**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: 000-52247**




**VECTOR
      INTERSECT SECURITY ACQUISITION CORP.**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            
            **20-3200738**(State
                or Other Jurisdiction of
            
            (I.R.S.
                EmployerIncorporation
                or Organization)
            
            Identification
                No.)




**65
      Challenger Road, Ridgefield Park, NJ**


(Address
      of Principal Executive Offices including Zip Code)




**(201)
      708-9801**


(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 Exchange Act during the preceding 12 months
      (or for such shorter period that the registrant was required to file such
      reports), and (2) has been subject to such filing requirements for the past
      90
      days. Yes x  No o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of ‘‘accelerated
      filer and large accelerated filer’’ in Rule 12b-2 of the Exchange. (Check
      one):





Large
                Accelerated Filero
            Accelerated
                FileroNon-Accelerated
                Filero(Do not check if a smaller reporting company)
            Smaller
                Reporting Companyx




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




There
      were 9,968,750 shares of the Registrant’s common stock issued and outstanding as
      of November 12, 2008.









**Vector
      Intersect Security Acquisition Corp.**




Index
      to Form 10-Q





PART
                I — FINANCIAL INFORMATION
            
            1ITEM
                1
            —
                FINANCIAL STATEMENTS (UNAUDITED)
            
            1Balance
                Sheets
            
            1As
                of September 30, 2008 and December 31, 2007
            
            1Statements
                of Income
            
            2Statement
                of Stockholders Equity (deficit)
            
            3Statements
                of Cash Flows
            
            4Notes
                to Financial Statements
            
            5ITEM
                2
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS
            
            12ITEM
                3
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            
            15ITEM
                4
            CONTROLS
                AND PROCEDURES
            
            16ITEM
                4T
            CONTROLS
                AND PROCEDURES
            
            16PART
                II — OTHER INFORMATION
            
            17ITEM
                1
            LEGAL
                PROCEEDINGS
            
            17ITEM
                1A
            RISK
                FACTORS
            
            17ITEM
                2
            UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
            
            17ITEM
                3
            DEFAULTS
                UPON SENIOR SECURITIES
            
            17ITEM
                4
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            18ITEM
                5
            OTHER
                INFORMATION
            
            18ITEM
                6
            EXHIBITS
            
            18SIGNATURES
            
            19









**PART
      I — FINANCIAL INFORMATION**




**ITEM
      1** **—
      FINANCIAL STATEMENTS (UNAUDITED).**




**Vector
      Intersect Security Acquisition Corp.**


**(a
      corporation in the development stage)**


**Balance
      Sheets**


**As
      of September 30, 2008 and December 31, 2007**





**September 30,**
              **2008**
            
            **December 31,**
              **2007****(Unaudited)**
            
            **(Audited)****ASSETS****Current
                assets:**Cash
            
            $
            86,858
            
            $
            569,723Investment
                in trust account
            
            
            58,708,365
            
            
            58,309,161Prepaid
                Expenses
            
            
            9,344
            
            
            94,444**Total
                current assets**
            
            
            58,804,567
            
            
            58,973,328Deferred
                Acquisition Cost
            
            
            274,736
            
            
            –**Total
                assets**
            
            $
            59,079,303
            
            $
            58,973,328**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****Current
                liabilities:**Deferred
                underwriting fees
            
            $
            2,340,000
            
            $
            2,340,000Accounts
                payable and accrued expenses
            
            
            129,995
            
            
            79,024Accrued
                interest on notes payable, stockholders
            
            
            23,852
            
            
            9,481Income
                taxes payable
            
            
            –
            
            
            85,000Due
                to stockholders
            
            
            8,820
            
            
            8,820Notes
                payable, stockholders
            
            
            55,000
            
            
            205,000**Total
                current liabilities**
            
            
            2,557,667
            
            
            2,727,325Common
                Stock, subject to possible redemption, 1,462,499 shares
            
            
            11,275,867
            
            
            11,144,242**Commitments
                and Contingencies****STOCKHOLDERS’
                EQUITY**Preferred
                stock, $0.001 par valueAuthorized
                1,000,000 shares; none issued
            
            
            –
            
            
            –Common
                stock, $0.001 par valueAuthorized
                50,000,000 sharesIssued
                and outstanding 1,875,000 shares and 9,375,000 at December 31, 2006
                and
                September 30, 2007
            
            
            9,375
            
            
            9,375Additional
                paid-in-capital
            
            
            44,308,108
            
            
            44,439,734Earnings
                accumulated during the development stage
            
            
            928,286
            
            
            652,652**Total
                stockholders’ equity**
            
            
            45,245,769
            
            
            45,101,761**Total
                liabilities and stockholders’ equity**
            
            $
            59,079,303
            
            $
            58,973,328




See
      notes to financial statements.




1




**Vector
      Intersect Security Acquisition Corp.**


**(a
      corporation in the development stage)**


**Statements
      of Income**


**(Unaudited)**


**Nine Months Ended**
                **September 30,**
              
              **Three Months Ended**
                **September 30,**
              
              **For the period**
                **from**
                **July 19, 2005**
                **(inception) to****2008**
              
              **2007**
              
              **2008**
              
              **2007**
              
              **Sept. 30, 2008**Interest
                  Income
              
              $
              899,226
              
              $
              861,202
              
              $
              286,642
              
              $
              518,768
              
              $
              2,246,148Operating
                  expenses
              
              
              637,279
              
              
              267,107
              
              
              225,144
              
              
              142,832
              
              
              1,216,969Income
                  before interest expense and income taxes
              
              
              261,947
              
              
              594,095
              
              
              61,498
              
              
              375,936
              
              
              1,029,179Interest
                  expense-related party
              
              
              4,371
              
              
              26,152
              
              
              1,540
              
              
              15,073
              
              
              32,589Income
                  before provision for income taxes
              
              
              257,576
              
              
              567,943
              
              
              59,958
              
              
              360,863
              
              
              996,590Provision
                  for income taxes (benefit)
              
              
              (18,058
              )
              
              121,500
              
              
              2,180
              
              
              91,100
              
              
              68,304Net
                  income for the period
              
              $
              275,634
              
              $
              446,443
              
              $
              57,778
              
              $
              269,763
              
              $
              928,286Weighted
                  average shares outstanding -Basic
              
              
              9,375,000
              
              
              6,082,418
              
              
              9,375,000
              
              
              9,375,000
              
              
              5,205,731Diluted
              
              
              11,896,460
              
              
              7,411,104
              
              
              11,944,844
              
              
              11,759,038
              
              
              10,295,599Net
                  income per share – Basic
              
              $
              0.03
              
              $
              0.07
              
              $
              0.01
              
              $
              0.03
              
              $
              0.18Net
                  income per share – Diluted
              
              $
              0.02
              
              $
              0.06
              
              $
              0.00
              
              $
              0.02
              
              $
              0.09




See
      notes to financial statements.




