.

         We have incurred significant losses since the commencement of
operations in 2003, and will continue to incur losses and negative cash flow for
the indefinite future, including the fiscal years ended December 31, 2003 and
2004 and into the fiscal year ending December 31, 2005.

         We have a history of losses and the likelihood of our success depends
on many factors, including some that are out of our control. We had cumulative
net losses since inception of approximately $7.0 million. The likelihood of the
our success must be considered in light of the problems, delays, expenses and
difficulties encountered by an enterprise in our stage of development, some of
which may be beyond our control. These include, but are not limited to, the
ability to operate its anticipated business; delays in acceptance of our
Identiprise system by our business partners; the ability of our business
partners to attract a sufficient number of customers, unanticipated problems
relating to further software enhancement and development; the competitive and
regulatory environment in which we operate; marketing problems; and additional
costs and expenses that may exceed current estimates. We anticipate continued
losses and negative cash flow, and we cannot predict whether or when we will
become profitable.

         WE REQUIRE ADDITIONAL FUNDING.

         We require additional funding to carry out our business plan.
Additional funding may not be available on terms acceptable to us, if at all.
Our cash requirements may vary materially from those now planned due to a number
of factors, including the extent to which we develop the Identiprise software
under its own brand, the response of competitors to the Identiprise software and
our ability to satisfy applicable licensing requirements. We may need to raise
additional capital to fund our future operations. There can be no assurance that
additional financing will be available when needed on terms acceptable to us, or
at all. If additional funds are raised by issuing equity securities, further
dilution to existing shareholders will result and future investors may be
granted rights superior to those of existing shareholders. Moreover, raising
additional funds in the future may trigger the anti-dilution provisions in the
Investor Warrants issued in our recent financing, resulting in further dilution
to existing shareholders. Insufficient funds may prevent us from implementing
our business strategy, may require us to limit our operations significantly or
may prevent us from continuing as a going concern.

         DUE TO OUR LIMITED OPERATING HISTORY WE MAY NEVER GENERATE SIGNIFICANT
REVENUE.

         Our sales and integration cycles with potential business partners for
our Identiprise software is long and unpredictable. Potential business partners
typically undertake a lengthy evaluation process. As a result, we may not
recognize revenue from sales efforts for an extended period of time, if at all.
Assuming an agreement is reached, the Identiprise software must then be
integrated with the business partner's technical environment. The length of time
to complete the integration process may be adversely impacted by a number of
factors, including the business partner's system infrastructure, its strategic
priorities and technical resources. Unanticipated problems during the
integration process could result in extensive delays in launching Identiprise or
termination of an agreement, which could materially and adversely affect our
business, financial condition and results of operations.

         WE MAY BE AFFECTED ADVERSELY BY CHANGES IN EXCHANGE RATES.

         Our international operations subject us to currency exchange risks. A
significant portion of our operations are in Canada and denominated in Canadian
dollars. As a result our operating results may be adversely affected by changes
in exchange rates. Given the volatility of currency exchange rates, we cannot
predict the effect of exchange rate fluctuations on the Company's future
operating results.

                                       7
<PAGE>

         WE ARE A RELATIVELY SMALL COMPANY WITH LIMITED RESOURCES.

         We face substantial competition in the security industry and may not be
able keep up with future technological changes. Our Identiprise software and the
business intended to be operated by us competes with other forms of security
systems, There can be no assurance that future technological advances will not
result in improved products or services that could adversely affect our business
or that we will be able to develop and introduce competitive uses for its
products and to bring such uses to market in a timely manner. Our success
depends significantly upon our ability to protect our Intellectual property and
to avoid infringing the intellectual property of third parties, which could
result in costly and time-consuming litigation.

         IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY WE MAY BE UNABLE
TO COMPETE.

         We regard the Identiprise software and related technology as
proprietary and rely primarily on a combination of patent, trademark, copyright
and trade secret laws and employee and third-party non-disclosure agreements to
protect its proprietary rights. Currently, we have no United States patents for
its proprietary methods and its related computer processing system. No assurance
can be given that any of our pending domestic or foreign patent pending
applications will result in patents, that any issued patents will provide us
with significant competitive advantages, or that challenges will not be
instituted against the validity or enforceability of any patent we own, or, if
instituted, that such challenges will not be successful. Defense of intellectual
property rights can be difficult and costly, and there can be no assurance that
we will be able to effectively protect our technology from misappropriation by
competitors. Additionally, third party infringement claims may result in our
being required to enter into royalty arrangements or pay damages, any of which
could materially and adversely affect our business, financial condition and
results of operations As the number of software products in the industry
increase and the functionality of these products further overlap, software
developers and publishers may increasingly become subject to infringement
claims. Although we have not received any claim that we are infringing on any
patent or trade secrets and we are not aware of any claim that we are infringing
on any such rights of others, there can be no assurance that we will not face
such claims, with or without merit, in the future. Any such claims or litigation
could be costly and could result in a diversion of management's attention, which
could have a material adverse effect on our business, financial condition and
results of operations. Any settlement of such claims or adverse determinations
in such litigation could also have a material adverse effect on our business,
financial condition and results of operations.

         OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL.

         We are dependent upon the continued efforts and abilities of our
Executive officers and other key personnel, the loss or unavailability of
certain key people for any significant period could have a material adverse
effect on our business, financial condition and results of operations. These key
employees have entered into employment agreements with us which terminate on
December 31, 2004 and no assurance can be given that those agreements will be
extended or renewed by us or the employees upon expiration of their term and if
not extended or renewed, whether individuals with similar backgrounds and
experience could be hired to replace them. We do maintain and do intend to
obtain key person life insurance on the life of key employees. Our operations
will also depend to a great extent on our ability to attract new key personnel
and retain existing key personnel in the future. Competition is intense for
highly skilled employees and there can be no assurance that we will be
successful in attracting and retaining such personnel or that we can avoid
increased costs in order to do so. Our failure to attract additional qualified
employees or to retain the services of key personnel could have a material
adverse effect on our business, financial condition and results of operations.

                                       8
<PAGE>

         EFFECTIVE CONTROL IS HELD BY FOUR DIRECTORS.

         Our directors, King T. Moore, Michael P. Dubreuil, Shawn Kreloff and T.
Kendall Hunt, beneficially own, respectively, 1,866,667, 1,300,000, 900,000 and
1,300,000 shares of our common stock, not including shares underlying
immediately exercisable options and warrants. In addition, Vasco Data Security
International, Inc. owns 2,000,000 shares of our preferred stock, which have one
vote per share, votes together with our common stock as a single class and is
convertible into an equivalent number of shares of common stock and 84,128
shares of common stock. Mr. Hunt is the Chairman and Chief Executive Officer of
Vasco and, therefore, may be deemed the beneficial owner of Vasco's shares.
Accordingly, these four directors together beneficially own 7,450,795 voting
shares or approximately 42.8% of our voting shares based on the number of shares
outstanding as of March 28, 2005. As a result, our directors may control the
election of our directors and the outcome of issues submitted to a vote of
stockholders.

         OUR COMMON STOCK IS A "PENNY STOCK" WHICH MAY RESTRICT THE ABILITY OF
STOCKHOLDERS TO SELL OUR COMMON STOCK AND WARRANTS IN THE SECONDARY MARKET.

         The Securities and Exchange Commission has adopted regulations which
generally define "penny stock" to be an equity security that has a market price,
as defined, of less than $5.00 per share of an exercise price of less than $5.00
per share, subject to certain exceptions, including an exception of an equity
security that is quoted on a national securities exchange. Our common stock is
not now quoted on a national exchange but is traded on the OTC bulletin board.
Thus, they are subject to rules that impose additional sales practice
requirements on broker-dealers who sell these securities. For example, the
broker-dealer must make a special suitability determination for the purchaser of
such securities and have received the purchaser's written consent to the
transactions prior to the purchase. Additionally, the rules require the
delivery, prior to the transaction, of a disclosure schedule prepared by the
Securities and Exchange Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered underwriter, and current quotations for the
securities, and, if the broker-dealer is the sole market maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, among other requirements, monthly statements must be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks. The "penny stock" rules,
may restrict the ability of our stockholders to sell our common stock and
warrants in the secondary market.

         THE MARKET PRICE OF OUR COMMON STOCK MAY BE HIGHLY VOLATILE

         The market price of securities of many emerging and high technology
companies has been highly volatile, experiencing wide fluctuations not
necessarily related to the operating performance of such companies. Factors such
as volatility in the trading markets generally, our operating results, public
announcements regarding us or our competitors concerning technological
innovations and new products or systems may have a significant impact on the
market price of our securities.

         Statements or changes in opinions, ratings or earning estimate made by
brokerage firms or industry analysts relating to the markets in which we operate
or expect to operate could also have an adverse effect on the market price of
our common stock. In addition, the stock market as a whole has from time to time
experienced extreme price and volume fluctuations which have particularly
affected the market price for the securities of many small cap companies and
which often have been unrelated to the operating performance of these companies.

                                       9
<PAGE>

         PROVISIONS IN OUR CHARTER DOCUMENTS COULD PREVENT DELAY OR IMPEDE A
CHANGE IN CONTROL OF THE COMPANY AND DEPRESS THE MARKET PRICE OF OUR COMMON
STOCK.

         Our Certificate of Incorporation authorizes the issuance of 5,000,000
shares of Preferred Stock (of which 2,000,000 have been designated as Series A
Preferred Stock and are outstanding) with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without obtaining stockholder
approval, to issue such Preferred Stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other
rights of the holders of the Common Stock. In the event of issuance, the
Preferred Stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in the control of the Company.
Certain provisions of Delaware law may also discourage third party attempts to
acquire control of the Company.

         ANY ACQUISITION WE MAKE COULD DISRUPT OUR BUSINESS AND HARM OUR
FINANCIAL CONDITION.

         Our strategy is to grow via generic growth of our current products and
services and also acquire complimentary companies and technologies. We have
limited experiences in making significant acquisitions. Acquisitions entail a
number of risks that could materially and adversely affect our business and
operating results including problems integrating the acquired operations,
technologies and products, potential loss of key employees and difficulties in
maintaining relationships with suppliers and customers

ITEM 2.  DESCRIPTION OF PROPERTY

      We currently lease following properties:

     o   5,329 square feet of office space at 1155 North Service Road West,
         Oakville, Ontario Canada pursuant to a 3-year lease ending on April 30,
         2008;

     o   1,604 square feet of space for our development facilities located in
         Baltimore Maryland pursuant to a lease ending on July 31, 2009;

     o   4,399 square feet of office space at 110 William Street, New York, New
         York pursuant to a lease ending on April 30, 2010;

     o   With the acquisition of the assets of Cybrix, we lease 1,295 square
         feet of space in Minnesota on a month to month basis;

     o   A property on 76th Street in New York City pursuant to a lease ending
         on July 31, 2006;

     o   A number of off-site facilities in Virginia for the storage of
         equipment; and

     o   Through March 2005, approximately 2,500 square feet of office space at
         1175 North Service Road West, Oakville, Ontario, Canada under a five
         year lease which had been extended.

ITEM 3.  LEGAL PROCEEDINGS.

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         On Monday, November 8, 2004 at 10:00 a.m., eastern time we held our
2004 Annual Meeting of Stockholders for the purpose of electing directors,
amending our 2003 Incentive Stock Option Plan and ratifying our independent
registered public accounting firm for the fiscal year ending December 31, 2004.

         At the meeting, for which proxies were solicited pursuant to Regulation
14A under the Exchange Act and there was no solicitation in opposition to any of
the nominees, all of the nominees were re-elected as directors for one year
terms. Each director received at least 13,353,691 votes, which 96.4% of the
shares voted. The amendment to our 2003 Incentive Stock Option Plan to increase
the number of shares available for issuance under the plan was approved with
12,954,499 votes in favor, which is 93.5% of the shares voted. In addition, the
appointment of J.H. Cohn LLP as our independent registered public accounting
firm for the fiscal year ending December 31, 2004 was ratified with 13,836,657
votes in favor, which is 99.9% of the shares voted.

                                       10
<PAGE>



                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION.

         The following table sets forth, for the periods indicated and as
reported by NASDAQ OTCBB, the high and low bid prices for our Common Shares. The
quotations reflect inter-dealer prices without retail mark-up or commission and
may not represent actual transactions. Our common stock are traded on the OTCBB
Market under the symbol "SSVC.OB".

                                                               Bid Price
                                                     ---------------------------
                     QUARTERS                         HIGH                LOW
                                                     ---------------------------
           YEAR ENDED DECEMBER 31, 2003
January 1, 2003 to March 31, 2003 (*)                 $1.15              $0.12
April 1, 2003 to June 30, 2003                        $2.50              $0.66
July 1, 2003 to September 30, 2003                    $3.15              $1.50
October 1 2003 to December 31, 2003                   $2.71              $1.50
           YEAR ENDED DECEMBER 31, 2004
January 1, 2004 to March 31, 2004                     $2.40              $1.50
April 1, 2004 to June 30, 2004                        $2.80              $1.50
July 1, 2004 to September 31, 2004                    $2.00              $0.75
October 1 2004 to December 31, 2004                   $1.88              $1.15
             YEAR ENDED DECEMBER 31, 2005
January 1, 2005 to February 27, 2005                  $1.95              $1.30

(*) A 1 for 35 reverse-split was effected on March 14, 2003.

         As of March 28, 2005, the closing bid price per share for our common
stock, as reported on the NASDAQ OTCBB was $1.65.

CURRENT HOLDERS OF COMMON STOCK

         Based upon information supplied to us by our transfer agent, there were
approximately 50 stockholders of record of our common shares on March 28, 2005.
We believe there are in excess of 1,600 beneficial owners of our common stock
whose shares are held in "Street Name."

DIVIDENDS

         We have never paid cash dividends with respect to our preferred or
common stock. We intend to retain future earnings, if any, to help finance
operations and expansion and accordingly do not plan to pay cash dividends to
holders of our preferred or common stock for the foreseeable future. Any
decision regarding the future payment of cash dividends on preferred or common
stock will depend on the results of operations and financial position and such
other factors as the Board of Directors, in its discretion, deems relevant.

FORMATION IN 2003

         On October 1, 2004, we issued 23,715 shares of our restricted common
stock to VASCO Data International Inc. in payment for quarterly dividend due and
payable on Series A Preferred Stock for the quarter ended September 30, 2004. In
2004 we paid VASCO Date International Inc. a total of 67,823 shares in payment
of the dividend due under the terms of the note.

                                       11
<PAGE>

         On November 1, 2004, as consideration for our purchase of certain of
the assets of Cybrix Corporation, a Minnesota corporation, we issued 125,000
restricted shares of common stock. For consulting services rendered in
connection with that transaction we issued compensatory warrants to David Dent,
an independent consultant, for 10,000 shares of common stock exercisable $1.96
per share

         All of the above securities were issued in reliance upon the exemption
from the registration requirements of the Securities Act of 1933, as amended,
provided in Sections 4(2) and 4(6) thereof, as a transaction by an issuer not
involving a public offering. We reasonably believed that each purchaser had such
knowledge and experience in financial and business matters to be capable of
evaluating the merits and risks of the investment, each purchaser represented an
intention to acquire the securities for investment only and not with a view to
distribution thereof and appropriate legends were affixed to the stock
certificates or warrants.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS SHOULD BE READ IN
CONJUNCTION WITH OUR AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
CONTAINED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING
STATEMENTS BASED ON CURRENT EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES.
ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS MAY DIFFER SIGNIFICANTLY FROM
THOSE PROJECTED IN SUCH FORWARD-LOOKING STATEMENTS.

