**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




x
            Quarterly
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934


For
      the
      quarterly period ended September 30, 2008




or




 ̈
            Transition
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934


For
      the
      transition period from
                                 
to




**Commission
      File Number: 001-33354**




**Alpha
      Security Group Corporation**


**(Exact
      name of registrant as specified in its charter)**




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




**328
      West 77th Street**


**New
      York, New York 10024**


(Address
      of Principal Executive Offices) (Zip Code)




**212-877-1588**


(Registrant’s
      Telephone Number, Including Area Code)




Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.


Yes
x  No  ̈




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




Large
      Accelerated Filer  ̈ Accelerated Filer  ̈ Non-accelerated Filer (Do not check if a smaller reporting company)  ̈ Smaller
      reporting company x




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




There
      were 7,580,000 shares of the Registrant’s common stock issued and outstanding as
      of November 18, 2008.












**TABLE
      OF CONTENTS**





**Page
                No.****Part
                I**
            **Financial
                Information**
            **3**Item
                1
            Financial
                Statements
            3Condensed
                Balance Sheets as of September 30, 2008 (unaudited) and December
                31,
                2007
            3Condensed
                Statements of Income for the three and nine months ended September
                30,
                2008 and September 30, 2007 and for the period from April 20, 2005
                (inception) to September 30, 2008 (unaudited)
            4Condensed
                Statement of Stockholders’ Equity for the period from April 20, 2005
                (inception) to September 30, 2008
            5Condensed
                  Statements of Cash Flows for the nine months ended September 30,
                  2008 and
                  September 30, 2007 and from April 20, 2005 (inception) to September
                  30,
                  2008 (unaudited)
            6Notes
                to Condensed Financial Statements
            7Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            15Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            19Item
                4T.
            Controls
                and Procedures
            19**Part
                II.**
            **Other
                Information**
            **19**Item
                1.
            Legal
                Proceedings
            19Item
                1A.
            Risk
                Factors
            20Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            20Item
                3.
            Default
                Upon Senior Securities
            20Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            20Item
                5.
            Other
                Information
            20Item
                6.
            Exhibits
            20**Signatures**
            **21**


2




**PART
      I FINANCIAL INFORMATION**




**ITEM
      1. FINANCIAL STATEMENTS**




ALPHA
      GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




CONDENSED
      BALANCE SHEET





**September 30,**
              **2008**
            
            **December 31, 2007****(unaudited)****ASSETS**Current
                AssetsCash
            
            $
            27,146
            
            $
            8,726Investment
                in trust
                account
            
            
            60,681,893
            
            
            60,578,630Prepaid
                expenses &
                taxes
            
            
            19,963
            
            
            17,342Total
                current assets
            
            
            60,729,002
            
            
            60,604,698Deferred
                tax
                asset
            
            
            359,688
            
            
            150,220Property
&
equipment,
                net of
                depreciation
            
            
            6,839
            
            
            6,099Total
                assets
            
            $
            61,095,529
            
            $
            60,761,017**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                LiabilitiesAccounts
                payable and accrued
                expenses
            
            $
            149,685
            
            $
            75,235Income
                taxes
                payable
            
            
            61,571Deferred
                underwriting
                fees
            
            
            1,800,000
            
            
            1,800,000Notes
                payable -
                stockholders
            
            
            250,000
            
            
            250,000Total
                liabilities
            
            
            2,261,256
            
            
            2,125,235Common
                stock, subject to possible
                redemption,2,099,400
                shares, at redemption value of
                $9.70 per share
            
            
            20,364,180
            
            
            20,364,180CommitmentsStockholders'
                equityPreferred
                stock, $.0001 par
                value, authorized1,000,000
                shares, none
                issuedCommon
                stock, $.0001 par value,
                authorized30,000,000
                shares; issued and
                outstanding7,580,000
                shares, inclusive of 2,099,400
                shares
              subject
                to possible redemption, at
                September 30,
              2008
                and December 31,
                2007
            