2




**Vector
      Intersect Security Acquisition Corp.**


**(a
      corporation in the development stage)**


**Statement
      of Stockholders Equity (deficit)**





**Common Stock**
            
            **Additional**
            
            **Deficiency**
              **Accumulated**
              **During the**
              **Development**
            
            **Total**
              **Stockholders’**
              **Equity****Shares**
            
            **Amount**
            
            **Paid-in capital**
            
            **Stage**
            
            **(Deficit)**Common
                shares issued July 19, 2005 at (inception) at $0.0133
            
            
            1,875,000
            
            $
            1,875
            
            $
            23,125
            
            $
            –
            
            $
            25,000Net
                loss for the period
            
            
            –
            
            
            –
            
            
            –
            
            
            (67,116
            )
            
            (67,116
            )Balances
                at December 31, 2005
            
            
            1,875,000
            
            $
            1,875
            
            $
            23,125
            
            $
            (67,116
            )
            $
            (42,116
            )Net
                loss for the period
            
            
            –
            
            
            –
            
            
            –
            
            
            (77,534
            )
            
            (77,534
            )Balances
                at December 31, 2006
            
            
            1,875,000
            
            
            1,875
            
            
            23,125
            
            
            (144,650
            )
            
            (119,650
            )Proceeds
                of private placement- April 25, 2007
            
            
            187,500
            
            
            187
            
            
            1,499,813
            
            
            –
            
            
            1,500,000Common
                shares issued June 30, 2007 @$8 per share
            
            
            7,312,500
            
            
            7,313
            
            
            58,492,687
            
            
            –
            
            
            58,500,000Expenses
                of the Offering
            
            
            –
            
            
            –
            
            
            (4,431,649
            )
            
            –
            
            
            (4,431,649
            )Proceeds
                subject to possible redemption of 1,462,499 shares
            
            
            –
            
            
            –
            
            
            (11,144,242
            )
            
            –
            
            
            (11,144,242
            )Net
                income for the period
            
            
            –
            
            
            –
            
            
            –
            
            
            797,302
            
            
            797,302Balances
                at December 31, 2007
            
            
            9,375,000
            
            
            9,375
            
            
            44,439,734
            
            
            652,652
            
            
            45,101,761Adjustment
                to value of shares subject to possible redemption
            
            
            
            
            
            
            
            
            (131,626
            )
            
            
            
            
            (131,626
            )Net
                income for the period
            
            
            
            
            
            
            
            
            
            
            
            275,634
            
            
            275,634Balances
                at September 30, 2008
            
            
            9,375,000
            
            $
            9,375
            
            $
            44,308,108
            
            $
            928,286
            
            $
            45,245,769




See
      notes to financial statements.




3




**Vector
      Intersect Security Acquisition Corp.**


**(a
      corporation in the development stage)**


**Statements
      of Cash Flows**


**(Unaudited)**





**Nine
                Months Ended**
              **September
                30,**
            
            **For
                the**
              **Period
                From**
              **July
                19, 2005**
              **(Inception)**
              **to**
              **September****2008**
            
            **2007**
            
            **30, 2008****Cash
                flows from operating activities**Net
                income
            
            $
            275,634
            
            $
            446,443
            
            $
            928,286Adjustments
                to reconcile net income to net cash provided by operating
                activitiesDeferred
                Acquisition Cost
            
            
            (274,736
            )
            
            —
            
            
            (274,736
            )Prepaid
                Expenses
            
            
            85,100
            
            
            (122,778
            )
            
            (9,344
            )Accounts
                payable and accrued expenses
            
            
            50,970
            
            
            (122,853
            )
            
            129,995Income
                tax payable
            
            
            (85,000
            )
            
            121,500
            
            
            —Accrued
                interest on notes payable, stockholders
            
            
            14,371
            
            
            4,257
            
            
            23,852**Net
                cash provided by (used in) operating activities**
            
            
            66,339
            
            
            326,569
            
            
            798,053**Cash
                flows from investing activities:**Payment
                to trust account
            
            
            (399,204
            )
            
            (58,280,433
            )
            
            (58,708,365
            )**Net
                cash used in investing activities**
            
            
            (399,204
            )
            
            (58,280,433
            )
            
            (58,708,365
            )**Cash
                flows from financing activities**Proceeds
                from advances from stockholder
            
            
            —
            
            
            (22,949
            )
            
            8,820Proceeds
                from sale of shares of common stock
            
            
            —
            
            
            —
            
            
            25,000Proceeds
                from notes payable, stockholders
            
            
            —
            
            
            (143,791
            )
            
            348,791Repayment
                of notes payable, stockholders
            
            
            (150,000
            )
            
            —
            
            
            (293,791
            )Proceeds
                from private placement
            
            
            —
            
            
            1,500,000
            
            
            1,500,000Proceeds
                from initial public offering
            
            
            —
            
            
            58,500,000
            
            
            58,500,000Payment
                of expenses of offering
            
            
            —
            
            
            (1,659,311
            )
            
            (2,091,650
            )**Net
                cash provided by financing activities**
            
            
            (150,000
            )
            
            58,173,949
            
            
            57,997,170**Net
                increase (decrease) in cash**
            
            
            (482,865
            )
            
            220,085
            
            
            86,858**Cash,
                beginning of period**
            
            
            569,723
            
            
            24,279
            
            
            —**Cash,
                end of period**
            
            $
            86,858
            
            $
            244,364
            
            $
            86,858Supplemental
                disclosure of cash flow informationCash
                paid for interest
            
            $
            —
            
            $
            —
            
            
            8,734**Supplemental
                schedule of non-cash financing activities:**Accrual
                of deferred underwriting costs
            
            $
            —
            
            $
            2,340,000
            
            $
            2,340,000




See
      notes to financial statements.




4




**Vector
      Intersect Security Acquisition Corp.**


**(a
      development stage company)**




**Notes
      to Financial Statements**


**September
      30, 2008**





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





**Basis
      of Presentation**





The
      financial statements of Vector Intersect Security Acquisition Corp. (the
‘‘Company’’), for the nine months ended September 30, 2008 and 2007, for the
      three months ended September 30, 2008 and 2007 and for the period from July
      19,
      2005 (inception) to September 30, 2008, are unaudited. In the opinion of
      management, all adjustments (consisting of normal adjustments) have been made
      that are necessary to present fairly the financial position of the Company
      as of
      September 30, 2008 and the results of its operations and its cash flows for
      the
      nine months ended September 30, 2008 and 2007, the three months ended September
      30, 2008 and 2007 and for the period from July 19, 2005 (inception) to September
      30, 2008. Operating results for the interim periods presented are not
      necessarily indicative of the results to be expected for the full fiscal year.
      The balance sheet as of December 31, 2007 has been derived from the audited
      financial statements.