OVERVIEW

         Secured Services is the first single-vendor provider of Secured User
Management solutions, which is the name we have given to our approach to enable
large organizations to administer, control, and audit all user logins and access
privileges to their entire complement of enterprise applications.

         Every organization is challenged with managing users' digital
identities, in order to effectively control access to and use of its IT
applications and information. Disjointed identity management approaches create a
significant set of operational, security and regulatory compliance problems. The
Company's Secured User Management strategy is to provide a comprehensive
security solution that concurrently addresses this trio of problems.

         The Identiprise software platform provides organizations of all sizes
the combined benefits of (i) complete, end-to-end functionality for management
and auditing of digital identities and (ii) an architecture design that
overcomes traditional barriers to identity management deployments. This yields a
solution that deploys rapidly, non-disruptively, and comprehensively within
complex IT environments, for all users and across all application types.

         In addition, complementary professional services assist clients in
understanding their regulatory and security requirements, designing appropriate
policies, and developing plans and budgets to support the implementation of an
enterprise-wide security solution. During Identiprise implementations, Secured
Services provides project management, training and services to ensure successful
roll-out of the Secured User Management solution.

         Secured Services' target customers include large to medium size
organizations in the financial services, health care and government markets,
primarily in North America. Secured Services employs a multi-channel approach to
reach these sector markets.

FORMATION IN 2003

         As explained above and in Note 3 to the consolidated financial
statements, Secured Services was formed on April 28, 2003, but did not commence
its Secured User Management solutions operations until it obtained financing and
completed the acquisitions of the VACMAN Enterprise product line ("Vacman") of
Vasco Data Security International, Inc. ("Vasco") and the acquisition of certain
assets related to, and the business operations of Dolfin.com, Inc. ("Dolfin") on
July 18, 2003. Since those acquisitions had to be accounted for using the
purchase method, our statement of operations for the year ended December 31,
2003 only includes the revenues and expenses of our principal operations from
July 18, 2003 and, accordingly, it is important to note that our comparisons of
operating results below are for a period of a full year in 2004 and with a
period of less than six months for 2003.

                                       12
<PAGE>

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

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

SOFTWARE DEVELOPMENT COSTS

         Pursuant to Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," the Company is required to charge the costs of creating a computer
software product to research and development expense as incurred until the
technological feasibility of the product has been established; thereafter, all
related software development and production costs are required to be
capitalized.

         Commencing upon the initial release of a product, capitalized software
development costs and any costs of related purchased software are generally
required to be amortized over the estimated economic life of the product or
based on current and estimated future revenues. Thereafter, capitalized software
development costs and costs of purchased software are reported at the lower of
unamortized cost or estimated net realizable value. Due to the inherent
technological changes in the software development industry, estimated net
realizable values or economic lives may decline and, accordingly, the
amortization period may have to be accelerated.

         We did not capitalize any software development costs during the
year-end December 31, 2004 and the period from April 28, 2003 (date of
inception) to December 31, 2003.

RECOGNITION OF IMPAIRMENT

         Goodwill and other intangible assets with indefinite useful lives are
subject to reduction when their carrying amounts exceed their estimated fair
values based on impairment tests that are required to be made annually or more
frequently under certain circumstances. Fair values are determined based on
models that incorporate estimates of future profitability and cash flows.

         Impairment losses on long-lived tangible and intangible assets which do
not have indefinite useful lives, such as computer equipment, customer lists and
technology, are recognized when events indicate that the undiscounted cash flows
estimated to be generated by such assets are less than their carrying value and
all or a portion of such carrying value may not be recoverable. Impairment
losses are then measured by comparing the fair value of assets to their carrying
amounts.

STOCK-BASED COMPENSATION

         We measure compensation cost for stock options granted to employees
using the intrinsic value method of accounting prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"), which generally only requires charges to compensation expense for
the excess, if any, of the fair value of the underlying stock at the date a
stock option is granted over the amount the employee must pay to acquire the
stock. We provide pro forma disclosures of net loss and loss per common share
as if a fair value based method of accounting had been applied at the date of
grant and the fair value of the options had been amortized over the vesting
period as required by Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123") and SFAS No.
148, "Accounting for Stock-Based Compensation -- Transition and Disclosure."

REVENUE RECOGNITION

         We apply the provisions of AICPA Statement of Position 97-2, "Software
Revenue Recognition," as amended, which specifies the following four criteria
that must be met prior to recognizing revenue: (1) there must be persuasive
evidence of the existence of an arrangement, (2) delivery must be completed, (3)
fees must be fixed or determinable, and (4) amounts due must be probable
collection. In addition, revenue earned on software arrangements involving
multiple elements is allocated to each element based on the relative fair value
of the elements. When applicable, revenue allocated to software products
(including specified upgrades/enhancements) is recognized upon delivery of the
products.

         The above listing is not intended to be a comprehensive list of all of
our accounting policies. In many cases, the accounting treatment of a particular
transaction is specifically dictated by accounting principles generally accepted
in the United States, with no need for management's judgment in their
application. There are also areas in which management's judgment in selecting
any available alternative would not produce a materially different result. See
our audited consolidated financial statements and

                                       13
<PAGE>

notes thereto which begin on page F-1 of this Annual Report on Form 10-KSB,
which contain accounting policies and other disclosures required by generally
accepted accounting principles.

IMPACT OF RECENTLY ISSUED ACCOUNTING POLICY

         In December 2004, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"), which
replaces SFAS 123 and supersedes APB 25. SFAS 123, as originally issued in 1995,
established as preferable a fair-value based method of accounting for
share-based payment transactions with employees. However, SFAS 123 permitted
entities the option of continuing to apply the guidance in APB 25, as long as
the notes to the financial statements disclosed what net income or loss would
have been had the preferable fair-value based method been used. SFAS 123R
requires that the compensation cost relating to all share-based payment
transactions, including grants of stock options to employees, be measured and
recognized in the financial statements using the fair value of the compensation
awards. Public entities filing as small business issuers will be required to
apply the provisions of SFAS 123R as of the first interim or annual reporting
period that begins after December 15, 2005. As the Company currently applies the
guidance in APB 25, it will be required to adopt the provisions of SFAS 123R in
the first quarter of the year ending December 31, 2006. The adoption will result
in recognition of additional compensation expense in the Company's consolidated
statements of operations.

         In January 2003, the FASB issued Interpretation No. 46R "Consolidation
of Variable Interest Entities," ("FIN 46R"). In general, a variable interest
entity is a corporation, partnership, trust, or any other legal structure used
for business purposes that either (a) does not have equity investors with voting
rights or (b) has equity investors that do not provide sufficient financial
resources for the entity to support its activities. A variable interest entity
often holds financial assets, including loans or receivables, real estate or
other property. A variable interest entity may be essentially passive or it may
engage in activities on behalf of another company. Until the adoption of FIN
46R, a company generally had included another entity in its consolidated
financial statements only if it controlled the entity through voting interests.
FIN 46R changes that by requiring a variable interest entity to be consolidated
by a company if that company is subject to a majority of the risk of loss from
the variable interest entity's activities or entitled to receive a majority of
the residual returns or both. FIN 46R's consolidation requirements apply
immediately to variable interest entities created or acquired after January 31,
2003. The requirements of FIN 46R apply to all financial statements issued after
December 15, 2004 regardless of when the variable interest entity was
established. The adoption of FIN 46R did not have a material effect on the
Company's consolidated financial position and results of operations.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity"
("SFAS 150"). SFAS 150 changes the accounting for certain financial instruments
that, under previous guidance, issuers could account for as equity. The new
statement requires that those instruments be classified as liabilities in
statements of financial position. Most of the guidance in SFAS 150 is effective
for all financial instruments entered into or modified after May 31, 2003. The
adoption of this statement did not have a material impact on the Company's
consolidated financial position, results of operations or cash flows.

         In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." The Company does not hold
any material derivative instruments and does not conduct any significant hedging
activities.

         In November 2002, the EITF reached a consensus on Issue No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables." This consensus
provides guidance on when and how to separate elements of an arrangement that
may involve the delivery or performance of multiple products, services and
rights to use assets into separate units of accounting. The guidance in the
consensus is effective for revenue arrangements entered into in fiscal periods
beginning after June 15, 2003. The Company adopted the guidance in the consensus
in the quarter beginning July 1, 2003. The adoption of the consensus did not
have a material effect on the Company's consolidated results of operations.

                                       14
<PAGE>

RESULTS OF OPERATIONS

         The following table sets forth for the periods presented the statement
of consolidated operations data as a percentage of revenues:

                                                                 PERIOD FROM
                                                               APRIL 28, 2003
                                          YEAR ENDED         (DATE OF INCEPTION)
                                         DEC 31, 2004         TO DEC. 31, 2003
                                         ------------        -------------------

         Revenues                           100.0%                  100.0%
         Cost of revenues                    47.2%                   32.7%
                                             -----                   -----
         Gross profit                        52.8%                   67.3%
                                             -----                   -----
         Selling, general and
           administrative expense           219.8%                  132.7%
         Research and development            53.8%                   18.0%
         Depreciation and amortization       14.4%                   13.0%
         Charge for impairment of
           related party loans               27.3%                    0.0%
                                             -----                    ----
         Total operating costs
           and expenses                     315.3%                  163.7%
                                            ------                  ------
         Loss from operations              -262.5%                  -96.4%
         Net interest (income) expense       -0.2%                    2.8%
                                              ----                    ----
         Net loss                          -262.3%                  -99.2%
                                           =======                  ======


YEAR ENDED DECEMBER 31, 2004

RESULTS OF OPERATIONS

         REVENUES. The revenues for year ended December 31, 2004 and for the
period from April 28, 2003 (date of inception) to December 31, 2003 totaled
$2,194,000 and $1,024,000, respectively, reflecting a year over year increase of
$1,170,000. Identiprise revenues totaled $1,103,500 and revenues from other
services totaled $1,090,500 for the year ended December 31, 2004. For the period
from April 28, 2003 (date of inception) to December 31, 2003, Identiprise
revenues totaled $621,000 and revenues from other services totaled $403,000. The
increase in revenues was due primarily to the increased operating period in
2004. We believe that with our continued increased investment in sales and
marketing efforts and recent release of our new version 6.0 of Identiprise, we
are well positioned for a growth in revenue in the future.

         COST OF REVENUES. Cost of revenues increased by $702,000 to $1,036,000
or 47% of our revenues for the year ended December 31, 2004 compared to $334,000
or 33% of our revenues for the period from April 28, 2003 (date of inception) to
December 31, 2003. The increase in the cost of revenues is due to primarily to
the recruitment of staff to deliver the products and services and the increase
in operating period. Cost of revenues mainly consists of payroll and related
expenses associated with our consulting services and software maintenance in
connection with previously installed Identiprise licenses.

         GROSS PROFIT. Our gross profit increased by $468,000 to $1,157,000 for
the year ended December 31, 2004 compared to $689,000 for the period from April
28, 2003 (date of inception) to December 31, 2003. For the year ended December
31, 2004 our gross profit margin decreased to 53% from 67% for the period from
April 28, (date of inception) to December 31, 2003. The decrease in gross profit
margin is due mainly to the rapid increase in staffing cost from the recruitment
of additional staff without a comparable increase in sales during the period
with the anticipation of not having to increase staff until which time our
revenue base increases, we anticipate our gross profit performance in the near
term to increase.

         SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased by $4,063,000 to $5,422,000 for the year ended
December 31, 2004 compared to $1,359,000 for the period


                                       15
<PAGE>

from April 28, 2003 (date of inception) to December 31, 2003. The increase in
costs include a rapid build-up of compensation costs for sales and marketing
personnel together with the initial marketing costs for developing sales
literature to maximize our new sales and marketing initiatives and total 300% of
our sales revenue. The increase is also attributed to a $600,000 impairment
charge of a related party receivable (Explained Below).

         RESEARCH AND DEVELOPMENT. The cost associated with our research and
development efforts increased by $997,000 to $1,181,000 for the year ended
December 31, 2004 compared to $184,000 for the period from April 28, 2003 (date
of inception) to December 31, 2003. These costs represent 54% and 18% of our
revenues for the year ended December 31, 2004 and for the period from April 28,
2003 (date of inception) to December 31, 2003, respectively. The increase in
costs has enabled us to improve our Identiprise product to match future
requirements of our customers and has resulted in the release of the new version
6.0 of the product.

         DEPRECIATION AND AMORTIZATION. The costs for depreciation and
amortization increased by $182,000 to $315,000 for the year ended December 31,
2004 from $133,000 for the period from April 28, 2003 (date of inception) to
December 31, 2003, respectively. These costs represented primarily amortization
of intangible assets acquired in connection with the acquisition of our business
operations in July 2003.

         IMPAIRMENT. The impairment cost of $600,000 relates to the charge taken
against a loan receivable of $1,543,000 from Dolfin.com Inc. and its subsidiary
Galaxy Inc. This loan is secured by certain assets of Dolfin.com Inc. which
currently have a market value of approximately $943,000. Consequently, the loan
was written down to the approximate market value of the security. Mr. Michael
Dubreuil holds the position of chairman and chief executive officer of
Dolfin.com Inc. and is co-Chairman of Secured Services Inc.

         INTEREST EXPENSE. Interest expense increased by $12,000 to $43,000 for
the year ended December 31, 2004 from $31,000 for the period from April 28, 2003
(date of inception) to December 31, 2003. Interest expense related primarily to
the 6% note payable in installments to VASCO Data Security International, Inc.
incurred in connection with the acquisition of Vacman (now re-branded as
Identiprise(TM)). In 2004, interest expense was partially offset by interest
income of approximately $47,000 for the year ended December 31, 2004, from
increased interest revenues from the short-term investment of our cash.

         INCOME TAX EXPENSE. As of December 31, 2004, our accumulated net
operating loss carryforward was in excess of $5.3 million. We anticipate that
all of this loss carryforward amount will remain available for offset against
any future tax liability that we may incur.

         NET LOSS. Net loss for the year ended December 31, 2004 and for the
period from April 28, 2003 (date of inception) to December 31, 2003 amounted
approximately $5,757,000 and $1,016,000, respectively. These losses are due to
the cost to maintain current revenue streams while investing in the rapid growth
of selling, marketing and research and development costs in order to reach our
expansion goals. Net loss applicable to common stock for the year ended December
31, 2004 and for the period from April 28, 2003 (date of inception) to December
31, 2003 amounted to approximately $5,877,000 and $1,076,000, respectively, and
includes preferred stock dividend requirements of $120,000 and $60,000,
respectively.

LIQUIDITY AND CAPITAL RESOURCES

         At December 31, 2004, we had current assets totaling $2,538,168 and
working capital of $622,707. Total current assets include cash and cash
equivalents of $1,607,777, a certificate of deposit of $218,051, accounts
receivable of $518,183 and other receivables of approximately $194,157. Cash
equivalents are limited to investment grade marketable securities with
maturities of less than three months when acquired. The certificate of deposit
matures in November 2005 and accrues interest at 4.75% per annum.

                                       16
<PAGE>

         Net cash used in operating activities totaled $3,606,978 for the year
ended December 31, 2004 compared to $674,730 for the period from April 28, 2003
(date of inception) to December 31, 2003. The increase in net cash used in
operating activities is due primarily to our net loss resulting from an increase
in investment in our sales and marketing efforts. Net cash used in investing
activities approximated $1,468,611 for the year ended December 31, 2004, of
which approximately $1,082,000 was advanced to a related entity for working
capital (of which $600,000 was written down to market value) and professional
fees, $200,000 was used in licensing a compatible security software product,
approximately $130,000 was used to acquire computer equipment, and $38,000 was
loaned to an employee.