            
            758
            
            
            758Additional
                paid-in
                capital
            
            
            37,488,281
            
            
            37,488,281Earnings
                accumulated during the
                development stage
            
            
            981,054
            
            
            782,563Total
                stockholders'
                equity
            
            
            38,470,093
            
            
            38,271,602Total
                liabilities and stockholders'
                equity
            
            $
            61,095,529
            
            $
            60,761,017




See
      accompanying notes to condensed financial statements


3




ALPHA
      GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




CONDENSED
      STATEMENT OF INCOME




For the period
              from April 20,For the
            
            2005Three months ended
            
            Nine months ended
            
            (inception) toSeptember 30,
              2008
            
            September 30,
              2007
            
            September 30,
              2008
            
            September 30,
              2007
            
            September 30,
              2008**(unaudited)**
            
            **(unaudited)**
            
            **(unaudited)**
            
            **(unaudited)**
            
            **(unaudited)**Interest
                and dividend income
            
            $
            294,461
            
            $
            663,210
            
            $
            1,164,094
            
            $
            1,434,335
            
            $
            3,258,624Formation
                and operating costs
            
            
            (244,115
            )
            
            (134,204
            )
            
            (668,991
            )
            
            (353,319
            )
            
            (1,208,292
            )Income
                before provision for income taxes
            
            
            50,346
            
            
            529,006
            
            
            495,103
            
            
            1,081,016
            
            
            2,050,331Provision
                for income taxes
            
            
            (49,547
            )
            
            (253,474
            )
            
            (296,612
            )
            
            (526,354
            )
            
            (1,069,277
            )Net
                income
            
            
            799
            
            
            275,532
            
            
            198,491
            
            
            554,662
            
            
            981,054Weighted
                average shares outstanding
            
            
            7,580,000
            
            
            7,580,000
            
            
            7,580,000
            
            
            5,689,890
            
            
            4,221,366Net
                income per share
            
            $
            0.00
            
            $
            0.04
            
            $
            0.03
            
            $
            0.10
            
            $
            0.23




See
      accompanying notes to condensed financial statements


4




ALPHA
      GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




CONDENSED
      STATEMENT OF STOCKHOLDERS EQUITY (DEFICIENCY)





For the period from April 20, 2005 (inception) to September 30, 2008Common stock
            
            Additional
              paid-in
            
            Earnings
              (deficit)
              accumulated
              during the
              development
            
            Stockholders’
              equityShares
            
            Amount
            
            capital
            
            stage
            
            (deficiency)Common
                shares issued
              July
                18, 2005 at
                $.0156
            
            
            1,600,000
            
            $
            160
            
            $
            24,840
            
            $
            —
            
            $
            25,000Net
                loss – 2005
            
            
            
            
            
            
            
            
            
            
            
            (11,140
            )
            
            (11,140
            )Balance
                – December 31, 2005
            
            
            1,600,000
            
            
            160
            
            
            24,840
            
            
            (11,140
            )
            
            13,860Net
                loss – 2006
            
            
            
            
            
            
            
            
            
            
            
            (23,905
            )
            
            (23,905
            )Redemption
                – September 15, 2006
            
            
            (20,000
            )
            
            (2
            )
            
            (310
            )
            
            
            
            
            (312
            )Balance
                – December 31, 2006
            
            
            1,580,000
            
            
            158
            
            
            24,530
            
            
            (35,045
            )
            
            (10,357
            )Proceeds
                of private placement –
              March
                21, 2007
            
            
            
            
            
            
            
            
            3,200,000
            
            
            
            
            
            3,200,00Common
                shares issued
              March
                28, 2007 at $10 per
                share
            
            
            6,000,000
            
            
            600
            
            
            59,999,400
            
            
            
            
            
            60,000,000Proceeds
                subject to possible redemption
            
            
            
            
            
            
            
            
            (20,346,180
            )
            