The
      Company was incorporated in Delaware on July 19, 2005 as a blank check company.
      It’s objective is to acquire, through a merger, capital stock exchange, asset
      acquisition or other similar business combination (as defined below), one or
      more businesses in the homeland security, national security and/or command
      and
      control industries.





The
      registration statement for the Company’s initial public offering (the ‘‘Public
      Offering’’) was declared effective on April 25, 2007. The Company completed a
      private placement (the ‘‘Private Placement’’) and received gross proceeds of
      $1,500,000 on April 25, 2007. The Company consummated the Public Offering on
      May
      1, 2007 and received gross proceeds of $58,500,000. The Company’s management has
      broad discretion with respect to the specific application of the net proceeds
      of
      the Private Placement and the Public Offering (collectively the ‘‘Offerings’’,
      each as described in Note 2), although substantially all of the net proceeds
      of
      the Offerings are intended to be generally applied toward consummating a
      business combination with a target business. A ‘‘target business’’ includes an
      operating business in the 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, $58,030,000 was placed in a trust account (‘‘Trust
      Account’’) at JP MorganChase, New York City, 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,
      and
      $2,340,000 of deferred underwriting compensation fees (the ‘‘Discount’’) which
      will be paid to Rodman & Renshaw, LLC if, and only if, a business
      combination is 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 $1,500,000
      of
      interest income on the Trust Account may be used to fund the Company’s working
      capital requirements including payments for legal and accounting fees to due
      diligence on prospective acquisitions and continuing general and administrative
      expenses.





After
      signing a definitive agreement for the acquisition of a target business, the
      Company will submit such transaction for stockholder approval. In the event
      (i)
      the Business Combination is not approved by a majority of the shares of common
      stock issued in our initial public offering or (ii) 20% or more of the shares
      of
      common stock held by the public stockholders vote against the Business
      Combination and exercise their conversion rights described below, the Business
      Combination will not be consummated.




5




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 its, his or her shares. The per share redemption price will
      equal the amount in the Trust Fund, plus interest (net of taxes payable and
      net
      of up to $1,500,000 of interest income on the Trust Fund that may be used to
      fund the Company’s working capital) calculated as of two business days prior to
      the proposed Business Combination, divided by the number of shares of common
      stock held by Public Stockholders at the consummation of the Public Offering.
      Accordingly, Public Stockholders holding approximately 19.99% of the aggregate
      number of shares owned by all Public Stockholders may seek redemption of their
      shares in the event of a Business Combination. Such Public Stockholders are
      entitled to receive their per share interest in the Trust Fund computed without
      regard to the shares held by the Initial Stockholders.





**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.





**Concentration
      of Credit Risk**





Financial
      instruments that potentially subject the Company to credit risk consist of
      cash
      and cash equivalents. The Company’s policy is to limit the amount of credit
      exposure to any one financial institution and place investments with financial
      institutions or in short-term money market funds that provide minimal exposure
      to interest rate and credit risk.





**Earnings
      per Common Share**





Basic
      earnings per share (‘‘EPS’’) is computed by dividing net income applicable to
      common stock by the weighted average common shares outstanding during the
      period. Diluted EPS reflects the additional dilution for all potentially
      dilutive securities such as stock warrants.





**Recent
      Accounting Pronouncements**





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





**2.**
            **Offerings.**





On
      April
      25, 2007 the Company sold 187,500 units in a Private Placement, and on May
      1,
      2007 the Company sold 7,312,500 units in the Public Offering (collectively
      the
‘‘Units’’). Each Unit consists of one share of the Company’s common stock,
      $0.001 par value, and one common stock purchase warrant (‘‘Warrants’’). Each
      Warrant entitles the holder to purchase from the Company one share of common
      stock at an exercise price of $5.00 per share (which Warrant may be exercised
      on
      a cashless basis) commencing the later of (a) one year from the effective date
      of the Public Offering; or (b) the completion of a Business Combination with
      a
      target business and expiring four years from the date of the Public Offering
      prospectus (unless earlier redeemed). The Warrant is redeemable at a price
      of
      $0.01 per Warrant upon 30 days notice after the Warrant becomes exercisable,
      only in the event that (a) the last sales price of the common stock is at least
      $11.50 per share for any 20 trading days within a 30-trading-day period ending
      on the third business day prior to date on which notice of redemption is
      given.




6




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. The Warrants may not be exercised in the absence of an
      effective registration statement and, in the event that the Company is unable
      to
      maintain the effectiveness of such registration statement until the expiration
      of the Warrants, and therefore is unable to deliver registered shares, the
      Warrants may expire unexercised and worthless. In no event will the Company
      be
      required to net-cash settle the Warrants. Accordingly, the Company has
      determined that the Warrants should be classified in stockholders’ equity upon
      issuance in accordance with the guidance in EITF 00-19, ‘‘Accounting for
      Derivative Financial Instruments Indexed to, and Potentially Settled in, a
      Company’s Own Stock’’.





**3.**
            **Deferred
                Acquisition Costs.**





Deferred
      acquisition costs consist of legal, auditing, regulatory filing, underwriting
      fees and other costs incurred related to the Proposed Acquisition.





**4.**
            **Advances
                from Stockholder.**





In
      March
      2006 and in September 2006, a stockholder advanced the Company a total of $8,820
      for operating expenses. The advance is non-interest bearing and is due on
      demand.





**5.**
            **Notes
                Payable, Stockholders.**





In
      addition to their purchase of the Company’s common stock, two of the Company’s
      stockholders and officers advanced the Company an aggregate of $205,000 in
      exchange for unsecured promissory notes. The notes bear interest at a rate
      of 4%
      per annum with principal and accrued interest due no later than the first
      anniversary of the Public Offering. During the nine months ended September
      30,
      2008, the Company repaid $150,000 of these loans.





**6.**
            **Per
                Share Information.**





In
      accordance with SFAS No. 128, ‘‘Earnings Per Share,’’ basic income per common
      share (‘‘Basic EPS’’) is computed by dividing the net income by the
      weighted-average number of shares outstanding. Diluted income per common share
      (‘‘Diluted EPS’’) is computed by dividing the net income by the weighted-average
      number of common shares and dilutive common share equivalents then outstanding.
      SFAS No. 128 requires the presentation of both Basic EPS and Diluted EPS on
      the
      face of the Company’s Condensed Statements of Income.