         Net cash provided by financing activities for the year ended December
31, 2004 approximated $6,664,000 which included proceeds from sales of 7,831,090
shares of common stock and warrants to purchase 1,997,513 shares of common stock
through private placements reduced by related fees and repayments of notes
payable. Private placements of common stock and warrants generated net proceeds
of approximately $6,622,000 consisting of gross proceeds of approximately
$8,349,000 reduced by subscriptions receivable of $792,000 and fees of $935,000
incurred in connection with the private placements. Collections of subscriptions
receivable amounted to $391,100. Repayments of principal amounts due under the
note payable to VASCO Data Security International, Inc. in exchange for
Vacman approximated $350,000. The cash provided by financing activities will be
used to fund working capital requirements and to expand our sales and marketing
initiatives for Identiprise.

As of March 31, 2005, we had entered into non-binding Letters of Intent to
acquire the businesses and certain assets of two companies which our management
believes will compliment the Company's current products and service offerings.
If successful, the acquisitions will involve the issuance of stock and cash.

One of the Letters of Intent is for the purchase of a security software product
company for an initial purchase price of approximately $17,000,000 which is to
be paid in cash and stock. The purchase price will be subject to additional
payments based on an earnout calculation that is contingent upon the fulfillment
of all of the seller's financial projections.

The second Letter of Intent is for the purchase of a software security product
company relating to wireless technology for a purchase price of approximately
$6,250,000 which is to be paid in cash and stock.

Consummation of both acquisitions will be subject to, among other things, the
determination of the final terms of the agreements, the final approval of the
Boards of Directors of both companies and the completion of our financing.

As of March 31, 2005, the current structure of the aggregate purchase price for
the two acquisitions will require us to pay $8,500,000 in cash with the
remainder to be paid by the issuance of shares of common stock. To finance
the cash portion of the two acquisitions, the Company has obtained a non-binding
commitment from a number of institutional investors to purchase shares of the
Company's convertible preferred stock which we project will raise approximately
$10,000,000 in cash, $7,000,000 of which will be used to fund the two
acquisitions with the balance to be used for working capital purposes. In
addition, we have an on-going private placement of units (described below) to
raise an additional $2,400,000 in cash. If the Company is unsuccessful in
obtaining all of the funds from these two proposed financing transactions and no
other cash is raised, the Company believes that it will be able to renegotiate
the structure of the acquisitions to take into account the actual cash raised.

On March 7, 2005, we commenced a private placement whereby we were offering
400,000 units at $6.00 per unit, each unit consisting of four shares of common
stock and one warrant to purchase one share of common stock, exercisable at
$2.00 per share for the first year and for $2.50 per share for the subsequent
two years. Through March 31, 2005, the Company sold approximately 69,000 units
from which it will receive proceeds, net of estimated offering costs, of
approximately $414,000. We cannot assure that we will be able to sell any
additional units.

         We believe that our current cash balances, the anticipated cash
generated from operations, including the realization of deferred revenue which
is recorded as a current liability, deposits that will be received in future
quarters on orders and the impact of obtaining additional equity financing, will
be sufficient to meet our anticipated cash needs over the next twelve months.

         There is substantial risk, however, that we may not be able to either
obtain additional financing or the revenue growth and cash receipts will not be
sufficient to generate the funds needed to repay the debt to VASCO Data Security
International, Inc. within the terms of the existing agreement. If we are unable
to meet our revenue and cash goals and also unable to either renegotiate the
terms of the agreement with VASCO Data Security International, Inc., we may need
to significantly reduce our workforce, sell certain of our assets, enter into
strategic relationships or business combinations, discontinue some or all of our
operations, or take other similar restructuring actions. While we expect that
these actions would result in a reduction of recurring costs, they also may
result in a reduction of recurring revenues and cash receipts. It is also likely
that we would incur substantial non-recurring costs to implement one or more of
these restructuring actions.





ITEM 7.  FINANCIAL STATEMENTS

         The consolidated financial statements required by this item are set
forth beginning on Page F-1 which immediately follows the signature page below.

                                       17
<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None

ITEM 8A. CONTROLS AND PROCEDURES
      EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

         Management, with the participation of our chief executive officer and
the chief financial officer, carried out an evaluation of the effectiveness of
our "disclosure controls and procedures" (as defined in the Securities Exchange
Act of 1934 (the "Exchange Act") Rules 13a-15(c) and 15-d-15(e)) as of the end
of the period covered by this report (the "Evaluation Date"). Based upon that
evaluation, the chief executive officer and the chief financial officer
concluded that, as of the Evaluation Date, our disclosure controls and
procedures are effective, providing them with material information relating to
us as required to be disclosed in the reports we file or submit under the
Exchange Act on a timely basis.

      CHANGES IN INTERNAL CONTROLS

         In connection with the audit of our 2004 financial statements,
management, together with J. H. Cohn LLP, our independent registered public
accounting firm, identified the existence of several deficiencies related to the
preparation of our financial statements and notes thereto. These deficiencies
collectively amount to a material weakness in our internal control over
financial reporting.

         In response to the matters identified, we have taken steps to
strengthen our internal control over financial reporting to remediate the
significant deficiencies. Specifically, we have taken, or intend to take, the
following steps, among others:

o We will expand our accounting and reporting resources by adding a full-time
person.

o We intend to expand our financial disclosure and reporting knowledge through
continuing education and engaging expert resources.

         Other than as set forth above there were no changes in Secured Services
internal controls over financial reporting, known to the chief executive officer
or the chief financial officer that occurred during the fourth quarter of the
year ended December 31, 2004 that has materially affected, or is reasonably
likely to materially affect, Secured Services' internal control over financial
reporting.

ITEM 8B.  OTHER INFORMATION

         None



                                       18
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS

         Our executive officers and directors, and their respective ages as of
March 10, 2005, are as follows:

<TABLE>
<CAPTION>
           NAME                           AGE        POSITION                            DIRECTOR SINCE
           ----                           ---        --------                            --------------
<S>                                       <C>        <C>                                 <C>
           Michael P. Dubreuil            46         Co-Chairman of the Board and        September 2003
                                                     Secretary
           King T. Moore                  61         President, Chief Executive          September 2003
                                                     Officer and Director
           T. Kendall Hunt(1)(2)(3)       61         Director                            September 2003
           Shawn Kreloff                  43         Co-Chairman of the Board            September 2004
                                                     Vice President and Chief            Not a Director
           John Day                       57         Financial Officer
</TABLE>

------------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating and Governance Committee


         MICHAEL P. DUBREUIL, a co-founder of Secured Services, Inc., has been
our Chairman since September, 2003 and co-Chairman since September, 2004. He
started SSI Operating Corp. (f/k/a Secured Services, Inc.) in November 2002.
Prior to that, in May 1988 Mr. Dubreuil founded Dolfin.com, Inc. and holds the
positions of CEO and Chairman. Mr. Dubreuil brings 20 years of strong general
business team building, sales, start-up, and acquisition experience to our
Company. Mr. Dubreuil holds a B.S. in Mathematics from the University of
Waterloo where he focused on computer science, business and economics.

         KING T. MOORE, a co-founder of Secured Services, Inc., has been our
President and Chief Executive Officer since July, 2003. From November 2001 to
September 2002 he was a private investor. From June 1998 to November 2001 he was
Chief Executive Officer of Mastech Quantum, Inc. Previously, he led Quantum
Information Resources ("Quantum") from a money losing operation with a few
employees to a $75 million (Canadian) Company with over 800 employees in Canada
and the United States. In 1998, Quantum was purchased by Mastech Systems Corp.
and subsequently became known as "Mastech Quantum, Inc." Mr. Moore has been
actively involved in the IT industry for over 35 years. He brings a strong
Marketing, Sales and Operations background to our Company.

         T. KENDALL "KEN" HUNT, a co-founder of Secured Services, Inc., is
founder, Chairman and CEO of VASCO Data Security International, Inc. (Nasdaq,
Symbol: vdsi). He served as Chief Executive Officer through June 1999. He
returned as CEO in November 2002. He has been a director of VASCO since July
1997 and currently serves a one-year term. He served since 1990 as Chairman and
President of its predecessor, VASCO Corp. He is also affiliated with several
high-tech early-stage companies, serving as a member of their Board of
Directors. Mr. Hunt is President of the Belgian Business Club of Chicago.
Additionally, he is on the Advisory Board for the Posse Foundation, an
organization dedicated to providing full college scholarships to urban minority
youth leaders through its partnerships with elite universities across the U. S.
He holds an MBA from Pepperdine University, Malibu, California, 1979 and a BBA
from the University of Miami, Florida, 1965.

                                       19
<PAGE>

         SHAWN KRELOFF has been our co-Chairman since September, 2004 and
previously been a consultant to us. He provides business development and
entrepreneurial skills to our board. Since 1999, Mr. Kreloff served on the board
of directors of Hudson Williams until it was acquired by Keynote Systems earlier
in 2004. Prior to that he was a founding investor in Insight First, which was
acquired by 24/7 Real Media in 2003. From September 2002 to 2003, Mr. Kreloff
was Executive Vice President ("EVP") of Sales, Marketing and Business
Development of Predictive Systems Corp., a network infrastructure and security
consulting Company. In 1999, he was a founding investor and EVP of Business
Development at Opus360 Corporation until it was acquired in 2001. In 1996 he
founded Gray Peak Technologies, Inc., a network consulting firm that provided
high end consulting to telecomm, financial and other Fortune 1000 companies, and
served as its Chairman and CEO until it was sold to USWeb (NASDAQ: USWB) in 1998
for over $100 million. From 1986 to 1994 he served as Vice President of Global
Network Services at Credit Suisse First Boston, Mr. Kreloff was responsible for
global network operations and engineering to 50,000 users. Mr. Kreloff also sits
on the boards of two private IT hi-tech companies. Mr. Kreloff holds a BS degree
in Operations Research from Syracuse University, 1984.

         JOHN DAY has been our Vice President and Acting Chief Financial Officer
since May 2003. In October 2003 he was elected Chief Financial Officer. Prior to
that he held the position of Executive Vice President and Chief Financial
Officer at Hudson Williams Inc from October 1998 to May 2003. His career has
covered all aspects of Financial and Information Management on an International
scope. His background includes holding senior positions in both large public
corporations and small companies. Mr. Day holds a degree in Special Physics from
University of London and is a Fellow Member of the Institute of Chartered
Accountants, and member of Financial Executives International, Inc.

         All directors hold offices until the next annual meeting of
stockholders and until their successors are duly elected and qualified. Officers
are elected to serve, subject to the discretion of the Board of Directors, until
their successors are appointed.

BOARD COMMITTEES

         Secured Service's Board of Directors has established compensation,
audit and nominating and governance committees. The Compensation Committee
reviews and recommends to the Board of Directors the compensation and benefits
of all the officers of Secured, reviews general policy matters relating to
compensation and benefits of employees of Secured, and administers the issuance
of stock options to Secured's officers, employees, directors and consultants.
All compensation arrangements between Secured and its directors, officers and
affiliates are reviewed by the Compensation Committee comprised of an
independent director. The Audit Committee meets with management and Secured's
independent auditors to determine the adequacy of internal controls and other
financial reporting matters. The Nominating and Governance Committee identifies
director candidates who possess an ability, as demonstrated by recognized
success in his or her field, to make meaningful contributions to the Board's
oversight of our business and affairs and an impeccable reputation of integrity
and competence in his or her personal or professional activities.

AUDIT COMMITTEE FINANCIAL EXPERT

         The Board has determined that T. Kendall Hunt qualifies as our "audit
committee financial expert," as that term is defined in Item 401(e) of
Regulation S-B, and "independent" as that term is used in Item7 (d) (3)(iv) of
schedule 14A under the Securities Exchange Act of 1934.

                                       20
<PAGE>

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires Secured
Service's officers and directors, and persons who own more than ten percent
(10%) of a registered class of Secured Service's equity securities to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Officers, directors and greater than ten percent (10%)
stockholders are required by SEC regulations to furnish Secured Services with
copies of all Section 16(a) forms they file.

            To the best of Secured Services knowledge, based solely on review of
the copies of such forms furnished to it, or written representations that no
other forms were required, Secured Services believes that all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent (10%) shareholders were complied with during 2004. With respect to any
former directors, officers, and ten percent (10%) shareholders of Secured
Services, Secured Services does not have any knowledge of any known failures to
comply with the filing requirements of Section 16(a).

CODE OF ETHICS

         The integrity of Secured Services' employees and consultants is key to
our business and professional reputation. Our Customers trust us with their
proprietary systems and date. To warrant this trust we are required to maintain
the highest standards of professionalism. Employees are expected to conduct
themselves honestly and with good business judgment. An employee Code of Conduct
has been established based on those of the leading industry associations.
Secured Services has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and other persons performing
similar functions. This code of ethics is posted on our web site at
www.secured-services.com.

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following table provides information regarding the compensation
awarded or paid to, or earned by, our CEO and each of our most highly
compensated executive officers whose compensation exceeded $100,000 for the
period from April 28, 2003, the date of inception, through December 31, 2003 and
the year ended December 31, 2004. We refer to these individuals elsewhere in
this report as "Named Executive Officers."

<TABLE>
<CAPTION>
                                                                                       LONG TERM COMPENSATION
                                                  ANNUAL COMPENSATION                         AWARDS
                                              ----------------------------          RESTRICTED     SECURITIES
                                                                                    STOCK          UNDERLYING
OFFICER NAME               POSITION           YEAR               SALARY($)          AWARD          OPTIONS
------------               --------           ----               ---------          ----------     ----------
<S>                        <C>                <C>                <C>                  <C>          <C>
Michael P. Dubreuil        Co-chairman of     2004               164,000                           100,000
                           the Board          2003
King T. Moore              President &        2004               164,000                           100,000
                           CEO (1)            2003                76,600
John Day (1)               VP Finance &       2004               149,984
                           CFO                2003               106,600              60,000        20,000
</TABLE>


(1) Assumed position, in July 2003, upon consummation of the Agreement and Plan
of Merger (the "Merger Agreement") among the Company, SSGI Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of the Company, and SecureD
Services, Inc., a Delaware corporation ("SSI").

                                       21
<PAGE>

EQUITY COMPENSATION PLAN INFORMATION

         To attract and retain the personnel necessary for our success, we
adopted a stock option plan and reserved 2,000,000 shares of stock for future
grants under that plan. Under this plan, administered by our board of directors
we may grant options covering up to 2,000,000 shares of common stock to our
employees, directors and consultants. In addition, the plan provides that the
maximum term for options granted under the plan is 10 years and that the
exercise price for the options may not be less than the fair market value of the
common stock on the date of grant. Options granted to stockholders owning more
than 10% of our outstanding common shares must be exercised within five years
from the date of grant and the exercise price must be at least 110% of the fair
market value of the common stock on the date of the grant. As of December 31,
2004, we issued options covering 1,097,397 shares of common stock under the
stock option plan. These options have a weighted exercise price of $1.81.