            
            
            
            (20,364,180
            )Expenses
                of the Offering
            
            
            
            
            
            
            
            
            (5,371,569
            )
            
            
            
            
            (5,371,569
            )Net
                income – 2007
            
            
            
            
            
            
            
            
            
            
            
            817,608
            
            
            817,608Proceeds
                of options sold
            
            
            
            
            
            
            
            
            100
            
            
            
            
            
            100Balance
                – December 31, 2007
            
            
            7,580,000
            
            
            758
            
            
            37,488,281
            
            
            782,563
            
            
            38,271,602(unaudited)
              Net
                income for the period
            
            
            
            
            
            
            
            
            
            
            
            198,491
            
            
            198,491Balance
                – September 30, 2008
            
            
            7,580,000
            
            
            758
            
            $
            37,488,281
            
            $
            981,054
            
            $
            38,470,093




See
      accompanying notes to condensed financial statements


5




ALPHA
      GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




CONDENSED
      STATEMENT OF CASH FLOWS





For the period fromApril 20, 2005
              (Inception) to
              September 30, 2008
            
            January 1, 2008
              to
              September 30, 2008
            
            January 1, 2007
              to
              September 30, 2007Cash
                flows for operating activities:Net
                Income
            
            $
            981,054
            
            $
            198,491
            
            $
            554,662Adjustments
                to reconcile net income to net cash used
              in
                operating
                activitiesDepreciation
            
            
            1,559
            
            
            1,260
            
            
            54Increase
                in investment in Trust
                Account
            
            
            (3,250,928
            )
            
            (1,164,094
            )
            
            (228,265
            )Increase
                in deferred tax
                asset
            
            
            (359,688
            )
            
            (209,468
            )
            
            (104,656
            )Increase
                in prepaid expenses
                & taxes
            
            
            (19,963
            )
            
            (2,621
            )
            
            (42,262
            )Increase
                in income taxes
                payable
            
            
            61,571
            
            
            61,571
            
            
            —Increase
                in account payable and
                accrued expenses
            
            
            149,685
            
            
            74,450
            
            
            54,824Net
                cash used in operating activities
            
            
            (2,436,710
            )
            
            (1,040,411
            )
            
            234,357Cash
                flows from investing activities:Payment
                to trust
                account
            
            
            (60,002,831
            )
            
            —
            
            
            (60,002,831
            )Withdrawals
                from trust
                account
            
            
            2,571,866
            
            
            1,060,831
            
            
            (4,170
            )Purchase
                of
                equipment
            
            
            (8,398
            )
            
            (2,000
            )
            
            —Net
                cash provided by (used in) investing activities
            
            
            (57,439,363
            )
            
            1,058,831
            
            
            (60,077,001
            )Cash
                flows from financing activities:Payment
                of expenses of
                offering
            
            
            (3,571,569
            )
            
            —
            
            
            (3,400,009
            )Proceeds
                from sale of common
                stock
            
            
            25,000
            
            
            —
            
            
            —Proceeds
                from notes payable –
                stockholder(s)
            
            
            250,000
            
            
            —
            
            
            250,000Proceeds
                from initial public
                offering
            
            
            60,000,000
            
            
            —
            
            
            60,000,000Proceeds
                from private
                placement
            
            
            3,200,000
            
            
            —
            
            
            3,200,000Proceeds
                from sale of
                option
            
            
            100
            
            
            —
            
            
            100Repayment
                of notes payable –
                stockholders
            
            
            —
            
            
            —
            
            
            (187,802
            )Redemption
                of
                stock
            
            
            (312
            )
            
            —
            
            
            —Net
                cash provided by financing activities
            
            
            59,903,219
            
            
            —
            
            
            59,862,289Net
                increase (decrease) in cash
            
            
            27,146
            
            
            27,146
            
            
            96,764Cash
                – beginning of period
            
            
            —
            
            
            8,726
            
            
            7,119Cash
                – end of period
            
            $
            27,146
            
            $
            27,146
            
            $
            96,764Supplemental
                disclosure of cash flow informationCash
                paid for income
                taxes
            