The
      following table sets forth the computation of basic and diluted per share
      information:





**Nine Months Ended**
              **September 30,**
            
            **Three Months Ended**
              **September 30,**
            
            **For the period**
              **from**
              **July 19, 2005**
              **(inception) to********2008**
            
            **2007**
            
            **2008**
            
            **2007**
            
            **Sept.
                30, 2008**Interest
                Income
            
            $
            899,226
            
            $
            861,202
            
            $
            286,642
            
            $
            518,768
            
            $
            2,246,148Operating
                expenses
            
            
            637,279
            
            
            267,107
            
            
            225,144
            
            
            142,832
            
            
            1,216,969Income
                before interest expense and income taxes
            
            
            261,947
            
            
            594,094
            
            
            61,498
            
            
            375,936
            
            
            1,029,179Interest
                expense-related party
            
            
            4,371
            
            
            26,152
            
            
            1,540
            
            
            15,073
            
            
            32,589Income
                before provision for income taxes
            
            
            257,576
            
            
            567,943
            
            
            59,958
            
            
            360,863
            
            
            996,590Provision
                for income taxes (benefit)
            
            
            (18,058
            )
            
            121,500
            
            
            2,180
            
            
            91,000
            
            
            68,304Net
                income for the period
            
            $
            275,634
            
            $
            446,443
            
            $
            57,778
            
            $
            269,763
            
            $
            928,286Weighted
                average shares outstanding -Basic
            
            
            9,375,000
            
            $
            6,082,418
            
            
            9,375,000
            
            
            9,375,000
            
            
            5,205,731Diluted
            
            
            11,896,460
            
            
            7,411,104
            
            
            11,944,844
            
            
            11,759,038
            
            
            10,295,599Net
                income per share – Basic
            
            $
            0.03
            
            $
            0.07
            
            $
            0.01
            
            $
            0.03
            
            $
            0.18Net
                income per share – Diluted
            
            $
            0.02
            
            $
            0.06
            
            $
            0.00
            
            $
            0.02
            
            $
            0.09




7




**7.**
            **Commitments.**





In
      connection with the Public Offering the Company sold to the representative
      of
      the underwriter for $100 an option to purchase up to a total of 731,250 Units.
      The Units issuable upon exercise of this option are identical to those offered
      to the public, except that the Warrants underlying this option are exercisable
      at $5.50 (110% of the exercise price of the Warrants included in the units
      sold
      in the Public Offering). This option is exercisable at $8.80 per unit commencing
      on the later of the consummation of a Business Combination and one year from
      the
      date of offerings and expiring five years from the date of offerings. The option
      and the 731,250 units, the 731,250 shares of common stock and the 731,250
      Warrants underlying such units, and the 731,250 shares of common stock
      underlying such Warrants, have been deemed compensation by the Financial
      Industry Regulatory Authority (‘‘FINRA’’).





The
      Company accounted for this purchase option as a cost of raising capital and
      will
      include the instrument as equity in the financial statements. Accordingly,
      there
      will be 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 estimated, based upon a Black-Scholes model, that the fair value of
      the
      purchase option on the date of sale is approximately $3.40 per unit (or
      $2,486,250 in the aggregate), using an expected life of 5 years, volatility
      of
      44%, and a risk-free rate of 5%. However, because the Company’s units did not
      have a trading history, the volatility assumption was based on information
      then
      available to management. The volatility estimate is derived using historical
      data of public companies in the proposed industry. The Company believes the
      volatility estimate calculated from these companies is a reasonable benchmark
      to
      use in estimating the expected volatility of our units; however, the use of
      an
      index to estimate volatility may not necessarily be representative of the
      volatility of the underlying securities. Although an expected life of five
      years
      was used in the calculation, if the Company does not consummate a Business
      Combination with the prescribed time period and it liquidates the option will
      become worthless.





The
      Company has engaged the representative of the underwriters on a non-exclusive
      basis as an agent for the solicitation of target for a Business Combination.
      The
      Company has agreed to pay the representative of the underwriters a transaction
      fee in cash equal to 3% of the aggregate consideration paid by the Company
      in a
      Business Combination with a target business the representative of the
      underwriters introduces to the Company, if such Business Combination is
      consummated within twenty-four months of such introduction.





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 FINRA and the rules and
      regulations of the Securities and Exchange Commission, the Company has agreed
      to
      pay the representative of the underwriter for bona fide services rendered a
      commission equal to 3% of the exercise price for each Warrant exercised more
      than one year after the date of the Public Offering 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;




8




·
            The
                Warrants are held in a discretionary
                account;





·
            The
                Warrants are exercised in an unsolicited transaction;
                or





·
            The
                representative has not provided to the holder of the Warrants solicited
                for exercise a copy of the Public Offering prospectus with respect
                to the
                shares of common stock underlying the
                Warrants.





The
      Company has engaged Selway Partners LLC, an entity with which several of the
      Company’s officers and directors are affiliated for an aggregate monthly fee of
      $7,500 for certain administrative, technology, bookkeeping and secretarial
      services, as well as, the use of limited office space in New
      Jersey.





On
      May 1,
      2007, the Company entered into a $500,000 revolving credit agreement with SCP
      Private Equity Management Company, LLC, of which the Company’s Chief Executive
      officer and one of its directors are members. Any amounts outstanding under
      the
      revolving credit agreement will bear interest at a rate of 5.5% per year. Any
      funds outstanding under the revolving credit agreement will become due and
      payable by the Company upon our consummation of a business combination. As
      of
      September 30, 2008, the Company has not borrowed any amounts under this
      facility.





**8.**
            **Proposed
                Business Combination.**





On
      February 14, 2008, Vector and its newly-formed, wholly-owned subsidiary Cyalume
      Acquisition Corp. (‘‘Transaction Subsidiary’’), entered into a stock purchase
      agreement with Cyalume Technologies, Inc. (‘‘Cyalume’’) and GMS Acquisition
      Partners Holdings, LLC (‘‘Seller’’), which owns 100% of the issued and
      outstanding equity securities of Cyalume, pursuant to which the Transaction
      Subsidiary will acquire all of the outstanding securities of Cyalume, resulting
      in Cyalume becoming an indirect wholly-owned subsidiary of Vector the (“Proposed
      Acquisition”). The parties amended the stock purchase agreement on October 22,
      2008 in order to reallocate the payment of certain consideration amongst the
      holders of Series A Preferred Units of Seller, such that those holders would
      receive an aggregate of $10 million less in cash, and an aggregate of $10
      million more in stock of Vector, while the total transaction consideration
      remained unchanged. The total transaction consideration will equal approximately
      $117.1 million minus approximately $40.2 million for the repayment of the
      indebtedness of Cyalume, Cyalume’s unpaid acquisition expenses of approximately
      $700,000, and the value of the 1,505,646 shares placed in escrow at a
      contractually agreed value of $7.97 per share (which was based on the amount
      per
      public share held in the trust account as of the date of the purchase
      agreement). The estimated closing payment will be adjusted based on an estimate
      of Cyalume’s net working capital on the closing date. If Cyalume’s estimated net
      working capital is above $9,000,000, then the estimated closing payment will
      be
      increased, on a dollar for dollar basis, by the amount that the estimated net
      working capital exceeds $9,000,000. If Cyalume’s estimated net working capital
      is below $7,000,000, then the estimated closing payment will be reduced, on
      a
      dollar for dollar basis, by the difference between the estimated net working
      capital and $7,000,000. A number of shares held in escrow with a value equal
      to
      any adjustment on Vector’s behalf will be returned to Vector for cancellation in
      satisfaction of such adjustment. The amount held in escrow will be available
      for
      any purchase price adjustment and/or indemnification obligation of Seller.
      The
      Company has filed preliminary proxy statement on Schedule 14A which is pending
      SEC approval. Once SEC approval is received the Company will hold a meeting
      and
      the shareholders will vote on the proposed business combination.