         The following table sets forth, as of December 31, 2004, information
concerning our stock option plan, as well as information relating to other
equity compensation plans that we have adopted.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                              NUMBER OF SECURITIES TO       WEIGHTED-AVERAGE         NUMBER OF SECURITIES
                              BE ISSUED UPON EXERCISE       EXERCISE PRICE OF       REMAINING AVAILABLE FOR
                              OF OUTSTANDING OPTIONS,     OUTSTANDING OPTIONS,       FUTURE ISSUANCE UNDER
                                WARRANTS AND RIGHTS        WARRANTS AND RIGHTS        EQUITY COMPENSATION
                                        (A)                        (B)                 PLANS (EXCLUDING
                                                                                    SECURITIES REFLECTED IN
                                                                                          COLUMN (A))
                                                                                              (C)
-------------------------------------------------------------------------------------------------------------
<S>                                  <C>                          <C>                          <C>
Equity Compensation Plans
Approved by Shareholders             1,097,397                    $1.81                        902,603
-------------------------------------------------------------------------------------------------------------
Equity Compensation Plans
Not Approved by                         70,000                    $1.70
Shareholders
-------------------------------------------------------------------------------------------------------------
Total                                1,167,397                                                 902,603
-------------------------------------------------------------------------------------------------------------
</TABLE>

The equity compensation plans not approved by shareholders referred to in the
table above include:

     o   An issuance of ten thousand (10,000) 3-year common stock purchase
         warrants with an exercise price of $1.96 per share, which expires on
         November 1, 2007 and are immediately exercisable, were issued to an
         outside consultant for services rendered in connection with our
         acquisition of the assets of Cybrix Corporation. This issuance was made
         pursuant to Sections 4(2) and 4(6) of the Securities Act of 1933, as
         amended (the "Act").

     o   A grant of twenty thousand (20,000) non-qualified common stock purchase
         options exercisable at $1.50 per share, which expires on November 29,
         2014 and are exercisable upon vesting on December 31, 2004. This grant
         was made to a non-employee director for his services to the Board.

     o   A grant of forty thousand (40,000) non-qualified common stock purchase
         options exercisable at $1.85 per share, which expires on June 22, 2014.
         This grant was made to a non-employee director for his services to the
         Board.

                                       22
<PAGE>

         On November 29, 2004, the Board authorized the issuance of 50,000
restricted shares, at a price of $1.40 per share of our common stock to Steven
Sonnenberg, an employee. The shares were issued to Mr. Sonnenberg as of the
close of business on November 16, 2004 pursuant to Sections 4(2) and 4(6) of the
Act. Of the 50,000 shares issued, 16,666 shares will vest on the 1st anniversary
of the issuance date and the remaining 33,334 shares will vest on the 2nd
anniversary of the issuance date. The vesting of the shares is contingent upon
Mr. Sonnenberg's continued employment with us. Mr. Sonnenberg is deemed the
owner of these shares as of the date of grant and, as such will be entitled to
vote them on all matters presented to stockholders for a vote and will be
entitled to dividends, if any, payable on our common stock. If Mr. Sonnenberg
terminates his employment with us voluntarily or we terminate him, any unvested
shares will be forfeited and will revert to back to us.

COMPENSATION OF DIRECTORS

         Directors are compensated at the rate of 40,000 options per annum pro
rated for partial periods of services. The following grants were made in 2004:

     o   A grant of 40,000 non-qualified common stock purchase options
         exercisable at 1.85 per share which expires on June 22, 2014 are
         exercisable upon vesting on June 30, 2004. This grant was made to a
         non-employee director for his services to the board.

     o   A grant of twenty thousand (20,000) non-qualified common stock purchase
         options exercisable at $1.50 per share, which expires on November 30,
         2014 and are exercisable upon vesting on December 31, 2004. This grant
         was made to a non-employee director for his services to the Board.

LIMITATION OF DIRECTORS' LIABILITY AND INDEMNIFICATION

         The Delaware General Corporation Law (the "DGCL") authorizes
corporations to limit or eliminate the personal liability of directors to
corporations and their shareholders for monetary damages for breach of
directors' fiduciary duty of care. Secured Service's Certificate of
Incorporation limits the liability of its directors to Secured Services or its
stockholders to the fullest extent permitted by Delaware law.

         Secured Service's Certificate of Incorporation provides mandatory
indemnification rights to any officer or director of Secured Services who, by
reason of the fact that he or she is an officer or director of Secured Services,
is involved in a legal proceeding of any nature. Such indemnification rights
include reimbursement for expenses incurred by such officer or director in
advance of the final disposition of such proceeding in accordance with the
applicable provisions of the DGCL. Insofar as indemnification for liabilities
under the Securities Act of 1933 (the "Act") may be provided to officers and
directors or persons controlling Secured Services, Secured Services has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

         The following table sets forth certain information regarding the
beneficial ownership of our outstanding Common Stock as of March 25, 2005 by:
(i) each director; (ii) each Named Executive Officer (as defined under
"Executive Compensation - Compensation of Executive Officers" above); (iii) all
of our executive officers and directors as a group; and (iv) all those known by
us to be beneficial owners of more than five percent of our Common Stock:

                                       23
<PAGE>

NAME OF BENEFICIAL OWNER (1)             SHARES OF COMMON STOCK    PERCENTAGE OF
                                          BENEFICIALLY OWNED (2)     OWNERSHIP
                                         -----------------------   -------------
King T. Moore                                 2,061,111 (3)             11.7%
Michael P. Dubreuil                           1,352,777 (4)(5)           7.8%
John Day                                        297,225 (6)              1.7%
T. Kendall Hunt                               1,350,000 (7)              7.7%
Shawn Kreloff                                 1,230,000 (8)              6.9%

All Directors and Officers as a group
of 5 persons                                  6,291,113                 35.8%

5% Stockholder
033 Asset Management, LLC                     4,807,700(9)              26.2%
---------------
*less than 1%

(1)  Unless otherwise indicated the address of each beneficial owner identified
     is: c/o Secured Services, Inc. 1155 North Service Road West, Unit 8,
     Oakville, Ontario, Canada L6M 3E3.

(2)  A person is deemed to be a beneficial owner of securities that can be
     acquired by such person within 60 days from the filing of this report upon
     the exercise of options and warrants or conversion of convertible
     securities. Each beneficial owner's percentage ownership is determined by
     assuming that options, warrants and convertible securities that are held by
     such person (but not held by any other person) and that are exercisable or
     convertible within 60 days from March 25, 2005 have been exercised or
     converted. Except as otherwise indicated, and subject to applicable
     community property and similar laws, each of the persons named has sole
     voting and investment power with respect to the shares shown as
     beneficially owned. On March 25, 2005, 17,388,360 shares of Common Stock
     were outstanding.

(3)  Includes (i) qualified options to purchase 52,777 shares of common stock at
     an exercise price of $1.65 which expires on November 29, 2009. On November
     29, 2004, Mr. Moore was awarded qualified options to purchase 100,000
     shares of common stock with an exercise price of $1.65 (110% of the fair
     market value on November 30, 2004) which expires on November 29, 2009. Of
     the options, 36,111 vested on the date of grant with the remaining 63,889
     vesting on a pro-rata monthly basis through October 2006 provided that at
     the time of vesting Mr. Moore is an employee of Secured Services.; and (ii)
     Two immediately exercisable 3-year common stock purchase warrants to
     purchase 66,667 and 75,000 shares, respectively, at an exercise price of
     $1.50 per share. The warrants expire on 1/7/2006, 3/31/2007 and 4/9/2007,
     respectively.

(4)  Includes (i) qualified options to purchase 52,777 shares of common stock at
     an exercise price of $1.50 which expires on November 29, 2014. On November
     29, 2004, Mr. Dubreuil was awarded qualified options to purchase 100,000
     shares of common stock with an exercise price of $1.50 (the fair market
     value on November 30, 2004) which expires on November 29, 2014. Of the
     options, 36,111 vested on the date of grant with the remaining 63,889
     vesting on a pro-rata monthly basis through October 2006 provided that at
     the time of vesting Mr. Dubreuil is an employee of Secured Services.

(5)  1,300,000 shares are held by the Dubreuil Family Trust for the benefit of
     Mr. Dubreuil's minor children. The filing of this report shall not be
     construed as an admission that Mr. Dubreuil is the beneficial owner of any
     of the shares owned by the Dubreuil Family Trust for the purposes of
     Section 13 (d) or 13(g) of the Securities Exchange Act of 1934, as amended.

                                       24
<PAGE>

(6)  Includes (i) qualified options to purchase 10,558 shares of common stock at
     an exercise price of $1.75 which expires on October 3, 2013. On October 3,
     2003, Mr. Day was awarded qualified options to purchase 20,000 shares of
     common stock with an exercise price of $1.75 (the fair market value on the
     grant date) which vest, provided that at the time of vesting Mr. Day is an
     employee of Secured Services, over a 3 year period as follows: (a) 6,666
     shares on 10/03/04, (b) 556 shares on the 3rd day of each month beginning
     on 11/03/04 through and including 12/03/05 and (c) 555 shares on the 3rd
     day of each month beginning on 1/03/05 through and including 10/03/06; (ii)
     Three immediately exercisable 3-year common stock purchase warrants to
     purchase 26,667, 10,000 and 10,000 shares, respectively, at an exercise
     price of $1.50 per share. The warrants expire on 1/19/2007, 3/31/2007 and
     4/9/2007, respectively.

(7)  Includes non-qualified options to purchase 40,000 shares of common stock
     exercisable at $1.85 per share which expires on June 22, 2014; and (ii)
     non-qualified options to purchase 10,000 shares of common stock exercisable
     at $1.60 per share which expire on January 1, 2015 and represent the vested
     portion of the 40,000 compensatory options awarded by Secured Services for
     services as a director for the fiscal year ending December 31, 2005 which
     vest quarterly on a pro-rata basis provided that at the time of vesting Mr.
     Hunt is a director.

(8)  Includes non-qualified options to purchase 20,000 shares of common stock
     exercisable at $1.50 per share which expires on November 29, 2014; (ii)
     non-qualified options to purchase 10,000 shares of common stock exercisable
     at $1.60 per share which expire on January 1, 2015 and represent the vested
     portion of the 40,000 compensatory options awarded by Secured Services for
     services as a director for the fiscal year ending December 31, 2005 which
     vest quarterly on a pro-rata basis provided that at the time of vesting Mr.
     Kreloff is a director; and immediately exercisable 3-year common stock
     purchase warrants to purchase 300,000 shares, at an exercise price of $1.50
     per share. The warrants expire on 12/28/2006.

(9)  Consist of 3,846,160 shares of common stock and warrants to purchase
     961,540 shares of common stock exercisable at $1.96 per share which expires
     on May 19, 2009.

     In addition, Vasco Data Security International, Inc. owns 2,000,000 shares
of our Preferred Stock, which has one vote per share, votes together with our
Common Stock as a single share and is convertible into an equivalent number of
shares of common stock and 84,128 shares of common stock. Mr. Hunt is the
Chairman and Chief Executive Officer of Vasco and may be deemed the beneficial
owner of its shares. Including the shares owned by Vasco, Mr. Hunt would be the
beneficial owner of 17.7% of our common stock and all officers and directors
would be the beneficial owners of 45.8% of our common stock.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Mr. Michael P. Dubreuil holds the position of chairman and chief
executive officer of Dolfin.com Inc, Secured Services, Inc has loaned
Dolfin.com, Inc and its subsidiaries a total of $1,543,000 as at December 31,
2004. This loan is secured by 500,000 shares of Secured Services, Inc. common
stock. In December 2004 we wrote the loan down $600,000 to the value of the
shares held as security.

         Mr. T. Kendall Hunt holds the position of Chief Executive Officer of
Vasco Data Security International, Inc,. Vasco Data Security International, Inc
holds 2,000,000 preferred shares of Secured Services, Inc. which they obtained
when they sold the Identiprise product.

                                       25
<PAGE>

ITEM 13.  EXHIBITS

(a) Exhibits

The following exhibits are filed herewith

    EXHIBIT
       NO.                             DESCRIPTION
    -------                            -----------

       2.1         Agreement and Plan of Merger (1)

       3.1         Certificate of Amendment(1)

       3.2         Certificate of Merger(1)

       3.2         By-Laws(2)

       4.1         Form of Common Stock(5)

       4.2         Form of Series A Convertible Preferred Stock(5)

       4.3         Form of Common Stock Purchase Warrant from November 2003
                   private placement of units to accredited investors (included
                   in Exhibit 10.5)(5)

       4.4         Form of Common Stock Purchase warrant, dated May 10, 2004,
                   between Secured and institutional and accredited investors(6)

      10.1         Form of Securities Purchase Agreement from November 2003
                   private placement of Units to accredited investors(5)

      10.2         2003 Incentive Stock Option Plan(5)

      10.2a        Amendment to the 2003 Incentive Stock Option Plan*

      10.3         Form of Incentive Stock Option Agreement(included in Exhibit
                   10.2)(5)

      10.4         Form of Non-Qualified Stock Option Agreement(included in
                   Exhibit 10.2)(5)

      10.5         Form of Warrant Agreement from November 2003 private
                   placement of Units to accredited investors(5)

      10.6         Lock-up/Leak-out Agreement from November 2003 private
                   placement of Units to accredited investors(5)

      10.7         Form of Subscription Agreement, dated as of May 7, 2004,
                   between Secured and institutional and accredited investors(6)

      10.8         Form of Registration Rights Agreement, dated as of May 7,
                   2004, between Secured and institutional and accredited
                   investors(6)

      10.9         Form of the Letter of Intent for the purchase of Chameleon
                   Communications Technology, Inc. dated January 24, 2005.*

      10.10        Form of the Letter of Intent for the purchase of Allegent
                   Technology Group, Inc. dated January 24, 2005.*

      14.1         Code of Ethics(5)

      16.1         Letter from Grant Thornton  LLP dated August 14, 2003 (3)

      20.1         Notification to Secured Services, Inc. stockholders of
                   appointment of 3 new directors to the Board of Directors (4)

      21.1         Subsidiaries*

      31.1         Chief Executive Officer Certification pursuant to section 302
                   of the Sarbanes-Oxley Act of 2002*

      31.2         Chief Financial Officer Certification pursuant to section 302
                   of the Sarbanes-Oxley Act of 2002*

      32.1         Chief Executive Officer Certification pursuant to section 906
                   of the Sarbanes-Oxley Act of 2002*

      32.2         Chief Financial Officer Certification pursuant to section 906
                   of the Sarbanes-Oxley Act of 2002*

----------------------------
*Included herewith

     (1)  Previously filed as an Exhibit 2.1, on August 4, 2003 in the
          Registrant's initial Current Report on Form 8-K and incorporated
          herein by reference.

     (2)  Previously filed as an Exhibit with the same number, on the
          Registrant's Quarterly Report for the period ended September 30, 2004
          and incorporated herein by reference.

                                       26
<PAGE>

     (3)  Previously filed as an Exhibit 16.1, on August 14, 2003 in the
          Registrant's initial Current Report on Form 8-K and incorporated
          herein by reference.

     (4)  Filed on September 4, 2003 by Schedule 14F Information Statement.

     (5)  Filed as an exhibit to the Annual Report on Form 10KSB for the period
          ended December 31, 2003 and incorporated herein by reference.

     (6)  Filed as an exhibit on May 14, 2004 in the Registrant's Current Report
          on Form 8-K and incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES

       The aggregate fees billed by our principal independent registered public
accounting firm, J.H. Cohn LLP, for fees billed for fiscal years ended December
31, 2004 and 2003 are as follows:

                                          2004                   2003
                                     --------------         ---------------
Audit fees                               $116,900               $ 56,500
Audit related fees                         34,000                 16,000
                                     --------------         ---------------
TOTAL AUDIT AND AUDIT RELATED FEES        150,900                 72,500
Tax fees                                   17,400                     --
All other fees                                 --                     --
                                     --------------         ---------------

TOTAL FEES                               $168,300                $72,500
                                     ==============         ===============
AUDIT-RELATED FEES

         The Audit-Related Fees set forth in the table above consist primarily
of consulting on regulatory filings, acquisition audits of Cybrix Corporation,
and consulting and research on specific accounting issues that pertained to our
on-going operations and the audit, including, technical research associated with
revenue recognition, preferred and common financings, and purchase accounting
rules.