            $
            1,366,825
            
            $
            443,787
            
            $
            639,971Supplemental
                disclosure of non-cash financing activities:Accrual
                of deferred offering
                costs
            
            $
            1,800,000
            
            $
            —
            
            $
            1,800,000




See
      accompanying notes to condensed financial statements


6




ALPHA
      SECURITY GROUP CORPORATION


(a
      corporation in the development stage)




NOTES
      TO
      FINANCIAL STATEMENTS


September
      30, 2008




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




Basis
      of
      Presentation




The
      condensed financial statements at September 30, 2008 and for the periods ended
      September 30, 2008 and 2007 are unaudited and have been prepared by Alpha
      Security Group Corporation (the “Company”) in accordance with accounting
      principles generally accepted in the United States of America for interim
      financial information and with the instructions to Form 10-Q. Accordingly,
      they
      do not include all of the information and footnotes required by accounting
      principles generally accepted in the United States of America for complete
      financial statements. In the opinion of management, all adjustments (consisting
      of normal adjustments) have been made that are necessary to a fair presentation
      have been included. Operating results for the interim period presented are
      not
      necessarily indicative of the results to be expected for a full
      year.




These
      unaudited condensed interim financial statements should be read in conjunction
      with the audited financial statements and notes thereto for the period ended
      December 31, 2007 included in the Company’s Annual Report on Form 10-K filed
      with the U.S. Securities and Exchange Commission on April 15, 2008. The December
      31, 2007 balance sheet and the statement of stockholders’ equity for the period
      ended December 31, 2007 have been derived from these audited financial
      statements. The accounting policies used in preparing these unaudited financial
      statements are consistent with those described in the December 31, 2007 audited
      financial statements.




Nature
      of
      Operations




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




At
      September 30, 2008, the Company had not yet commenced any operations. All
      activity through September 30, 2008 relates to the Company’s formation, a
      private placement and the public offering described below. The Company has
      selected December 31 as its fiscal year-end.




7




The
      registration statement for the Company’s initial public offering (the “Public
      Offering”) was declared effective on March 23, 2007. On March 21, 2007, the
      Company completed a private placement (the “Private Placement”) and received net
      proceeds of $3,200,000. The Company consummated the Public Offering on March
      28,
      2007 and received net proceeds of $54,628,431. The Company’s management has
      broad discretion with respect to the specific application of the net proceeds
      of
      the Private Placement and the Public Offering (collectively the “Offerings”) (as
      described in Note 2), although substantially all of the net proceeds of the
      Offerings (exclusive of working capital) are intended to be generally applied
      toward consummating a business combination with a target business. As used
      herein, a “target business” shall include an operating business in the U.S.
      homeland security or defense industries, or a combination thereof, and a
“business combination” shall mean the acquisition by the Company of such a
      target business. There is no assurance that the Company will be able to effect
      a
      business combination successfully.




Of
      the
      proceeds of the Offerings, at September 30, 2008, $60,681,893 is being held
      in a
      trust account (“Trust Account”) at JP MorganChase, New York, New York,
      maintained by American Stock Transfer & Trust Company, the Company’s
      transfer agent. This amount includes the net proceeds of the Public Offering
      and
      the Private Placement (including interest thereon), interest earned since the
      public offering was declared effective which has not yet been withdrawn for
      working capital needs and $1,800,000 of deferred underwriting compensation
      fees
      which will be paid to Maxim Group LLC if, and only if, a business combination
      is
      consummated, but which will be forfeited in part if holders of the shares sold
      in the Public Offering (“Public Stockholders”) elect to have their shares
      redeemed for cash and in full if a business combination is not
      consummated.