9





**9.**
            **Bank
                Financing.**





As
      of
      August 1, 2008, and as amended October 10, 2008 and November 4, 2008, Vector
      signed a commitment letter for a senior secured credit facility from TD Bank,
      N.A. (“TD Banknorth”) in the aggregate amount of $33 million (which is the
      maximum amount that TD Banknorth would lend to the post-business combination
      company based on its financial position post business combination)
      (collectively, the “TD Loan”). The TD Loan is divided into three distinct
      facilities, consisting of (i) a $5,000,000 senior secured revolving credit
      facility (the “Revolver”); (ii) a $25.5 million amortizing senior secured term
      loan (the “Term Loan”); and (iii) a $2,500,000 commercial real estate mortgage
      loan (the “CREM”). The TD Loan is to close on or before December 31, 2008, and
      the Revolver, Term Loan and CREM are to mature three, five and five years from
      the closing date of the TD Loan, respectively. Cyalume would be the borrower
      under the facilities, which would close concurrently with the acquisition of
      Cyalume, and the TD Loan is to be guaranteed by Vector, and all existing or
      future
      domestic subsidiaries of Cyalume




The
      TD
      Loan, as well as any interest rate hedging provided by TD Banknorth, will be
      secured by a first priority perfected security interest in all of Cyalume’s
      tangible and intangible assets and all proceeds thereof. The Loans will also
      be
      secured by a pledge by Vector of Cyalume’s capital stock, 2/3 of Cyalume
      Technologies, S.A.’s capital stock, and a first mortgage on Cyalume’s real
      estate property located in West Springfield, MA. Cyalume is to pay an
      origination fee at closing in an amount equal to $415,000, and Cyalume will
      pay
      a commitment fee of $10,000 per month, which is payable whether or not the
      transaction closes. Cyalume will also pay a commitment fee equal to one half
      of
      one percent of the average daily unused portion of the Revolver, payable
      quarterly in arrears, after Closing.





Interest
      will accrue and payments will be due monthly in arrears on each of the Revolver
      and Term Loan at a rate determined by adding the applicable margin to 30, 60,
      or
      90 day LIBOR. The applicable margin will be set quarterly and will be based
      on a
      ratio of Cyalume’s senior debt to its adjusted EBITDA. The initial LIBOR margin
      will be 4.5%, with a LIBOR floor of 3.0%. The default-rate of interest will
      be
      2% above the applicable non-default interest rate. Other permissible debts
      incurred by Cyalume will be subordinate to the TD Loan. Cyalume will provide
      monthly, quarterly and annual reports to the lender to confirm Cyalume’s
      compliance with various financial covenants under the TD Loan. The TD Loan
      will
      contain a number of restrictions on Cyalume, including, without limitation,
      restrictions on new indebtedness and on payment of dividends.





The
      terms
      of the TD Loan are subject to the satisfactory completion of due diligence,
      credit approval, satisfactory review of documentation and such other terms
      and
      conditions as are determined by TD Banknorth.





**10.**
            **Subsequent
                Events.**





On
      October 15, 2008, the Company issued 593,750 shares of the Company’s common
      stock (the “Catalyst Shares”) and warrants to purchase up to 118,750 shares (the
“Catalyst Warrants”) of the Company’s common stock for $4,750,000 (the “Catalyst
      Proceeds”) to Catalyst Equity Management (“Catalyst”). The warrants issued to
      Catalyst will terminate five years after issuance and are exercisable for $8.00
      per share of the Company’s common stock. The warrants are exercisable on a
      cashless basis at the option of Catalyst. The warrants do not have any
      antidilution protection except in the case of significant corporate events
      such
      as splits or dividends of shares.





Pursuant
      to the subscription agreement, as amended, the Company is obligated to appoint
      Mr. Yair Shamir to its Board of Directors at the closing of the transaction
      with
      Cyalume. Until the earlier of (i) October 15, 2011, and (ii) the date on which
      Catalyst owns less than 50% of the shares of the Company’s common stock it
      purchased pursuant to the subscription agreement, the Company’s Board of
      Directors is obligated to nominate Mr. Yair Shamir to be a member of its Board
      of Directors and include him in its slate of board members to be presented
      to
      the stockholders of the Company for election at any meeting or consent held
      or
      signed for those purposes. The subscription agreement, as amended, provides
      that
      Catalyst will be entitled to demand and piggyback registration rights.




10


In
      the
      event that the Proposed Acquisition (as defined in Note 8) is not consummated
      by
      December 31, 2008, the Company has agreed not seek to consummate the Acquisition
      or seek to locate an alternative target business and will use its commercially
      reasonable best efforts to seek the approval of its stockholders to liquidate
      and dissolve the Company.





In
      connection with the subscription agreement, as amended, the Company and Catalyst
      entered into an escrow agreement pursuant to which (i) the Catalyst Shares,
      Catalyst Warrants and Catalyst Proceeds were placed into escrow, and (ii) may
      use the Catalyst Proceeds to acquire shares of the Company’s common stock in
      block trades or otherwise through the public markets (collectively, the
“Exchange Shares”), which Exchange Shares will then be placed into escrow. The
      timing, purchase price and the amount of any repurchases were to be determined
      by the Company's management, based on its evaluation of market conditions and
      other factors. In the event that the Acquisition is not consummated, the escrow
      agent will distribute the Exchange Shares and any portion of the Catalyst
      Proceeds still held in escrow to Catalyst and the Catalyst Shares and the
      Catalyst Warrants to the Company. In the event that the Acquisition is
      consummated, the escrow agent will distribute the Exchange Shares and any
      portion of the Purchase Price still held in escrow to the Company and the
      Catalyst Shares and the Catalyst Warrants to Catalyst. On October 15, 2008,
      the
      Company used $4,746,000 of the Catalyst Proceeds to acquire 600,000 shares
      of
      the Company’s common stock at a price of $7.91 per share.