TAX FEES

         The Tax Fees set forth in the table above are the aggregate fees paid
by us for tax services including, the preparation of corporate tax returns.

ALL OTHER FEES

         All Other Fees were zero for the periods presented.

         Each of the permitted non-audit services has been pre-approved by the
Audit Committee or the Audit Committee's Chairman pursuant to delegated
authority by the Audit Committee, other than de minimus non-audit services for
which the pre-approval requirements are waived in accordance with the rules and
regulations of the SEC.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

         The Audit Committee charter provides that the Audit Committee will
pre-approve audit services and non-audit services to be provided by our
independent auditors before the accountant is engaged to render these services.
The Audit Committee may consult with management in the decision-making process,
but may not delegate this authority to management. The Audit Committee may
delegate its authority to pre-approve services to one or more committee members,
provided that the designees present the pre-approvals to the full committee at
the next committee meeting.

                                       27
<PAGE>


                                   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.

                                       Secured Services, Inc.

                                       by: /s/ King T. Moore
                                       -------------------------------
                                       King T. Moore
                                       President and Chief Executive Officer


Dated: April 8, 2005

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates shown.

         SIGNATURE                      DATE                      TITLE
         ---------                      ----                      -----

/s/ King Moore                     April 12, 2005       Chief Executive Officer
-------------------------                               (Principal Executive
      King Moore                                        Officer)

/s/ John Day                       April 12, 2005       Chief Financial Officer
-------------------------                               (Principal Accounting
      John Day                                          Officer)

/s/ Michael P. Dubreuil            April 12, 2005       Director
-------------------------
      Michael P. Dubreuil

/s/ T. Kendall Hunt                April 12, 2005       Director
-------------------------
      T. Kendall Hunt

/s/ Shawn Kreloff                  April 12, 2005       Director
-------------------------
      Shawn Kreloff




                                       28

<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

                                                                            PAGE

Report of Independent Registered Public Accounting Firm ................... F-2

Consolidated Balance Sheet
  December 31, 2004........................................................ F-3

Consolidated Statements of Operations
  Year ended December 31, 2004 and the period from April 28, 2003
  (date of inception) to December 31, 2003 ................................ F-4

Consolidated Statements of Changes in Stockholders' Equity
  Year ended December 31, 2004 and the period from April 28, 2003
  (date of inception) to December 31, 2003 ...............................F-5/6

Consolidated Statements of Cash Flows
  Year ended December 31, 2004 and the period from
  April 28, 2003 (date of inception) to December 31, 2003.................. F-7

Notes to Consolidated Financial Statements ...............................F-8/26




                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Secured Services, Inc.

We have audited the accompanying consolidated balance sheet of Secured Services,
Inc. and  Subsidiaries  as of December 31,  2004,  and the related  consolidated
statements of operations, changes in stockholders' equity and cash flows for the
year  ended  December  31,  2004 and the  period  from  April 28,  2003 (Date of
Inception) to December 31, 2003. 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 audit to obtain  reasonable  assurance  about  whether the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Secured Services,
Inc. and  Subsidiaries  as of December 31, 2004, and their results of operations
and cash flows for the year ended  December  31,  2004 and the period from April
28, 2003 (Date of Inception) to December 31, 2003, in conformity with accounting
principles generally accepted in the United States of America.


                                                    /s/ J.H. Cohn LLP

Roseland, New Jersey
March 31, 2005



                                      F-2
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                December 31, 2004

<TABLE>
<CAPTION>
                                            ASSETS

Current assets:
<S>                                                                                             <C>
     Cash and cash equivalents                                                                  $1,607,777
     Certificate of deposit                                                                        218,051
     Accounts receivable, net of allowance for doubtful
         accounts of $93,750                                                                       518,183
     Note receivable - employee                                                                     38,000
     Due from stockholders                                                                          32,800
     Prepaid expenses and other current assets                                                     123,357
                                                                                                ----------
              Total current assets                                                               2,538,168

Loans receivable from related parties                                                              945,281
Computer  equipment, net of accumulated depreciation of
     $61,258                                                                                       146,656
Goodwill                                                                                         2,808,429
Other intangible assets, net of accumulated amortization
     of $360,000                                                                                   717,465
                                                                                                ----------
              Total                                                                             $7,155,999
                                                                                                ==========
                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of note payable                                                           $   355,494
     Accounts payable                                                                              328,314
     Accrued expenses                                                                            1,123,480
     Deferred revenues                                                                             108,173
                                                                                                ----------
              Total current liabilities                                                          1,915,461

Dividends payable in common stock                                                                   34,425
Note payable, net of current portion                                                               230,735
                                                                                                ----------
              Total liabilities                                                                  2,180,621
                                                                                                ----------

Commitments and contingencies

Stockholders' equity:
     Preferred stock; par value $.0001 per share; 5,000,000 shares authorized;
         2,000,000 shares of Series A convertible preferred stock issued and outstanding               200
     Common stock; par value $.0001 per share; 50,000,000 shares
         authorized; 17,378,836 shares issued and outstanding                                        1,738
     Additional paid-in capital                                                                 12,465,943
     Subscriptions receivable for 768,000 shares                                                  (576,000)
     Accumulated deficit                                                                        (6,953,151)
     Accumulated other comprehensive income                                                         36,648
                                                                                                ----------
              Total stockholders' equity                                                         4,975,378
                                                                                                ----------

         Total                                                                                  $7,155,999
                                                                                                ==========
</TABLE>

                See Notes to Consolidated Financial Statements.


                                      F-3
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
         YEAR ENDED DECEMBER 31, 2004 AND THE PERIOD FROM APRIL 28, 2003
                    (DATE OF INCEPTION) TO DECEMBER 31, 2003

                                                                 Period From
                                                               April 28, 2003
                                               Year Ended    (date of inception)
                                             Dec. 31, 2004    to Dec. 31, 2003
                                             -------------   -------------------
Revenues - sales and services                 $2,193,999         $1,023,995

Cost of revenues                               1,036,617            334,480
                                             -----------        -----------

Gross profit                                   1,157,382            689,515
                                             -----------        -----------

Operating expenses:
         Selling, general and administrative   4,822,025          1,359,252
         Research and development              1,181,413            184,216
         Depreciation of computer equipment       47,200             13,103
         Amortization of intangible assets       267,778            120,000
         Charge for impairment of loans
         from related parties                    600,000                  0
                                             -----------        -----------

         Totals                                6,918,416          1,676,571
                                             -----------        -----------

Loss from operations                          (5,761,034)          (987,056)
                                             -----------        -----------
Interest income                                  (47,198)            (2,158)
Interest expense                                  43,370             31,047
                                             -----------        -----------
         Net interest (income) expense            (3,828)            28,889
                                             -----------        -----------

Net loss                                      (5,757,206)        (1,015,945)

Preferred stock dividend requirements            120,000             60,000
                                             -----------        -----------

Net loss applicable to common stock          $(5,877,206)       $(1,075,945)
                                             ===========        ===========

Loss per common share - basic and diluted         $(0.45)            $(0.17)
                                             ===========        ===========

Weighted average common shares outstanding    13,196,336          6,232,304
                                             ===========        ===========


                See Notes to Consolidated Financial Statements.


                                      F-4
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
         YEAR ENDED DECEMBER 31, 2004 AND THE PERIOD FROM APRIL 28, 2003
                    (DATE OF INCEPTION) TO DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                SERIES A
                               CONVERTIBLE
                             PREFERRED STOCK        COMMON STOCK     ADDITIONAL                                  OTHER
                            -----------------     ----------------    PAID-IN   SUBSCRIPTIONS  ACCUMULATED   COMPREHENSIVE
                            SHARES     AMOUNT     SHARES    AMOUNT    CAPITAL    RECEIVABLE      DEFICIT         INCOME      TOTAL
                            ------     ------     ------    ------   ---------- -------------  -----------   ------------- --------
<S>                        <C>          <C>     <C>          <C>     <C>        <C>           <C>              <C>        <C>
Proceeds from
  the issuance of
  shares to founders                            3,900,000    $390    $     (90)                                          $      300

Shares issued in
  connection with
  acquisition of Vacman    2,000,000    $200                         1,999,800                                            2,000,000

Shares issued in
  connection with
  acquisition of Dolfin                           500,000      50      374,950                                              375,000

Effects of reverse
  acquisition                                     508,934      51     (128,749)                                            (128,698)

Shares sold through
  private placements,
  net of expenses of
  $210,341                                      3,968,766     397    2,105,837  $(525,000)                                1,581,234

Shares issued in
  exchange for
  services                                        384,004      38      287,965                                              288,003

Dividends declared
  on preferred
  stock                                                                                       $   (60,000)                  (60,000)

Shares issued for
  partial payment
  of dividends on
  preferred stock                                  16,305       2       26,575                                               26,577

Shares issued for
  charitable
  contributions                                    21,714       2       16,283                                               16,285

Net loss                                                                                       (1,015,945)               (1,015,945)

Foreign currency
  translation
  adjustments                                                                                                $4,455           4,455
                           ---------    ----    ---------    ----   ----------  ---------     -----------    ------      ----------
Balance,
  December 31, 2003        2,000,000    $200    9,299,723    $930   $4,682,571  $(525,000)    $(1,075,945)   $4,455      $3,087,211

</TABLE>



                                      F-5
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
         YEAR ENDED DECEMBER 31, 2004 AND THE PERIOD FROM APRIL 28, 2003
                    (DATE OF INCEPTION) TO DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                SERIES A
                               CONVERTIBLE                                                                    ACCUMULATED
                             PREFERRED STOCK        COMMON STOCK     ADDITIONAL                                  OTHER
                            -----------------     ----------------    PAID-IN   SUBSCRIPTIONS  ACCUMULATED   COMPREHENSIVE
                            SHARES     AMOUNT     SHARES    AMOUNT    CAPITAL    RECEIVABLE      DEFICIT         INCOME      TOTAL
                            ------     ------     ------    ------   ---------- -------------  -----------   ------------- --------
<S>                        <C>          <C>     <C>          <C>     <C>        <C>           <C>              <C>        <C>
Shares sold through
  private placements,
  net of costs
  of $934,980                                   7,831,090     783    7,413,097   (792,100)                                6,621,780

Payment and offsets                                                               741,100                                   741,100

Dividends declared
  on preferred stock                                                                             (120,000)                 (120,000)

Shares issued for
  payment of
  accrued dividends on
  preferred stock                                  67,823       7      119,993                                              120,000

Shares issued
  in exchange
  for services                                     55,200       5       62,795                                               62,800

Shares issued
  in connection
  with business
  acquisition                                     125,000      13      187,487                                              187,500

Net loss                                                                                       (5,757,206)               (5,757,206)

Foreign currency
  translation
  adjustments                                                                                                32,193          32,193
                           ---------    ----    ---------    ----   ----------  ---------     -----------    ------      ----------

Balance,
  December 31, 2004        2,000,000    $200   17,378,836  $1,738  $12,465,943  $(576,000)    $(6,953,151)   $36,648     $4,975,378
                           =========    ====   ==========  ======  ===========  =========     ===========    =======     ==========
</TABLE>



                See Notes to Consolidated Financial Statements.


                                      F-6
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                YEAR ENDED DECEMBER 31, 2004 AND THE PERIOD FROM
             APRIL 28, 2003 (DATE OF INCEPTION) TO DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                                                                                    April 28, 2003
                                                                                Year Ended        (date of inception)
                                                                               Dec. 31, 2004       to Dec. 31, 2003
                                                                               -------------      -------------------
<S>                                                                             <C>                  <C>
Operating activities:
     Net loss                                                                   $(5,757,206)         $(1,015,945)
     Adjustments to reconcile net loss to net cash used in
         Operating activities:
         Depreciation                                                                47,200               13,103
         Amortization of intangible assets                                          267,778              120,000
         Provision for bad debts                                                     61,350               32,400
         Deferred revenues                                                           69,801              (55,417)
         Common stock issued for services and charitable contribution                62,800              304,288
         Charge for impairment of loans receivable from related parties             600,000
         Changes in operating assets and liabilities:
                  Accounts receivable                                              (137,329)            (277,735)
                  Prepaid expenses and other current assets                        (101,413)             (22,258)
                  Accounts payable                                                  (15,563)              74,210
                  Accrued expenses                                                1,295,604              152,624
                                                                                -----------          -----------
                       Net cash used in operating activities                     (3,606,978)            (674,730)
                                                                                -----------          -----------
Investing activities:
     Purchase of intangible asset                                                  (200,000)
     Purchase of certificate of deposit                                            (218,051)
     Loans to related parties, net                                               (1,082,879)            (471,112)
     Loan to employee                                                               (38,000)
     Loans to stockholders, net                                                     (18,128)             (14,900)
     Purchases of computer equipment                                               (129,604)              (6,273)
                                                                                -----------          -----------
                       Net cash used in investing activities                     (1,686,662)            (492,285)
                                                                                -----------          -----------
Financing activities:
     Repayments of note payable                                                    (349,093)            (212,772)
     Proceeds from loan payable to stockholder                                      250,050                    0
     Repayment of loan payable to stockholder                                      (250,050)                   0
     Proceeds from issuance of common stock to founders                                                      300
     Proceeds from private placements of common stock, net                        6,621,780            1,581,234
     Proceeds from subscriptions receivable for common stock                        391,100                    0
                                                                                -----------          -----------
                       Net cash provided by financing activities                  6,663,787            1,368,762
                                                                                -----------          -----------
Effect of foreign currency translation on cash                                       33,953                1,930
                                                                                -----------          -----------
Net increase in cash and cash equivalents                                         1,404,100              203,677
Cash and cash equivalents, beginning of period                                      203,677
                                                                                -----------          -----------
Cash and cash equivalents, end of period                                        $ 1,607,777          $   203,677
                                                                                ===========          ===========
Supplementary disclosure of cash flow information:
     Interest paid                                                              $    43,370          $    31,047
                                                                                ===========          ===========
</TABLE>

                See Notes to Consolidated Financial Statements.


                                      F-7
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organization and basis of presentation:

           On July 18, 2003,  Secured Services,  Inc. ("SSI") completed a merger
           (the  "Merger")  with  Southern  Software  Group,  Inc.  ("SSGI"),  a
           publicly-held  company with no operating  business  activities  as of
           that date. SSI was a  privately-held  company that had been formed on
           April  28,  2003 to  acquire  two  operating  businesses.  SSI had no
           operating  business  activities until it completed those acquisitions
           on, effectively,  July 18, 2003 as described below and in Note 3. The
           Merger was effected  pursuant to an Agreement and Plan of Merger (the
           "Merger  Agreement")  that was also  executed on July 18, 2003 by and
           between SSGI,  SSGI  Acquisition  Corp.  ("Newco"),  a  newly-formed,
           wholly-owned  subsidiary  of SSGI,  and SSI.  Pursuant  to the Merger
           Agreement,  Newco merged with and into SSI; SSI became the  surviving
           corporation; SSI changed its name to SSI Operating Corp.; SSGI became
           authorized to issue shares of Series A Convertible  Preferred  Stock;
           and SSGI changed its name to Secured Services, Inc.

           SSGI  issued  shares  of common  and  voting  preferred  stock to the
           stockholders  of SSI in order to complete  the  Merger.  Prior to the
           completion  of the  Merger,  SSGI had 508,934  outstanding  shares of
           common  stock.  Following  the  closing of the Merger,  the  combined
           companies  had  6,996,271  outstanding  shares  of  common  stock and
           2,000,000 outstanding shares of Series A Convertible Preferred Stock,
           each of which  has  voting  rights  equivalent  to a share of  common
           stock. The stockholders of SSI before the Merger owned  approximately
           94%  and  the   stockholders   of  SSGI   before  the  Merger   owned
           approximately 6% of the voting  securities of the combined  companies
           following the closing of the Merger.