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




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




With
      respect to the first business combination which is approved and consummated,
      any
      Public Stockholder who voted against the business combination may demand that
      the Company redeem his or her shares. The per share redemption price will equal
      $10 per share plus the pro-rata share of any accrued interest earned on the
      Trust Account, net of: (i) taxes payable on interest income earned on the Trust
      Account, State of Delaware franchise taxes, repayment of $250,000 of an
      additional officer loan made prior to closing of the Public Offering by Steven
      M. Wasserman (such loan was repaid in October 2008) and (ii) up to $1,825,000
      of
      interest earned on the Trust Account released to the Company to fund its working
      capital. If Public Stockholders holding no more than 34.99% of the aggregate
      number of shares owned by all Public Stockholders vote against the business
      combination and seek redemption of their shares the business combination may
      still be consummated. Such Public Stockholders are entitled to receive their
      per
      share interest in the Trust Account computed without regard to the shares held
      by Initial Stockholders. In the event that more than 20% of the Public
      Stockholders exercise their redemption rights, a proportional percentage of
      the
      common stock held by the Company’s Initial Stockholders will automatically, and
      without any further action required by the Company or such stockholders, be
      forfeited and cancelled upon consummation of the business combination. The
      percentage of shares forfeited will be equal to the percentage of redemptions
      above 20% and will be pro rata among the Initial Stockholders on the 1,580,000
      shares owned by them.


8




The
      Company’s Amended and Restated Certificate of Incorporation provides for
      mandatory liquidation of the Trust Account as part of a stockholder-approved
      plan of dissolution and liquidation in the event that the Company does not
      consummate a business combination within 18 months from the date of the
      consummation of the Public Offering, or 24 months from the consummation of
      the
      Public Offering if a letter of intent, agreement in principle or definitive
      agreement has been executed within 18 months after consummation of the Public
      Offering and the business combination has not yet been consummated within such
      18 month period. On September 26, 2008 the Company disclosed on a current report
      on Form 8-K filed with Securities and Exchange Commission that it has signed
      a
      letter of intent and has met the condition under its Amended and Restated
      Certificate of Incorporation that permits it until March 28, 2009 to complete
      a
      business combination. In the event of such liquidation, the amount in the Trust
      Account will be distributed to the holders of the shares sold in the Public
      Offering. The Company’s initial business combination must be for assets or with
      a target business the fair market value of which is at least equal to 80% of
      the
      Company’s net assets at the time of such acquisition (exclusive of Maxim Group
      LLC’s deferred underwriting compensation, including interest thereon, held in
      the trust account).




If
      the
      Company cannot complete a business combination by March 28, 2009, it will be
      required to liquidate. No adjustments have been made to the accompanying
      financial statements to reflect this uncertainty.




*Cash
      and Cash Equivalents*




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




*Income
      Taxes*




The
      Company recorded a deferred tax asset of $359,688 and $150,220 at September
      30,
      2008 and December 31, 2007, respectively, for the tax effect of temporary
      differences, aggregating $1,057,905 and $441,823, respectively. In recognition
      of the uncertainty regarding the ultimate amount of income tax benefits to
      be
      derived, the Company recorded a valuation allowance of $209,468 and $43,658
      at
      September 30, 2008 and December 31, 2007, respectively. The effective tax rate
      differs from the statutory rate of 34% due to the effect of state and local
      income taxes.


9




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




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




*Recently
      Issued Accounting Pronouncements*




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




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




*Income
      (Loss) Per Common Share*




Income
      (Loss) per share is computed by dividing net income (loss) by the
      weighted-average number of shares of common stock outstanding during the period.
      Shares of common stock issuable upon the exercise of options and warrants at
      September 30, 2008 (9,410,000 shares) are excluded from the computation since
      such options and warrants are contingently exercisable.