11





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





**Overview**





Vector
      Intersect Security Acquisition Corp. is a blank check company organized under
      the laws of the State of Delaware on July 19, 2005. We were formed to acquire,
      through merger, capital stock exchange, asset acquisition or other similar
      business combination, one or more businesses in the homeland security, national
      security and/or command and control industries or businesses relating to the
      manufacture of products for use in such industries. We intend to utilize our
      cash derived from the net proceeds of our offering, our authorized and unissued
      shares of common and preferred stock, debt or a combination thereof to effect
      a
      business combination. Our officers and directors have agreed that they will
      not
      recommend to our shareholders that they approve a business combination with
      an
      entity that is affiliated with any of our officers or directors, or that is
      an
      entity in which any of our officers or directors, or any of their respective
      affiliates, has a direct or indirect investment. Our officers and directors
      have
      agreed not to recommend to our shareholders a business combination with an
      entity with which they are affiliated to prevent a conflict of interest from
      developing that could lead to liability for us in the future.





On
      February 14, 2008, Vector and its newly-formed, wholly-owned subsidiary Cyalume
      Acquisition Corp. (‘‘Transaction Subsidiary’’), entered into a stock purchase
      agreement with Cyalume Technologies, Inc. (‘‘Cyalume’’) and GMS Acquisition
      Partners Holdings, LLC (‘‘Seller’’), which owns 100% of the issued and
      outstanding equity securities of Cyalume, pursuant to which the Transaction
      Subsidiary will acquire all of the outstanding securities of Cyalume, resulting
      in Cyalume becoming an indirect wholly-owned subsidiary of Vector. The parties
      amended the stock purchase agreement on October 22, 2008 in order to reallocate
      the payment of certain consideration amongst the holders of Series A Preferred
      Units of Seller, such that those holders would receive an aggregate of $10
      million less in cash, and an aggregate of $10 million more in stock of Vector,
      while the total transaction consideration remained unchanged. The total
      transaction consideration will equal approximately $117.1 million minus
      approximately $40.2 million for the repayment of the indebtedness of Cyalume,
      Cyalume’s unpaid acquisition expenses of approximately $700,000, and the value
      of the 1,505,646 shares placed in escrow at a contractually agreed value of
      $7.97 per share (which was based on the amount per public share held in the
      trust account as of the date of the purchase agreement). The estimated closing
      payment will be adjusted based on an estimate of Cyalume’s net working capital
      on the closing date. If Cyalume’s estimated net working capital is above
      $9,000,000, then the estimated closing payment will be increased, on a dollar
      for dollar basis, by the amount that the estimated net working capital exceeds
      $9,000,000. If Cyalume’s estimated net working capital is below $7,000,000, then
      the estimated closing payment will be reduced, on a dollar for dollar basis,
      by
      the difference between the estimated net working capital and $7,000,000. A
      number of shares held in escrow with a value equal to any adjustment on Vector’s
      behalf will be returned to Vector for cancellation in satisfaction of such
      adjustment. The amount held in escrow will be available for any purchase price
      adjustment and/or indemnification obligation of Seller.




Vector
      has filed a preliminary proxy statement relating to the transaction with Cyalume
      with the SEC and is waiting for comments or an indication from the SEC that
      they
      have no additional comments.




**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 in our other Securities and
      Exchange Commission filings. The following discussion should be read in
      conjunction with our unaudited Financial Statements and related Notes thereto
      included elsewhere in this report.




12


**Critical
      Accounting Policies**




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 these
      estimates.




Deferred
      income taxes are provided for temporary differences between the carrying amount
      of assets and liabilities for financial reporting purposes and the amounts
      for
      tax purposes. Valuation allowances are provided against the deferred tax asset
      amounts when the realization is uncertain.




Vector
      purchases U.S. Treasury Bills and money market investments and holds these
      investments to maturity. The investments are recorded at market value which
      approximates their carrying amount and includes accrued interest.




Vector
      must seek stockholder approval to effect any business combination. Vector will
      proceed with a business combination only if a majority of the shares of common
      stock issued in its initial public offering are voted in favor of the business
      combination, and public stockholders owning less than 20% of the shares sold
      in
      the offering exercise their redemption rights (which requires that the
      stockholder electing redemption vote against the business combination). Public
      stockholders voting against the combination may demand that Vector redeem his
      or
      her shares at an initial redemption price of $7.94 (which includes $0.32 of
      deferred underwriting discount) per share plus interest earned thereon in the
      trust account, net of taxes payable and up to $1,500,000 of interest income
      which may be released from the trust account to fund our working capital.
      Accordingly, Vector has classified the contingent shares at $7.62 ($7.94 -
      $0.32) and related deferred interest as a liability, not as permanent
      equity.




**Results
      of Operations f** **or
      the Three Month Period ended September 30, 2008**




We
      reported net income of $57,778 for the three-month period ended September 30,
      2008. We incurred a net income of $269,763 for the three-month period ended
      September 30, 2007. The decrease in net income during the three-month period
      ending September 30, 2008 was mainly the result of acquisition costs incurred
      in
      the quarter, which significantly increased after signing a definitive agreement
      with Cyalume in February 2008. Until we enter into a business combination,
      we
      will not have revenues.




Overall,
      for the quarter ended September 30, 2008, we incurred $135,537 of consulting
      and
      professional fees, $29,990 of insurance expense, $61,157 of rent expense and
      other operating costs. For the quarter ended September 30, 2007, we incurred
      $92,235 of consulting and professional fees, $33,709 of rent expense and other
      operating costs.




Our
      trust account earned interest of $286,642 for the three months ended September
      30, 2008.




**Results
      of Operations for the** **Nine
      Month Period ended September 30, 2008**




We
      reported net income of $275,634 for the nine-month period ended September 30,
      2008. We incurred a net income of $446,443 for the nine-month period ended
      September 30, 2007. The decrease in net income during the nine-month period
      ending September 30, 2008 was mainly the result of acquisition costs incurred
      in
      the quarter, which significantly increased after signing a definitive agreement
      with Cyalume in February 2008. Until we enter into a business combination,
      we
      will not have revenues.




13


Overall,
      for the nine months ended September 30, 2008, we incurred $409,176 of consulting
      and professional fees, $85,100 of insurance expense, $147,373 of rent expense
      and other operating costs. For the nine months ended September 30, 2007, we
      incurred $151,250 of consulting and professional fees, $76,611 of rent expense
      and other operating costs.




Our
      trust account earned interest of $899,226 for the nine months ended September
      30, 2008.




**Liquidity
      and Capital Resources**




On
      April 25, 2007, we completed a private placement of 187,500 units to our Chief
      Executive Officer and one of our directors and received net proceeds of $1.5
      million. On May 1, 2007, we consummated our initial public offering of 7,312,500
      units. Each unit in both the private placement and 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 our common
      stock at an exercise price of $5.00.