           As conditions for the  completion of the Merger,  SSI was required to
           have  consummated the acquisition of the operating assets related to,
           and the business  operations of, the VACMAN  Enterprise  product line
           ("Vacman") of Vasco Data Security International,  Inc. ("Vasco"), the
           acquisition of certain assets related to, and the business operations
           of, Dolfin.com,  Inc. ("Dolfin") and a private offering of its common
           stock from which it would have  received at least  $1,000,000.  Those
           acquisitions  and the private  placement  were also  completed  on or
           about July 18, 2003 (see Notes 3 and 7).  Vacman  designs,  develops,
           markets and supports  security products and services that manage user
           access  and  single   sign-on  to  web,   client/server   and  legacy
           applications  in one  integrated  system for corporate and government
           customers. Dolfin markets and supports security products and services
           that manage data  security  across  integrated  systems of  corporate
           customers.

           Since the stockholders of SSI received a substantial  majority of the
           voting  securities  of the merged  companies and SSI had acquired the
           operating  businesses,  the Merger was accounted for, effective as of
           July 18,  2003,  as a "reverse  acquisition"  in which SSI (the legal
           acquiree) was the accounting  acquirer and SSGI (the legal  acquirer)
           was the  accounting  acquiree.  Since SSGI was inactive,  the reverse
           acquisition was accounted for effectively,  as a recapitalization  of
           SSI as of July 18, 2003 with SSGI's assets and  liabilities  recorded
           at their  historical  carrying values which  approximated  their fair
           values.


                                      F-8
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organization and business operations (continued):

       The  acquisitions  of the  businesses  of  Vacman  and  Dolfin  were also
       accounted for as purchases by SSI under accounting  principles  generally
       accepted in the United States of America and,  accordingly,  their assets
       and  liabilities  were  recorded  as of the  acquisition  date  at  their
       respective  fair values.  Under the purchase  method of  accounting,  the
       results of operations  of SSGI,  Vacman and Dolfin were combined with the
       results of operations of SSI commencing on July 1, 2003, which was deemed
       to be the  effective  date for the  completion  of the  acquisitions  for
       accounting purposes. Accordingly, the results of operations prior to July
       1, 2003 only  reflect the results of SSI from its  inception on April 28,
       2003.

       On November 1, 2004 SSI completed the  acquisition of Cybrix  Corporation
       ("Cybrix"),  a company  registered in Minnesota,  operating as a security
       services  company (see Note 3). The acquisition of this business was also
       accounted  for as purchase by SSI and the results of operations of Cybrix
       were  combined  with the  results  of  operations  of SSI  commencing  on
       November  1,  2004,  which was  deemed to be the  effective  date for the
       completion of the acquisition for accounting purposes.

       As used herein,  the "Company" refers to SSI prior to July 1, 2003 and to
       SSI and its subsidiaries thereafter.

       The Company is an information  security  company which  provides  Secured
       User  Management  Software  for  the  entire  enterprise.  The  Company's
       customers manage complex application access for employees, suppliers, and
       their  customers.   Customers  must  manage  operational  risk  and  meet
       regulatory  compliance  requirements.  Customers work within a complex IT
       infrastructure   developed   over  decades  and  made  up  of  mainframe,
       client/server and web-based applications.

       The  Company's  revenues  are derived  primarily  from its core  product,
       Identiprise(TM).   The  Identiprise(TM)   Suite  was  designed  from  its
       inception to provide  comprehensive  Secured User  Management  across the
       corporation. The Identiprise Suite enables users to have secure access to
       corporate  applications with one unique  organizational  identifier while
       providing a detailed audit of all their activities.  Functionality of the
       Suite includes:

       o    Consolidated user account creation or deletion to assigned
            applications.

       o    Simplified and distributed administration.

       o    Detailed usage logs for risk management and compliance reporting.

       o    Rapid installation and implementation without impact to
            applications.

       o    Significantly reduced user management costs.

       The Company's  Advanced User Security Group provides project  management,
       training and services to ensure a  non-disruptive,  on-time and on-budget
       installation of the Secured User Management solution. Services include:

       o    Understanding their regulatory and security requirements.

       o    Setting appropriate policies.

       o    Developing plans and budgets to support the implementation of an
            enterprise wide Secured User Management solution.


                                      F-9
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Organization and business operations (concluded):

         The Company's products are generally sold on a perpetual license basis.
         Customers  enter into an annual  support  agreement for their  software
         license  at the time of  initial  purchase  and  typically  renew  this
         support agreement annually. The support agreement entitles customers to
         software  upgrades and support.  The  Company's  professional  services
         group provides  customers  with project  management,  architecture  and
         design, custom development services and training.

Note 2 - Summary of significant accounting policies:

     Principles of consolidation:

         The accompanying consolidated financial statements include the accounts
         of SSI and its wholly-owned subsidiaries.  All significant intercompany
         accounts and transactions have been eliminated in consolidation.

     Use of estimates:

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

     Cash equivalents:

         The Company considers all highly liquid  investments with a maturity of
         three months or less when purchased to be cash equivalents.

     Software development cost:

         Pursuant to the  Statement of Financial  Accounting  Standards  No. 86,
         "Accounting  for the Cost of Computer  Software  to be Sold,  Leased or
         Otherwise  marketed,"  the  Company is  required to charge the costs of
         creating  a  computer  software  product to  research  and  development
         expense as incurred until the technological  feasibility of the product
         has been established;  thereafter, all related software development and
         production costs are required to be capitalized.

         Commencing upon the initial release of a product,  capitalized software
         development  costs  and any costs of  related  purchased  software  are
         generally  required to be amortized over the estimated economic life of
         the  product  on the basis of current  and  estimated  future  revenue.
         Thereafter,   capitalized  software  development  costs  and  costs  of
         purchased  software  are reported at the lower of  unamortized  cost or
         estimated  net  realizable  value.  Due to the  inherent  technological
         changes in the software development industry,  estimated net realizable
         values or economic lives may decline and, accordingly, the amortization
         period may have to be accelerated.

         The Company did not  capitalize any software  development  costs during
         the year ended  December  31,  2004 and the period  from April 28, 2003
         (date of inception) to December 31, 2003.


                                      F-10
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of significant accounting policies (continued):

     Computer equipment:

         Computer equipment is stated at cost. Deprecation is provided using the
         straight-line  method over the  estimated  useful life of such computer
         equipment of three years.

     Goodwill:

         Goodwill is comprised of the excess of the costs of acquired businesses
         over the fair  value of their net  assets at the dates of  acquisition.
         Pursuant  to  the  provisions  of  Statement  of  Financial  Accounting
         Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142").
         Under SFAS 142,  goodwill is deemed to have an  indefinite  useful life
         and is no  longer  systematically  amortized.  Instead  it is tested at
         least annually for impairment.

     Other intangible assets:

         Costs of acquiring  customer lists,  technology and license  agreements
         are  capitalized.  Amortization  is  provided  using the  straight-line
         method over the estimated useful lives of such assets of three years.

     Recognition of impairment:

         Goodwill  represents  the  excess  of cost  over the fair  value of net
         assets of an acquired  business.  Under SFAS 142, goodwill is deemed to
         have an indefinite life and is no longer subject to amortization but is
         tested instead for impairment  annually under a two-step  approach,  or
         more frequently,  if events or changes in  circumstances  indicate that
         the asset might be impaired.

         Impairment is assessed at the "reporting unit" level by applying a fair
         value-based  test.  A reporting  unit is defined as the same as, or one
         level below,  the operating  segment level as described in Statement of
         Financial Accounting Standards No. 131,  "Disclosures about Segments of
         an Enterprise and Related Information" ("SFAS 131"). Under the two-step
         approach,  the carrying  amount of the reporting  unit is compared with
         its fair value.  If the  carrying  amount  exceeds its fair value,  the
         "implied"  fair value (as defined in SFAS 142) of the reporting  unit's
         goodwill is compared with its carrying  amount to measure the amount of
         the impairment  loss, if any. When the carrying amount of the reporting
         unit's  goodwill  exceeds the implied fair value, an impairment loss is
         recognized in an amount equal to such excess.

         Impairment losses on long-lived tangible and intangible assets which do
         not have indefinite useful lives, such as computer equipment,  customer
         lists and  technology,  are  recognized  when events  indicate that the
         undiscounted  cash flows  estimated  to be generated by such assets are
         less than their  carrying  value and all or a portion of such  carrying
         value may not be  recoverable.  Impairment  losses are then measured by
         comparing the fair value of assets to their carrying amounts.


                                      F-11
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of significant accounting policies (continued):

     Foreign currency translation:

         The financial  statements  of the foreign  division of the Company have
         been  translated  into U.S.  dollars in  accordance  with  Statement of
         Financial Accounting  Standards No. 52, "Foreign Currency  Translation"
         ("SFAS 52").  Under SFAS 52, all balance sheet  accounts are translated
         at year-end  rates of exchange,  except for equity  accounts  which are
         translated  at  historical  rates.  Income  and  expense  accounts  are
         translated  at the average of the exchange  rates in effect  during the
         period. The resulting translation  adjustment is included as a separate
         component of stockholders'  equity and accumulated other  comprehensive
         income or loss. Realized foreign exchange transaction gains and losses,
         which are not material, are included in the results of operations.

     Revenue recognition:

         The Company applies the provisions of AICPA Statement of Position 97-2,
         "Software  Revenue  Recognition,"  as  amended,   which  specifies  the
         following four criteria that must be met prior to recognizing  revenue:
         (1)  there  must  be  persuasive   evidence  of  the  existence  of  an
         arrangement,  (2) delivery must be completed, (3) fees must be fixed or
         determinable  and (4)  collection  amounts  due  must be  probable.  In
         addition,  revenue earned on software  arrangements  involving multiple
         elements is allocated to each element  based on the relative fair value
         of  the  elements.  When  applicable,  revenue  allocated  to  software
         products (including specified upgrades/enhancements) is recognized upon
         delivery of the products.

     Income taxes:

         The  Company  accounts  for  income  taxes  pursuant  to the  asset and
         liability  method  which  requires   deferred  income  tax  assets  and
         liabilities to be computed annually for temporary  differences  between
         the financial  statement and tax bases of assets and  liabilities  that
         will  result in taxable or  deductible  amounts in the future  based on
         enacted  tax laws and  rates  applicable  to the  periods  in which the
         differences are expected to affect taxable income. Valuation allowances
         are  established  when  necessary to reduce  deferred tax assets to the
         amount  expected to be realized.  The income tax provision or credit is
         the tax payable or  refundable  for the period plus or minus the change
         during the period in deferred tax assets and liabilities.

     Concentrations of credit risk:

         Financial   instruments  which  potentially   subject  the  Company  to
         concentrations  of  credit  risk  consist  primarily  of cash  and cash
         equivalents and accounts receivable. The Company maintains its deposits
         of cash and cash equivalents with high-quality financial  institutions.
         At times,  the Company's cash balances exceed the amount insured by the
         Federal  Deposit  Insurance  Corporation  of $100,000.  At December 31,
         2004,  the  Company  had cash  and cash  equivalents  on  deposit  that
         exceeded the amount insured by approximately $1,627,000.

         At December 31, 2004,  the Company's  trade  accounts  receivable  were
         concentrated with four major customers  representing  approximately 99%
         of the total  accounts  receivable  balance.  Revenues  from these four
         customers  accounted for  approximately  99% of total  revenues for the
         year  ended  December  31,  2004,  and three  customers  accounted  for
         approximately  85% of total revenues for the period from April 28, 2003
         (date of inception) to December 31, 2003.


                                      F-12
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of significant accounting policies (continued):

         The Company generally extends credit to its customers without obtaining
         collateral.  The Company reduces its exposure to credit risk by closely
         monitoring the extension of credit to its customers  while  maintaining
         appropriate allowances for potential credit losses based on its history
         of past  write-offs  (including  periods prior to the  acquisitions  of
         Vacman and Dolfin),  current economic  conditions and its evaluation of
         the credit risk related to specific customers. Accordingly,  management
         does not believe  that the Company  was exposed to  significant  credit
         risk at December 31, 2004.

     Earnings (loss) per common share:

         The Company  presents  "basic" earnings (loss) per common share and, if
         applicable,  "diluted"  earnings  per  common  share  pursuant  to  the
         provisions of Statement of Financial  Accounting Standards ("SFAS") No.
         128,  "Earnings per Share".  Basic earnings  (loss) per common share is
         calculated by dividing net income or loss applicable to common stock by
         the weighted  average number of common shares  outstanding  during each
         period. The calculation of diluted earnings per common share is similar
         to that of basic  earnings per common  share,  except that the weighted
         average number of common shares outstanding is increased to include the
         number of additional  common shares that would have been outstanding if
         all potentially dilutive common shares, such as those issuable upon the
         exercise  of  stock   options  and  warrants  and  the   conversion  of
         outstanding convertible preferred stock, were issued during the period,
         with appropriate  adjustments for the application of the treasury stock
         method  with  respect  to  options  and  warrants  assumed to have been
         exercised and the elimination of any dividends on the preferred  shares
         assumed to have been converted from net income or loss.

         Since the Company had net losses for the year ended  December  31, 2004
         and the period from April 28, 2003 (date of  inception) to December 31,
         2003,  the assumed  effects of the  exercise  of options  and  warrants
         outstanding at December 31, 2004 and 2003 for the purchase of 4,289,118
         shared of common  stock at December  31, 2004 and  1,515,095  shares of
         common  stock at December  31,  2003 and the  conversion  of  2,000,000
         shares of  Series A  convertible  preferred  stock  into an  equivalent
         number of shares of common stock  December 31, 2004 and 2003 would have
         been anti-dilutive.

     Advertising:

         The  Company  expenses  the  cost  of  advertising  and  promotions  as
         incurred.  Advertising  cost charged to operations  were immaterial for
         the year ended  December  31,  2004 and the period  from April 28, 2003
         (date of inception) to December 31, 2003

     Research and development costs:

         The Company expenses research and development costs as incurred.


                                      F-13
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of significant accounting policies (continued):

     Stock-based compensation:

         SFAS No. 123,  "Accounting for Stock-Based  Compensation" ("SFAS 123"),
         provides  for the use of a fair value based  method of  accounting  for
         employee stock compensation. However, SFAS 123 also allows an entity to
         continue  to measure  compensation  cost for stock  options  granted to
         employees using the intrinsic value method of accounting  prescribed by
         Accounting  Principles  Board  Opinion  No. 25,  "Accounting  for Stock
         Issued to  Employees"  ("APB  25"),  which  only  requires  charges  to
         compensation  expense for the excess,  if any, of the fair value of the
         underlying  stock  at the  date a stock  option  is  granted  (or at an
         appropriate  subsequent  measurement date) over the amount the employee
         must pay to acquire the stock,  if such amounts differ  materially from
         the historical amounts.  The Company has elected to continue to account
         for employee  stock options using the intrinsic  value method under APB
         25. By making  that  election,  it is required by SFAS 123 and SFAS No.
         148,  "Accounting  for  Stock-Based   Compensation  --  Transition  and
         Disclosure"  ("SFAS 148"), to provide pro forma disclosures of net loss
         and loss per common share as if a fair value based method of accounting
         had been applied.