10




*Use
      of Estimates*




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




**2.
      Public Offering and Private Placement**




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




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




Under
      the
      terms of the Company’s warrant agreement, no public warrants will be exercisable
      unless at the time of exercise a registration statement relating to common
      stock
      issuable upon exercise of the warrants is effective and current, a prospectus
      is
      available for use by the Public Stockholders and those shares of common stock
      have been registered or been deemed to be exempt from registration under the
      securities laws of the state of residence of the holder of the warrants. The
      holders of the Warrants issued in the Private Placement will be able to exercise
      their Warrants even if, at the time of exercise, a prospectus relating to the
      common stock issuable upon exercise of such Warrants is not current. In
      addition, in no event will the registered holders of the Warrants issued in
      the
      Public Offering or the Private Placement be entitled to receive a net cash
      settlement of stock or other consideration in lieu of physical settlement in
      shares of the Company’s common stock. As such, the Company has determined that
      the public warrants should be classified in stockholders’ equity in accordance
      with the guidance of EITF 00-19 (“EITF 00-19”), Accounting for Derivative
      Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own
      Stock.




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




11




**3.
      Note payable, stockholder**




The
      Company issued an unsecured promissory note to Steven Wasserman, a related
      party, totaling $250,000 on March 28, 2007. The promissory note does not bear
      interest and was to be repaid in full ninety days thereafter and such repayment
      has not been made. Due to the short-term nature of the promissory note, the
      fair
      value of the note approximates its carrying value. The loan was repaid in
      October 2008.




**4.
      Commitments**




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




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




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




12




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




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




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




·
            the
                warrants are held in a discretionary
                account;




·
            warrants
                are exercised in an unsolicited transaction;
                or




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




**5.
      Income Taxes**




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





**Nine months**
              **ended**
            
            **Year ended****September 30,**
              **2008**
            
            **December 31,**
              **2007****Current:**Federal
            
            $
            315,025
            
            $
            574,837State
            
            
            191,055
            
            
            348,047Total
                Current
            
            $
            506,080
            
            $
            922,884**Deferred:**Federal
            
            $
            (130,440
            )
            $
            (93,658
            )State
            
            
            (79,028
            )
            $
            (56,562
            )Total
                Deferred
            
            $
            (209,468
            )
            $
            (150,220
            )**Total
                provisions**
            
            $
            296,612
            
            $
            772,664




13




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





**September
                30,**
              **2008**
            
            **December
                31,**
              **2007**Expenses
                deferred for income tax purposes
            
            $
            1,057,905
            
            $
            441,823Adjusted
                deferred tax asset
            
            
            569,156
            
            
            193,878Valuation
                allowance
            
            
            (209,468
            )
            
            (43,658
            )**Total
                deferred tax asset**
            
            $
            359,688
            
            $
            150,220




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





**September 30,**
              **2008**
            
            **December 31,**
              **2007**Federal
                income tax rate
            
            
            34.00
            %
            
            34.00
            %State
                & local tax rate
            
            
            10.90
            %
            
            10.90
            %Valuation
                allowance
            
            
            14.80
            %
            
            3.70
            %**Effect
                Tax Rate**
            
            
            59.70
            %
            
            48.60
            %




Deferred
      income taxes represent the net tax effects of temporary differences between
      the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      amounts used for income tax purposes. The Company had net deferred tax assets
      of
      $359,688 on September 30, 2008 and $150,220 on December 31, 2007 partially
      offset by valuation allowances. A valuation allowance was established for the
      realizability of certain tax benefits considering the expected future taxable
      income of the Company.




**6.
      Preferred Stock**




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




**7.
      Stockholders’ Equity**




On
      September 8, 2006, the Company redeemed 20,000 shares of its common stock at
      a
      price of $0.0156 per share.