The
      net proceeds from the sale of our units, after deducting certain offering
      expenses of approximately $4.0 million including underwriting discounts of
      approximately $3.5 million, were approximately $54.5 million. Approximately
      $58.0 million of the proceeds from the initial public offering and the private
      placement was placed in a trust account for our benefit. Except for $1.5 million
      in interest that is earned on the funds contained in the trust account that
      may
      be released to us to be used as working capital, we will not be able to access
      the amounts held in the trust until we consummate a business combination. The
      trust account also contains approximately $2.3 million of the underwriter’s
      compensation which will be paid to them only in the event of a business
      combination. The amounts held outside of the trust account are available to
      be
      used by us to provide for business, legal and accounting due diligence on
      prospective acquisitions and continuing general and administrative expenses.
      From July 19, 2005 (the date of our inception) through September 30, 2008,
      we
      had operating expenses of approximately $1,216,969 and deferred acquisition
      costs of approximately $274,736. The net proceeds deposited into the trust
      fund
      remain on deposit in the trust account earning interest. As of September 30,
      2008, we had approximately $58,708,365 held in the trust account, which includes
      deferred underwriting fees of approximately $2,340,000. Additionally, as of
      September 30, 2008, we have approximately $86,858 outside the trust account
      to
      fund our working capital requirements. As of September 30, 2008, we have
      received $1,500,000 in interest from the trust account which we used for working
      capital purposes.




On
      May 1, 2007, we entered into a $500,000 revolving credit agreement with SCP
      Private Equity Management Company, LLC, of which our Chief Executive Officer
      and
      one of our directors are members. Any amounts outstanding under the revolving
      credit agreement will bear interest at a rate of 5.5% per year. Any funds
      outstanding under the revolving credit agreement will become due and payable
      by
      us upon our consummation of a business combination. As of September 30, 2008,
      we
      have not borrowed any amounts under this facility.




Vector
      will use substantially all of the net proceeds of the initial public offering
      to
      acquire a target business, including identifying and evaluating prospective
      acquisition candidates, selecting the target business, and structuring,
      negotiating and consummating the business combination. 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.




Assuming
      the release of the full amount of the interest we are entitled to receive from
      the trust account, we believe we will have sufficient available funds outside
      of
      the trust account to operate through May 1, 2009, assuming that a business
      combination is not consummated during that time. We do not believe we will
      need
      to raise additional funds in order to meet the expenditures required for
      operating our business. 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 that is presented to us. We would only
      consummate such a financing simultaneously with the consummation of a business
      combination. We
      anticipate that we will need at least $16,000,000 (and up to at least
      $27,000,000 if the maximum number of Vector’s stockholders redeem their shares
      of common stock) to consummate the Cyalume transaction.




14


Our
      accounts payable and accrued expenses, as of September 30, 2008 were $129,995
      and related expenses and $23,852 of accrued interest on related party
      notes.




Commencing
      on April 25, 2007 we began incurring a fee of approximately $7,500 per month
      for
      certain administrative, technology, bookkeeping and secretarial services, as
      well as, the use of limited office space in New Jersey. We pay consultants
      approximately $12,000 per month for services in connection with Vector’s
      reporting obligations and in connection with Vector’s search for a target
      business.




Assuming
      the completion of the Cyalume acquisition, Vector will incur approximately
      $33
      million of new debt in connection with the transaction. The
      total
      transaction consideration will equal approximately $117.1 million, which
      includes approximately $29.6 million in cash, approximately 6.2 million shares
      of Vector common stock valued at $7.50 per share (the closing price of Vector’s
      common stock on September 30, 2008) approximately $40.2 million for the
      repayment of the indebtedness of Cyalume, Cyalume’s unpaid acquisition expenses
      of approximately $700,000, and the value of the 1,505,646 shares placed in
      escrow at a contractually agreed value of $7.97 per share (which was based
      on
      the amount per public share held in the trust account as of the date of the
      purchase agreement). The estimated closing payment will be adjusted based on
      an
      estimate of Cyalume’s net working capital on the closing date. If Cyalume’s
      estimated net working capital is above $9,000,000, then the estimated closing
      payment will be increased, on a dollar for dollar basis, by the amount that
      the
      estimated net working capital exceeds $9,000,000. If Cyalume’s estimated net
      working capital is below $7,000,000, then the estimated closing payment will
      be
      reduced, on a dollar for dollar basis, by the difference between the estimated
      net working capital and $7,000,000. A number of shares held in escrow with
      a
      value equal to any adjustment on Vector’s behalf will be returned to Vector for
      cancellation in satisfaction of such adjustment. The amount held in escrow
      will
      be available for any purchase price adjustment and/or indemnification obligation
      of Seller. Vector
      will also assume the current liabilities relating to accounts payable, accrued
      liabilities and billings in excess of costs and estimated earnings on incomplete
      contracts.




The
      Company has filed preliminary proxy statement on Schedule 14A and is being
      reviewed by the SEC. Once SEC approval is received the Company will hold a
      meeting and the Shareholders will vote on the proposed business
      combination.





On
      October 15, 2008, Vector issued Catalyst Equity Management (“Catalyst”) 593,750
      shares of Vector’s common stock and warrants to purchase 118,750 shares of
      common stock for $4,750,000 in a private offering, exempt from registration
      requirements under Section 4(2) of the Securities Act of 1933 (the “Securities
      Act”). Vector paid no fees or commission in connection with the issuance. The
      common stock, warrants and $4,750,000 of proceeds were placed into escrow,
      and
      Vector used $4,746,000 of the proceeds of the offering to acquire 600,000 shares
      of Vector’s common stock, at $7.91 per share, which shares were placed into
      escrow. The warrants issued to Catalyst will terminate five years after
      issuance, are exercisable for $8.00 per share of Vector’s common stock and the
      warrants are exercisable on a cashless basis at the option of Catalyst.





**Off-Balance
      Sheet Arrangements**




Vector
      does not have any off-balance sheet arrangements.





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




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




15




**ITEM
                4.**
            **CONTROLS
                AND PROCEDURES.**




*Disclosure
      Controls and Procedures.*





We
      maintain disclosure controls and procedures (as defined in Rules 13a-15(e)
      and
      15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended
      (the
      "Exchange Act") that are designed to ensure that information required to be
      disclosed in our reports filed pursuant to the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules, regulations and related forms, and that such information is
      accumulated and communicated to our principal executive officer and principal
      financial officer, as appropriate, to allow timely decisions regarding required
      disclosure.