         Since the Company has  elected to continue to use the  intrinsic  value
         method of accounting  prescribed by APB 25 in accounting  for its stock
         options  granted  to  employees  and the  exercise  price of all of the
         options granted to employees has been equal to or greater than the fair
         market value at the date of grant,  no earned or unearned  compensation
         cost has been  recognized in the  accompanying  consolidated  financial
         statements  for stock  options  granted  to  employees.  The  Company's
         historical  net loss and net loss per  share and pro forma net loss and
         net  loss  per  share  applicable  to  common   stockholders   assuming
         compensation  cost had been  determined  based on the fair value of the
         options  at the date of grant and  amortized  over the  vesting  period
         consistent with the provisions of SFAS 123 is set forth below:

<TABLE>
<CAPTION>
                                                                                                       Period from
                                                                                                     April 28, 2003
                                                                                     Year Ended    (date of inception)
                                                                                   Dec. 31, 2004    to Dec. 31, 2003
                                                                                   -------------   -------------------

         <S>                                                                       <C>                  <C>
         Net loss applicable to common stockholder - as reported                   $(5,877,206)         $(1,075,945)
         Deduct total stock-based employee compensation
                     expense determined under a fair value based
                     method for all awards, net of related tax effects                  77,500               10,500
                                                                                   -----------          -----------
         Net loss applicable to common stockholder - pro forma                     $(5,954,706)         $(1,086,445)
                                                                                   ===========          ===========
         Net loss per common share:
                     Basic - as reported                                              $   (.45)               $(.17)
                                                                                      ========                =====
                     Basic - pro forma                                                $   (.45)               $(.17)
                                                                                      ========                =====
</TABLE>





                                      F-14
<PAGE>

                           SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of significant accounting policies (concluded):

         To determine pro forma net loss  applicable  to common stock,  the fair
         value of each option  granted was  estimated on the date of grant using
         the Black-Scholes  option-pricing model. The following weighted-average
         assumptions were used for determining the fair value of options granted
         during the year ended  December  31, 2004 and the period from April 28,
         2003 (date of inception) to December 31, 2003:

                                                                  Period from
                                                                April 28, 2003
                                               Year Ended    (date of inception)
                                              Dec. 31, 2004    to Dec. 31, 2003
                                              -------------  ------------------
                 Risk-free interest rates         5.25%            4%
                 Expected options lives           10 years         10 years
                 Expected volatility              35%              41%
                 Expected dividend yields         0%               0%

         As a result of  amendments to SFAS 123, the Company will be required to
         expense  the fair value of  employee  stock  options  over the  vesting
         period beginning with its fiscal quarter ending March 31, 2006.

         In accordance  with the provisions of SFAS 123, all other  issuances of
         common stock,  stock options or other equity  instruments  to employees
         and nonemployees as consideration for goods or services received by the
         Company  are  accounted  for  based  on the fair  value  of the  equity
         instruments issued (unless the fair value of the consideration received
         can be more  reliably  measured).  The  fair  value of any  options  or
         similar  equity  instruments  issued  will be  estimated  based  on the
         Black-Scholes  option-pricing model, which meets the criteria set forth
         in SFAS 123, and the assumption that all of the options or other equity
         instruments  will ultimately vest. Such fair value is measured as of an
         appropriate  date of pursuant to the  guidance in the  consensus of the
         emerging   Issues  Task  Force  (`EITR")  for  EITF  Issues  No.  96-18
         (generally, the earlier of the date of other party becomes committed to
         provide goods or services or the date performance by the other party is
         complete) and  capitalized  or expenses as if the Company had paid cash
         of the goods or services.



                                      F-15

<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Business acquisitions:

         As explained in Note 1, SSI completed the acquisition of certain assets
         and  the  business  of  Vacman  and  the   acquisition  of  Dolfin  on,
         effectively,  July 1, 2003.  The  acquisitions  were  accounted  for as
         purchases.  Accordingly,  the accompanying  consolidated  statements of
         operations  include the results of operations of Vacman and Dolfin from
         the date of acquisition.  The total cost for the purchase of Vacman was
         $3,073,094,  which was  comprised  of (i) a note issued to Vasco in the
         principal  amount of  $1,073,094  payable in 36  monthly  installments,
         including  interest  at 6%,  and  (ii)  2,000,000  shares  of  Series A
         convertible  preferred  stock issued to Vasco with an approximate  fair
         value of  $2,000,000,  or  $1.00  per  share.  The  total  cost for the
         purchase of Dolfin was $375,000,  which was comprised of the fair value
         of 500,000  shares of common  stock issued to the owners of Dolfin with
         an estimated fair value of $.75 per share.

         The total cost of the  acquisitions of Vacman and Dolfin was $3,448,094
         which was allocated to the identifiable  assets acquired (including the
         identifiable  intangible  assets of Vacman  comprised of customer lists
         and  technology)  and  liabilities  assumed of the acquired  businesses
         based on their  fair  values  with the excess of the cost over the fair
         value of the  identifiable  net assets  allocated  to goodwill as shown
         below:

<TABLE>
<CAPTION>
                                                             VACMAN           DOLFIN             TOTAL
                                                           -----------       ---------        -----------
                    <S>                                    <C>               <C>              <C>
                    Allocation of purchase price:
                        Accounts receivable                $   104,546       $  82,137        $   186,683
                        Computer equipment                      65,698           4,745             70,443
                        Goodwill                             2,287,396         521,033          2,808,429
                        Customer lists                         540,000                            540,000
                        Technology                             180,000                            180,000
                        Accounts payable                                      (214,702)          (214,702)
                        Accrued expenses                       (10,757)        (18,213)           (28,970)
                        Deferred revenues                      (93,789)                           (93,789)
                                                           -----------       ---------        -----------

                           Net assets acquired              $3,073,094        $375,000         $3,448,094
                                                           ===========       =========        ===========
</TABLE>

         As  explained  in  Note  1,  the  Company  effectively   completed  the
         acquisition  of the  business  of  Cybrix  on  November  1,  2004.  The
         acquisition  was  accounted  for as a purchase  and,  accordingly,  the
         accompanying  consolidated statements of operations include the results
         of Cybrix from the date of acquisition. The total cost for the purchase
         of Cybrix  was  $187,500,  which was paid by the  issuance  of  125,000
         shares of common stock with an estimated fair value of $1.50 per share.

         In  connection  with  services  rendered,  the  Company  issued  10,000
         warrants to purchase  common stock  exercisable at $1.96 per share to a
         consultant who assisted in the acquisition of Cybrix. The fair value of
         the warrants was immaterial.

         The purchase prices is subject to future upward adjustment from earnout
         provisions  based on certain  revenue and income  target levels and the
         achievement of certain agreed upon management objectives.  A maximum of
         175,000   additional   shares  of  the  Company's  common  stock  could
         potentially be issued as a result of the earnout provisions.


                                      F-16
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Business acquisitions (continued):

         The total  cost of the  acquisition  of  Cybrix  was  allocated  to the
         identifiable  tangible and  intangible  assets  acquired based on their
         fair values as shown below:

                                                                  Total
                                                               -----------
                    Allocation of purchase price:
                        Customer list                          $   185,243
                        Computer equipment                           2,257
                                                               -----------
                           Net assets acquired                 $   187,500
                                                               ===========

         Vacman,  Dolfin and Cybrix  were  acquired  for  noncash  consideration
         comprised of notes  payable and shares of preferred  and common  stock.
         Accordingly,  the acquisitions  were noncash  transactions that are not
         reflected in the accompanying consolidated statements of cash flows.

         The summarized  unaudited pro forma financial  information for the year
         ended  December  31,  2004 and the period  from April 28, 2003 (date of
         inception) to December 31, 2003 that follows  assumes the  acquisitions
         of Cybrix,  Vacman and Dolfin,  the Merger and the private placement of
         1,333,333 shares of common stock from which SSI received gross proceeds
         of $1,000,000 as required by the Merger  Agreement were all consummated
         on April 28, 2003:

<TABLE>
<CAPTION>
                                                                                                        Period from
                                                                                                      April 28, 2003
                                                                                Year Ended         (date of inception)
                                                                              Dec. 31, 2004          to Dec. 31, 2003
                                                                              -------------        -------------------

                    <S>                                                        <C>                     <C>
                    Revenues                                                   $ 3,255,738             $ 2,817,500
                    Cost of revenues                                             1,739,735               1,168,400
                                                                               -----------             -----------
                    Gross profit                                                 1,516,003               1,649,100
                    Operating expenses                                           7,364,460               3,363,000
                                                                               -----------             -----------
                    Loss from operations                                        (5,848,457)             (1,713,900)
                    Interest income (expense), net                                   3,829                 (89,700)
                                                                               -----------             -----------
                    Net loss                                                   $(5,844,628)            $(1,803,600)
                                                                               ===========             ===========
                    Net loss applicable to common stock                        $(5,877,000)            $(1,866,000)
                                                                               ===========             ===========
                    Loss per common share - basic and diluted                        $(.44)                  $(.26)
                                                                               ===========             ===========
                    Weighted average common shares outstanding                  13,290,503               7,246,600
                                                                               ===========             ===========
</TABLE>

         The unaudited  pro forma  results of  operations  for the year ended to
         December  31,  2004 and for the  period  from  April 28,  2003 (date of
         inception) to December 31, 2003, are not necessarily indicative of what
         the actual results of operations of the Company would have been had the
         acquisitions been consummated on April 28, 2003.


                                      F-17
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Other intangible assets:

         Other  intangible  assets consisted of the following as of December 31,
2004:

                                                  Estimated
                                                 Useful Lives           Amount
                                                 ------------         ----------
              Customer lists                         3 years            $725,243
              Technology                             3 years             180,000
              License agreement                      3 years             200,000
                                                                       ---------
                                                                       1,105,243
              Less accumulated amortization                              387,778
                                                                       ---------

                  Total                                                 $717,465
                                                                       =========

         On September 9, 2004, the Company  entered into a license  agreement to
         become a value added reseller of a software product and paid a one-time
         fee of $200,000 to the software developer.  The other intangible assets
         arose through the acquisitions described in Note 3.

         The estimated  amortization expense, based on the net carrying value of
         the  intangible  assets as of December 31, 2004,  for each of the three
         subsequent years is as follows:  $378,706 in 2005, $248,415 in 2006 and
         $90,344 in 2007.

Note 5 - Note payable:

         As  explained  in Note 3,  the  Company  issued  a note to  VASCO  Data
         International as part of the  consideration  for the purchase of Vacman
         (now  re-branded as Identiprise)  in the original  principal  amount of
         $1,073,094  that was  payable  in 36  monthly  installments,  including
         interest at 6%, through July 2006. The note is secured by the purchased
         assets.  The note had a  remaining  principal  balance of  $586,229  at
         December  31,  2004 which is payable in  subsequent  years as  follows:
         $355,494 in 2005 and $230,735 in 2006.

Note 6 - Related party transactions and balances:

         As of December 31, 2004,  the Company has made  aggregate cash advances
         of $1,545,281 to related companies in which a  founder/director  of the
         Company has an ownership interest.  The related companies have used the
         funds to pursue  litigation  to regain  certain  technology  consulting
         contracts  which they  believe  were  misappropriated  from  them.  The
         Company  owns  rights  to  purchase  the  contracts  from  the  related
         companies in exchange for its common stock.  The Company  believes that
         the contracts in question are lucrative,  and if the related  companies
         prevail in the  litigation,  the  Company  would seek to  exercise  its
         rights to obtain the contracts.

         The  advances  of  $1,545,281  are  evidenced  by two notes  receivable
         bearing interest at the rate of 6% per annum.  Interest only is payable
         monthly  with the entire  principal  balance and all accrued and unpaid
         interest due on April 1, 2006. The notes are  collateralized by 500,000
         shares of the  Company's  stock as well as  certain  other  proprietary
         intangible assets of the related companies.


                                      F-18
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Related party transactions and balances (continued):

         At December  31,  2004,  the Company  has made an  assessment  that the
         related companies do not have sufficient resources to continue pursuing
         the  litigation,  and possibly  will not have  sufficient  resources to
         continue operating if the litigation in process is not decided in their
         favor.  Based on the status of the  litigation,  the  Company  has also
         estimated that  subsequent to December 31, 2004, the related  companies
         may require  additional  funds of  approximately  $300,000 to carry the
         litigation to its conclusion.

         Consequently,  at December 31,  2004,  the Company has written down the
         notes receivable by $600,000 to $945,281,  an amount which approximates
         the estimated fair value of the collateral  that secures the notes.  In
         addition, the Company discontinued the accrual of interest.

         During the year ended  December  31,  2004,  the  Company  had sales of
         $238,752  to the  related  companies  referred  to above.  Sales to the
         related  companies  during  the  period  from  April 28,  2003 (date of
         inception) to December, 31, 2003 were $161,925.

         During  the year ended  December  31,  2004,  a  principal  stockholder
         charged a  consulting  fee to the Company in the amount of $350,000 for
         services  performed in connection with the private placement  completed
         by the Company on May 10, 2004 (see Note 7).

         A loan payable to a stockholder of $250,050 that arose from  borrowings
         during the three  months  ended  March 31,  2004 was repaid  during the
         three months ended June 30, 2004  together  with interest at 6%.

         During the year ended  December 31, 2004 the Company  loaned $38,000 to
         an  employee.  The  loan  is  evidenced  by a  promissory  note  and is
         scheduled to be repaid on September 30, 2005.  The loan bears  interest
         at 6%.

Note 7 - Stockholders' equity:

       Preferred stock:

           As of December 31, 2004,  the Company was  authorized  to issue up to
           5,000,000  shares of  preferred  stock with a par value of $.0001 per
           share.  Under the Company's  Articles of Incorporation,  the Board of
           Directors,  within certain  limitations and restrictions,  can fix or
           alter preferred  stock dividend  rights,  dividend rates,  conversion
           rights,  voting rights and terms of redemption,  including redemption
           prices and liquidation preferences.


                                      F-19
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Stockholders' equity (continued):

           During the period from April 28, 2003 (date of inception) to December
           31, 2003, the Company issued 2,000,000 shares of Series A convertible
           preferred  stock as part of the  consideration  for the purchase of a
           business  (see Note 3). Each share can be  converted  to one share of
           common stock and has voting rights similar to common stock.

           In addition, each share of Series A convertible preferred stock earns
           a  quarterly  dividend  of 6%  which  is  payable  in  shares  of the
           Company's  common  stock  based on the average  trading  price of the
           common stock over a specified period.

           The  Company  declared  dividends  of  $120,000  and  $60,000  on the
           outstanding  preferred  shares and issued a total of 67,823 shares of
           common  stock with a fair  value of  $120,000  and  16,305  shares of
           common stock with a fair value of $26,577 to pay dividends during the
           year ended December 31, 2004 and the period from April 28, 2003 (date
           of  inception)  to  December  31,  2003,  respectively.  Accordingly,
           dividends of $34,425 remained payable in common shares as of December
           31, 2004.

     Private placements of common stock and warrants:

            As a condition of the  consummation  of the Merger (see Note 1), the
            Company  completed  the sale of 1,333,333  shares of common stock at
            $.75  per  share  in  July  2003  and  received  gross  proceeds  of
            $1,000,000  through a private  placement  intended to be exempt from
            registration  under the  Securities  Act of 1933.  In addition,  the
            investors  received  warrants to purchase  333,333  shares of common
            stock that are exercisable at $1.50 per share through July 2006.

            The Company  incurred  $145,716  of costs in  connection  with,  and
            issued  580,000 shares of common stock and warrants for the purchase
            of  common  stock to  consultants  who  assisted  in,  this  private
            placement.  The warrants  are for the purchase of 170,000  shares of
            common  stock at prices  ranging  from $1.00 to $6.00 per share that
            are exercisable through July 2006.