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




14




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




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




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**




**Forward
      Looking Statements**




This
      quarterly report on Form 10-Q includes forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. We have based these
      forward-looking statements on our current expectations and projections about
      future events. These forward-looking statements are subject to known and unknown
      risks, uncertainties and assumptions about us that may cause our actual results,
      levels of activity, performance or achievements to be materially different
      from
      any future results, levels of activity, performance or achievements expressed
      or
      implied by such forward-looking statements. In some cases, you can identify
      forward-looking statements by terminology such as “may,” “should,” “could,”
“would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or
      the negative of such terms or other similar expressions. Factors that might
      cause or contribute to such a discrepancy include, but are not limited to,
      those
      described under “Risk Factors” in our annual report on Form 10-K for the period
      ended December 31, 2007 filed with the Securities and Exchange Commission on
      April 15, 2008. The following discussion should be read in conjunction with
      our
      Financial Statements and related Notes thereto included elsewhere in this
      report.




**Overview**




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




15




The
      Company’s Amended and Restated Certificate of Incorporation provides for
      mandatory liquidation of its trust account as part of a stockholder-approved
      plan of dissolution and liquidation in the event that the Company does not
      consummate a business combination within 18 months from the date of the
      consummation of the public offering, or 24 months from the consummation of
      the
      public offering if a letter of intent, agreement in principle or definitive
      agreement has been executed within 18 months after consummation of the public
      offering and the business combination has not yet been consummated within such
      18 month period. On September 26, 2008 the Company disclosed on a current report
      on Form 8-K filed with Securities and Exchange Commission that it has signed
      a
      letter of intent and has met the condition under its Amended and Restated
      Certificate of Incorporation that permits it until March 28, 2009 to complete
      a
      business combination. We cannot assure investors that we will consummate a
      business combination in the allotted time.




**Results
      of operations for the three-month periods ended September 30, 2008 and September
      30, 2007**




We
      reported net income of $799 for the three-month period ended September 30,
      2008.
      Net income consisted of interest income of $294,461 reduced by of $244,115
      of
      operating expenses. Operating expenses consisted of consulting and professional
      fees of $63,343, insurance expense of $9,708, travel expense of $107,425,
      Delaware franchise fees of $15,563 and other operating costs of
      $48,076.




The
      trust
      account earned interest of $294,461 during the three months ended September
      30,
      2008, none of which is attributable to common stock subject to possible
      redemption. We had $60,681,893 in trust as of September 30, 2008.




Until
      we
      enter into a business combination, we will not generate operating
      revenues.




We
      reported net income of $275,532 for the three-month period ended September
      30,
      2007. Net income consisted of interest income of $663,210 reduced by of $134,204
      of operating expenses. Operating expenses consisted of consulting and
      professional fees of $51,650, insurance expense of $16,112, travel expense
      of
      $26,607, Delaware franchise fees of $15,501 and other operating costs of
      $24,334.




The
      trust
      account earned interest of $663,210 during the three months ended September
      30,
      2007, none of which is attributable to common stock subject to possible
      redemption. We had $60,231,096 in trust as September 30, 2007.




**Results
      of operations for the nine-month periods ended September 30, 2008 and September
      30, 2007**




We
      reported net income of $198,491 for the nine-month period ended September 30,
      2008. Net income consisted of interest income of $1,164,094 reduced by of
      $668,991 of operating expenses. Operating expenses consisted of consulting
      and
      professional fees of $180,464, insurance expense of $35,528, travel expense
      of
      $202,151, Delaware franchise fees of $46,688 and other operating costs of
      $204,160.




16




The
      trust
      account earned interest of $1,164,094 during the nine months ended September
      30,
      2008, none of which is attributable to common stock subject to possible
      redemption. We had $60,681,893 in trust as of September 30, 2008.




Until
      we
      enter into a business combination, we will not generate operating
      revenues.




We
      reported net income of $554,662 for the nine month period ended September 30,
      2007. Net income consisted of interest income of $1,434,335 reduced by of
      $353,319 of operating expenses. Operating expenses consisted of consulting
      and
      professional fees of $115,363, insurance expense of $31,174, travel expense
      of
      $86,620, Delaware franchise fees of $41,387 and other operating costs of
      $78,775.