As
      of the end of the period covered by this report, the Company’s management
      conducted an evaluation, under the supervision and with the participation of
      our
      principal executive officer and our principal financial officer, of the
      effectiveness of the design and operation of our disclosure controls and
      procedures. Based on their evaluation of our disclosure controls and procedures,
      as of the end of the period covered by this report, our chief executive officer
      and chief financial officer have concluded that our disclosure controls and
      procedures are effective.





*Internal
      Control Over Financial Reporting.*





Our
      management, under the supervision of our principal executive officer and our
      principal financial officer, is also responsible for establishing and
      maintaining adequate internal control over financial reporting. The Company’s
      internal control over financial reporting is designed to provide reasonable
      assurance regarding the reliability of financial reporting and the preparation
      of financial statements for external purposes in accordance with generally
      accepted accounting principles.





There
      were no changes in internal controls over financial reporting that occurred
      during the first nine months of 2008 that have materially affected, or are
      reasonably likely to materially affect, the Company’s internal control over
      financial reporting.





**ITEM
                4T.**
            **CONTROLS
                AND PROCEDURES.**




Not
      Applicable.




16


**PART
      II — OTHER INFORMATION**





**ITEM
                1.**
            **LEGAL
                PROCEEDINGS.**





None.





**ITEM
                1A.**
            **RISK
                FACTORS.**





In
      addition to the other information set forth in this report, you should carefully
      consider the factors discussed in the section titled ‘‘Risk Factors’’ in our
      Annual Report on Form 10-K, filed on April 15, 2008, which could materially
      affect our business financial condition or future results. The risks described
      in our Annual Report are not the only risks facing our Company. Additional
      risks
      and uncertainties not currently known to us or that we currently deem to be
      immaterial also may materially adversely affect our business, financial
      condition and/or operating results. There have been no material changes to
      the
      risk factors described in our Annual Report on form 10-K.





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


In
        October 2008, the Company repurchased 600,000 shares of its common stock
        in a
        block trade at a price of $7.91 per share, for an aggregate purchase price
        of
        $4,746,000.
  On
          April 25, 2007, we consummated a private placement of 187,500 units. On
          May 1,
          2007, we consummated our initial public offering of 7,312,500 units. Each
          unit
          consists 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 our
          common stock at an exercise price of $5.00. The units were sold at an offering
          price of $8.00 per unit, generating total gross proceeds of $60,000,000.
          Rodman
& Renshaw, LLC acted as lead underwriter. The securities sold in our initial
          public offering were registered under the Securities Act of 1933 on a
          registration statement on Form S-1 (No. 333-127644). The Securities and
          Exchange
          Commission declared the registration statement effective on April 25,
          2007.
 
 We
          incurred a total of $3,510,000 in underwriting discounts and commissions
          and
          placement agent fees, of which $2,340,000 has been placed in the trust
          account.
          Such portion of the underwriter’s compensation will only be paid to the
          underwriters in the event that we consummate a business combination. The
          total
          expenses in connection with the sale of our units in the private placement
          and
          the initial public offering were $1,678,843. No expenses of the offering
          were
          paid to any of our directors or officers or any of their respective affiliates.
          All the funds held in the trust account have been invested in either Treasury
          Bills or Money Market Accounts.
 
 After
          deducting the underwriting discounts and commissions, placement agent fees
          and
          the offering expenses, the total net proceeds to us from the private placement
          and the initial public offering were approximately $60,000,000, of which
          approximately $58,030,000 (or $7.62 per unit sold in the offering, which
          does
          not include the deferred underwriting discounts of $2,340,000 that is held
          in
          the trust account.) was deposited into a trust account and the remaining
          proceeds are available to be used to provide for business, legal and accounting
          due diligence on prospective business combinations and continuing general
          and
          administrative expenses. The amounts held in the trust account may only
          be used
          by us upon the consummation of a business combination, except that we may
          use up
          to $1,500,000 of the interest earned on the trust account to fund our working
          capital prior to a business combination. As of September 30, 2008, there
          was
          approximately $58,708,365 held in the trust account, which includes deferred
          underwriting fees of $2,340,000 (including deferred
          interest).
  **Issuer
        Purchases of Equity Securities**
  **Period**
              
              **(a) Total**
                **Number of**
                **Shares (or**
                **Units)**
                **Purchased**
              
              **(b) Average Price**
                **Paid per Share (or**
                **Unit)**
              
              **(c) Total Number**
                **of Shares (or**
                **Units) Purchased**
                **as Part of Publicly**
                **Announced Plans**
                **or Programs**
              
              **(d) Maximum Number**
                **(or Approximate Dollar**
                **Value) of Shares (or**
                **Units) that May Yet Be**
                **Purchased Under the**
                **Plans or Programs**October
                  1 to October 31
              
              
              600,000
              
              
              7.91
              
              
              600,000
              
              $
              4,000
              (1)
 
 (1)
        Equivalent to 540 shares at $7.40 per shares, the market price as of November
        11, 2008.


**ITEM
                3.**
            **DEFAULTS
                UPON SENIOR SECURITIES.**





None.


17





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





None.





**ITEM
                5.**
            **OTHER
                INFORMATION.**





None.





**ITEM
                6.**
            **EXHIBITS.**





**Exhibit
                No.**
            
            **Description**3(i)
            
            Fourth
                Amended and Restated Certificate of Incorporation (1)3(ii)
            
            Bylaws
                (1)10.1
            
            Subscription
                Agreement with Catalyst Equity Management dated September 5, 2008
                (2)31.1
            
            Certification
                of the Chief Executive Officer (Principal Executive, Accounting and
                Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange
                Act, as amended.32.1
            
            Certification
                of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.





(1)
            Incorporated
                by reference to the Registrant’s Registration Statement on Form S-1
                (File No. 333-127644).(2)
            Incorporated
                by reference to the Current Report on Form 8-K filed September 8,
                2008.




18


**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.





**VECTOR
                INTERSECT SECURITY ACQUISITION CORP.**Date:
                November 12, 2008
            By:
            /s/
                Yaron
                EitanYaron
                EitanChief
                Executive Officer(Principal
                Executive, Accounting and Financial
                officer)




19




**Exhibit
      Index**





**Exhibit
                No.**
            
            **Description**3(i)
            
            Fourth
                Amended and Restated Certificate of Incorporation (1)3(ii)
            
            Bylaws
                (1)10.1
            
            Subscription
                Agreement with Catalyst Equity Management dated September 5, 2008
                (2)31.1
            
            Certification
                of the Chief Executive Officer (Principal Executive, Accounting and
                Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange
                Act, as amended.32.1
            
            Certification
                of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.





(1)
            Incorporated
                by reference to the Registrant’s Registration Statement on Form S-1
                (File No. 333-127644).(2)
            Incorporated
                by reference to the Current Report on Form 8-K filed September 8,
                2008.