            On December 23, 2003,  the Company sold  1,155,433  shares of common
            stock at $.75 per  share  through  a  private  placement  for  gross
            proceeds of $866,571.  In addition,  the investors received warrants
            to  purchase  385,143  shares of common  stock that are  exercisable
            through  December  2006 at $1.50 per  share.  The  Company  incurred
            $64,625 of costs in  connection  with this  private  placement.  The
            Company  received  proceeds  of  $791,571  from  the  sale  prior to
            December 31,  2003.  The  receivable  for the  remaining  balance of
            $75,000 was  included in  subscriptions  receivable  at December 31,
            2003 and paid in January 2004.

            On December  29, 2003,  the Company  sold  900,000  shares of common
            stock at $.50 per share  through a private  placement  and for gross
            proceeds of $450,000.  In addition,  the investors received warrants
            to  purchase  300,000  shares of common  stock that are  exercisable
            through  December  2006 at $1.50  per  share.  The  Company  did not
            received  any of the  proceeds  from the sale prior to December  31,
            2003 and,  accordingly,  the  receivable  for the entire  balance of
            $450,000 was included in  subscriptions  receivable  at December 31,
            2003.  A total of $100,000  was paid in February  2004.  The Company
            obtained  a note  receivable  for  $350,000  for the  balance of the
            proceeds.  The note bore  interest at 4% and was  originally  due on
            June 30, 2004.


                                      F-20
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Stockholders' equity (continued):

           During the year ended December 31, 2004 the Company sold common stock
           and  warrants  through two private  placements  intended to be exempt
           from registration under the Securities Act of 1933 (the "Act").

           The Company sold 599,489 units at $2.25 per unit, consisting of three
           shares  of common  stock and one  warrant  to  purchase  one share of
           common stock,  exercisable at $1.50 per share through March 2006. The
           Company also sold  1,346,156  units at $5.20 per unit,  consisting of
           four shares of common  stock and one warrant to purchase one share of
           common stock, exercisable at $1.96 per share through May 2009.

           In connection with the private  placements,  648,000 shares of common
           stock and 51,868  warrants  to  purchase  one share of common  stock,
           exercisable  at $1.50 per share  through  March 2006,  were issued to
           consultants who assisted in the private placements.

           In connection  with the purchase of Cybrix the Company issued 125,000
           shares of  common  stock in  exchange  for  certain  assets at a fair
           market value of $1.50 per share.

           The Company also issued  67,823  shares of common stock in payment of
           $90,000 of  dividends  payable  to Vasco and 60,000  shares of common
           stock as compensation to certain employees.

           As a result of the  transactions  during the year ended  December 31,
           2004, the Company issued a total of 7,831,090  shares of common stock
           and  warrants  to  purchase  1,997,513  shares  of  common  stock  in
           connection with the private  placements from which the gross proceeds
           were  $8,348,860.  The gross  proceeds  were  reduced to initial  net
           proceeds  of  $6,621,780  by  consulting  fees  and  other  costs  of
           $934,980, of which $350,000 was charged by a principal stockholder of
           the Company and paid through an offset against an equivalent  balance
           of a previously outstanding subscription receivable and by additional
           subscriptions receivable from purchasers of units of $792,100.

           Subscriptions  receivable  of $525,000  as of December  31, 2003 were
           increased  by  $792,100  from sales of units and  reduced by $741,100
           ($391,100  through  cash  payments  and  $350,000  through the offset
           against offering costs) during the year ended December 31, 2004. As a
           result,  the  Company  had  subscriptions  receivable  of $576,000 at
           December 31, 2004, which are offset against  stockholders'  equity in
           the accompanying consolidated balance sheet.

     Shares issued for services:
           During the  year ended  December 31, 2004,  the Company issued 55,200
           shares of common stock to key employees  for services and  recognized
           compensation expense of $62,800 based on the fair value of the shares
           issued.

           During the period  from April 28,  2003 to  December  31,  2003,  the
           Company  issued  384,004  shares of common stock to key employees for
           services  and  21,714   shares  of  common  stock  to  charities  and
           recognized  compensation  and  contribution  expenses of $288,003 and
           $16,285, respectively, based on the fair value of the shares issued.

           The  issuances  of the above shares were  noncash  transactions  and,
           accordingly,  they are not reflected in the accompanying consolidated
           statements of cash flows.


                                      F-21
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Stock options and warrants:

            In June 2003, the Company's Board of Directors  adopted,  subject to
            stockholder  approval,  a  stock  option  plan  (the  "Plan")  which
            provides   for  the  issuance  of   incentive   stock   options  and
            nonincentive  stock  options to  employees  of the  Company  for the
            purchase of up to  1,000,000  shares of common  stock at a price not
            less than the fair market  value of the shares on the date of grant,
            provided  that the  exercise  price of any  incentive  stock  option
            granted  to an  employee  owning  more  than 10% of the  outstanding
            common  shares  of the  Company  is not less  than  110% of the fair
            market  value of the  shares on the date of grant.  The term of each
            option and the manner of  exercise  are  determined  by the Board of
            Directors.  Employees  are fully  vested in the options  three years
            after the date of grant and the  options  are  exercisable  up to 10
            years after the date of the grant.

            During  the  period  from  April 28,  2003  (date of  inception)  to
            December 31, 2003, options to purchase 54,393 shares of common stock
            that were  outstanding  as of July 18,  2003 under an option plan of
            one of the acquired  businesses  (see Note 1) became options for the
            purchase of an  equivalent  number of shares of the Company  without
            any change in their exercise prices or expiration dates.

            A summary of stock option  activity for the year ended  December 31,
            2004 and the period  from  April 28,  2003  (date of  inception)  to
            December  31,  2003  related  to options  issued  under the Plan and
            options assumed from the acquired business follows:

<TABLE>
<CAPTION>
                                                                   Period from                  April 28, 2003
                                                                    Year Ended                (date of inception)
                                                                 December 31, 2004             December 31, 2003
                                                              ------------------------       -----------------------
                                                                              Weighted                     Weighted-
                                                                              Average                       Average
                                                                              Exercise                      Exercise
                                                              Shares           Price         Shares          Price
                                                              ------           -----         -------        --------
<S>                                                           <C>               <C>           <C>             <C>
     Outstanding, beginning of period                         326,619           $2.34

     Options of acquired companies
     assumed on July 18, 2003                                                                  54,393         $5.27

     Granted at fair value                                    888,500           $1.72         273,000         $1.75

     Forfeited                                               (117,722)          $2.56            (774)        $5.81
                                                             --------                        -------

     Outstanding, end of period                             1,097,397           $1.81         326,619         $2.34
                                                            =========                        ========

     Exercisable, end of period                               281,053           $2.11          53,619         $5.35
                                                            =========                        ========
</TABLE>





                                      F-22
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Stock options and warrants (concluded):

        The weighted average fair value of options granted during the year ended
        December 31, 2004 and the period from April 28, 2003 (date of inception)
        to December 31, 2003, was $1.72 and $1.75, respectively.

       The following table summarizes  information about the options outstanding
on December 31, 2004:

<TABLE>
<CAPTION>
                                        Options Outstanding                                        Options Exercisable
                     -------------------------------------------------------------------        --------------------------
                                                               Weighted
                                                               Average
                                                               Years of         Weighted                       Weighted
                            Range of                           Remaining         Average                       Average
                            Exercise                          Contractual        Exercise                      Exercise
                             Prices             Shares           Life            Price            Shares         Price
                     ----------------         ----------      -----------       ----------       ---------     ----------
                     <S>                       <C>             <C>              <C>              <C>            <C>
                     $1.00 to $2.00              979,500         9.46             $1.67            243,156        $1.72
                     $2.00 to $4.00              109,285         4.18              3.26             29,285         3.56
                     $4.00 to $6.00                3,428         8.45              4.12              3,428         4.12
                     $12.00 to $14.00              5,184         3.00             13.13              5,184        13.13
                                               ---------

                     $1.00 to $14.00           1,097,397                          $1.81            281,053        $4.81
                     ===============           =========                          =====            =======        =====
</TABLE>


A summary  of warrant  activity  for the year ended  December  31,  2004 and the
period from April 28, 2003 (date of inception) to December 31, 2003 follows:

<TABLE>
<CAPTION>
                                                                  Period from                   April 28, 2003
                                                                  Year Ended                  (date of inception)
                                                               December 31, 2004               December 31, 2003
                                                              -----------------------      -----------------------
                                                                             Weighted                     Weighted-
                                                                             Average                       Average
                                                                             Exercise                      Exercise
                                                              Warrants         Price       Warrants          Price
                                                              --------         -----       ---------      -------------
<S>                                                           <C>               <C>         <C>               <C>
     Outstanding, beginning of period                         1,188,476         $1.79

     Issued for services in connection with
      acquisition                                                10,000         $1.96

     Issues in connection with private
         placement (Note 7)                                   1,997,513         $1.81       1,188,476         $1.79

     Cancelled                                                   (4,268)        $1.50          -0-
                                                              ---------                     ---------

     Outstanding, end of period                               3,191,721         $1.81       1,188,476         $1.79
                                                              =========                     =========
</TABLE>



                                      F-23
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9 - Income taxes:

As of December 31, 2004,  the Company had  potential  future income tax benefits
from net  deferred  tax assets  which were  attributable  to the  effects of net
operating loss carryforwards and temporary differences as follows:

                  Deferred tax assets:
                      Net operating loss carry forwards:
                           United States                           $2,188,000
                           Canada                                     115,000
                      Amortization of intangible assets                40,000
                      Bad debts                                        24,000
                                                                   -----------
                               Total                                2,367,000

                  Deferred tax liabilities:
                      Depreciation                                    (20,000)
                                                                   -----------

                  Net deferred tax assets                           2,347,000
                  Less valuation allowance                         (2,347,000)
                                                                   -----------

                               Total                               $        -
                                                                   ==========

         The  Company had pre-tax  losses for  Federal and  Canadian  income tax
         purposes  for  the  year  ended  December  31,  2004  of  approximately
         $5,470,000  and $287,000,  respectively,  which  generated  Federal and
         Canadian net operating  loss  carryforwards  as of December 31, 2004 of
         approximately  $2,188,000  and $115,000,  respectively.  For the period
         from April 28, 2003 (date of  inception)  to  December  31,  2003,  the
         pre-tax  losses for  Federal  and  Canadian  income tax  purposes  were
         $982,000   and   $63,000,   respectively.   The  net   operating   loss
         carryforwards  are  available  to reduce  future  Federal and  Canadian
         taxable income through their expiration in 2024 and 2010, respectively.

         Due to the uncertainties related to the extent and timing of its future
         taxable  income,  the Company ffset the  potential  income tax benefits
         from its net deferred tax assets by an equivalent  valuation  allowance
         of  $2,347,000  as of December 31, 2004 and $407,000 as of December 31,
         2003.  As a result  of the  increases  in the  valuation  allowance  of
         $1,940,000  in the year ended  December  31, 2004 and  $407,000 for the
         period from April 28, 2004 (date of  inception)  to December  31, 2003,
         there are no credits for income  taxes  reflected  in the  accompanying
         consolidated  statements of operations to offset the Company's  pre-tax
         loss.

Note 10- Fair value of financial instruments:

         The Company's  financial  instruments at December 31, 2004 consisted of
         its cash and cash  equivalents,  trade accounts  receivable and payable
         and notes  receivable  and payables from (to) related  parties.  In the
         opinion of management,  the current instruments  described were carried
         at their  approximate fair values due to their liquidity and short-term
         maturities.

         The noncurrent  instruments,  primarily  loans  receivable from related
         parties,  in the opinion of management were carried at their fair value
         after being written down to an amount equal to the estimated fair value
         of their underlying collateral.


                                      F-24
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11- Operating leases:

         The Company  utilizes office and storage space under several  operating
         leases  that  expire at various  dates from July 31,  2006 to April 30,
         2010.

         Future minimum lease payments in years  subsequent to December 31, 2004
         and thereafter are as follows:

                  Year Ending
                  December 31,                       Amount
                  ------------                     ----------
                  2005                             $  280,949
                  2006                                310,460
                  2007                                289,134
                  2008                                212,631
                  2009                                147,137
                  Thereafter                           43,636
                                                   ----------

                    Total                          $1,283,947
                                                   ==========


Note 12- Other comprehensive income:

         The Company's  comprehensive  loss for the year ended December 31, 2004
         was  $5,725,013  which was comprised of its net loss of $5,757,206  and
         its other  comprehensive  income of $32,193 which was  attributable  to
         foreign currency translation adjustments.

         The Company's  comprehensive loss for the period from April 28, 2003 to
         December 31, 2003 was $1,011,490 which was comprised of its net loss of
         $1,015,945  and its other  comprehensive  income  of  $4,455  which was
         attributable to foreign currency translation adjustments.

Note 13- Segment and related information:

         The  Company's   operations   consist   principally  of  marketing  and
         supporting   security   products   across   integrated   systems   and,
         accordingly,  it operates in one industry segment.  The Company derived
         revenues of  approximately  $685,000 and $404,000 through the provision
         of services in Canada  during year ended  December 31, 2004 and for the
         period from April 28, 2003 to December 31, 2003, respectively. However,
         it had no material Canadian assets as of December 31, 2004 and 2003.


                                      F-25
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14- Letter of Intent:

         As of March 31, 2005,  we had entered  into  non-binding  Letters of
         Intent to acquire the  businesses  and certain  assets of two companies
         which our management  believes will  compliment  the Company's  current
         products and service  offerings.  If successful,  the acquisitions will
         involve the issuance of stock and cash.

         One of the Letters of Intent is for the purchase of a security software
         product company for an initial purchase price of approximately
         $17,000,000 which is to be paid in cash and stock. The purchase price
         will be subject to additionally payments based on an earnout
         calculation that is contingent upon the fulfillment of all of the
         seller's financial projections.

         The second Letter of Intent is for the purchase of a software security
         product company relating to wireless technology for a purchase price of
         approximately $6,250,000 which is to be paid in cash and stock.

         Consummation of both acquisitions will be subject to, among other
         things, the determination of the final terms of the agrements, the
         final approval of the Boards of Directors of both companies and the
         completion of our financing.

         As of March 31, 2005, the current structure of the aggregate purchase
         price for the two acquisitions will require us to pay $8,500,000 in
         cash with the remainder to be paid by the issuance of shares of common
         in stock. To finance the cash portion of the two acquisitions, the
         Company has obtained a non-binding commitment from a number of
         institutional investors to purchase shares of the Company's convertible
         preferred stock which we project will raise approximately $10,000,000
         in cash, $7,000,000 of which will be used to fund the two acquisitions
         with the balance to be used for working capital purposes. In addition,
         we have an on-going private placement of units (described below) to
         raise an additional $2,400,000 million in cash. If the Company is
         unsuccessful in obtaining all of the funds from these two proposed
         financing transactions and no other cash is raised, the Company
         believes that it will be able to renegotiate the structure of the
         acquisitions to take into account the actual cash raised.

         On March 7, 2005, we commenced a private  placement  whereby we were
         offering  400,000 units at $6.00 per unit, each unit consisting of four
         shares of common  stock and one warrant to purchase one share of common
         stock,  exercisable at $2.00 per share for the first year and for $2.50
         per share for the  subsequent  two years.  Through March 31, 2005,  the
         Company  sold  approximately  69,000  units from which it will  receive
         proceeds,  net of estimated offering costs, of approximately  $414,000.
         We cannot assure that we will be able to sell any additional units.

                                      F-26