The
      trust
      account earned interest of $1,434,335 during the nine months ended September
      30,
      2007, none of which is attributable to common stock subject to possible
      redemption. We had $60,231,096 in trust as of September 30, 2007.




**Liquidity
      and Capital Resources**




On
      March
      21, 2007, we sold to Steven M. Wasserman (500,000 warrants), our Chief Executive
      Officer, President and Co-Chairman of the board of directors, and Constantinos
      Tsakiris (2,700,000 warrants), a former director, an aggregate of 3,200,000
      warrants in a private placement for $1.00 per warrant or aggregate consideration
      of $3,200,000. The warrants in the private placement have identical terms to
      the
      warrants included in the units offered as part of the public offering. On March
      28, 2007, we consummated our initial public offering of 6,000,000 units at
      a
      purchase price of $10.00 per unit or gross proceeds of $60,000,000. Each unit
      in
      the public offering consisted of one share of common stock and one redeemable
      common stock purchase warrant. Each warrant entitles the holder to purchase
      from
      us one share of common stock at an exercise price of $7.50 per share. Prior
      to
      the closing of the public offering, Steven M. Wasserman loaned us $250,000
      for
      expenses of the public offering, which loan was repaid in October
      2008.




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




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




17




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




·
            payment
                of taxes on trust account interest
                income;




·
            payment
                of State of Delaware franchise
                taxes;




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




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




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




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




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




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




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




18




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




In
      addition to the above described allocation of interest accrued on the trust
      account, at September 30, 2008, we had funds aggregating $27,146 held outside
      of
      the trust account.




**Off-Balance
      Sheet Arrangements**




We
      do not
      have any off-balance sheet arrangements.




**Contractual
      Obligations**




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




**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**




This
      information has been omitted based on the Company’s status as a smaller
      reporting company.




**ITEM
      4T. CONTROLS AND PROCEDURES**




An
      evaluation of the effectiveness of our disclosure controls and procedures as
      of
      September 30, 2008 was made under the supervision and with the participation
      of
      our management, including our principal executive and principal financial
      officer. Based on that evaluation, our chief executive officer and principal
      financial officer concluded that our disclosure controls and procedures are
      effective as of the end of the period covered by this report to ensure that
      information required to be disclosed by us in reports that we file or submit
      under the Securities Exchange Act of 1934 is recorded, processed, summarized
      and
      reported within the time periods specified in Securities and Exchange Commission
      rules and forms, and that such information is accumulated and communicated
      to
      our management, including our principal executive officer and principal
      financial officer, as appropriate to allow timely decisions regarding required
      disclosure.




During
      the most recently completed fiscal quarter, there has been no change in our
      internal control over financial reporting that has materially affected, or
      is
      reasonably likely to materially affect, our internal control over financial
      reporting.




**PART
      II OTHER INFORMATION**




**ITEM
      1. LEGAL PROCEEDINGS**




None.




19




**ITEM
      1A. RISK FACTORS**




This
      information has been omitted based on the Company’s status as a smaller
      reporting company.




**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**




None.




**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**




None.




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




None.




**ITEM
      5. OTHER INFORMATION**




None.




**ITEM
      6. EXHIBITS**





**Exhibit No.**
            
            **Description**31.1
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer (Principal
                Executive and Financial Officer) pursuant to Rule 13a 14(a) of the
                Securities Exchange Act, as amended.32.1
            
            Certification
                of the Chief Executive Officer and Chief Financial Officer (Principal
                Executive and Financial Officer) pursuant to 18 U.S.C. 1350, as adopted
                pursuant to Section 906 of the Sarbanes Oxley Act of
                2002.




20




**SIGNATURES**




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





ALPHA
                SECURITY GROUP CORPORATIONNovember
                19, 2008
            By:
            /s/
                Steven M. WassermanSteven
                M. WassermanChief
                Executive Officer and Chief Financial Officer(Principal
                Executive and Financial
                Officer)


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