**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-QSB**




(Mark
      One)




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




For
      the
      quarterly period ended June 30, 2006




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




For
      the
      transition period from __________________ to __________________




Commission
      file number: 333-117495




**GLOBALOPTIONS
                GROUP, INC**(Name
                of Small Business Issuer in Its Charter)Nevada
            
            73-1703260(State
                or Other Jurisdiction of Incorporation or Organization)
            
            (I.R.S.
                Employer Identification No.)75
                Rockefeller Plaza, 27thFloor
              New
                York, New York
            
            10019(Address
                of Principal Executive Offices)
            
            (Zip
                Code)





Issuer’s
      telephone number, including area code: (212) 445-6262




Creative
      Solutions with Art, Inc., 32C Hadley Village Road, South Hadley, MA
      01075


(Former
      name and former address, if changed since last report)




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




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





As
      of
      August 11, 2006, there were 19,829,544 shares
      of the issuer’s common equity outstanding.





Transitional
      Small Business Disclosure Format (Check one):  Yes  ̈ No ý







**GLOBALOPTIONS
                  GROUP, Inc. AND SUBSIDIARIES****Form
                  10-QSB****June
                  30, 2006****Index
                  to Unaudited Condensed Consolidated Financial
                  Statements****PART
                  I - FINANCIAL INFORMATION**ITEM
                  1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited)
              
              
              **Page(s**)****Condensed
                  Consolidated Balance Sheet as of June 30, 2006
              
              
              P.
                  1Condensed
                  Consolidated Statements of Operationsfor
                  the Three Months and Six Months Ended June 30, 2006 and
                  2005
              
              
              P.
                  2Condensed
                  Consolidated Statements of Stockholders' Equityfor
                  the Six Months Ended June 30, 2006
              
              
              P.
                  3Condensed
                  Consolidated Statements of Cash Flows for theSix
                  Months Ended June 30, 2006 and 2005
              
              
              P.
                  4Notes
                  to Condensed Consolidated Financial Statements
              
              
              P.
                  7ITEM
                  2. MANAGEMENT'S DISCUSSION AND ANALYSIS ORPLAN
                  OF OPERATION
              
              
              P.
                  34ITEM
                  3. CONTROLS AND PROCEDURES
              
              
              P.
                  47**PART
                  II - OTHER INFORMATION**ITEM
                  1. LEGAL PROCEEDINGS
              
              
              P.
                  48ITEM
                  2. UNREGISTERED SALES OF EQUITY SECURITIESAND
                  USE OF PROCEEDS
              
              
              P.
                  48ITEM
                  3. DEFAULTS UPON SENIOR SECURITIES
              
              
              P.
                  48ITEM
                  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
              
              
              P.
                  48ITEM
                  5. OTHER INFORMATION
              
              
              P.
                  49ITEM
                  6. EXHIBITS
              
              
              P.
                  49SIGNATURES
              
              
              P.
                  50EXHIBITS
                  31.1 and 31.2EXHIBITS
                  32.1 and 32.2
   
  Part
                    I Financial InformationItem
                    1.     FINANCIAL STATEMENTS**GLOBALOPTIONS
                    GROUP, INC. AND SUBSIDIARIES****Condensed
                    Consolidated Balance Sheet****June
                    30,
                    2006****(Unaudited)**
  **ASSETS**Current
                    assets:Cash
                
                $
                22,956,403Restricted
                    cash
                
                
                1,747,282Accounts
                    receivable, net of allowance for doubtfulaccounts
                    of $1,113,000
                
                
                16,488,991Prepaid
                    expenses and other current assets
                
                
                214,292Total
                    current assets
                
                
                41,406,968Property
                    and equipment, net
                
                
                626,578Intangible
                    assets, net
                
                
                9,011,625Goodwill
                
                
                18,358,935Security
                    deposits and other assets
                
                
                107,972Total
                    assets
                
                $
                69,512,078**LIABILITIES
                    AND STOCKHOLDERS' EQUITY**Current
                    liabilities:Note
                    payable for CBR acquisition
                
                $
                904,229Note
                    payable for Safir acquisition
                
                
                1,000,000Current
                    portion of notes payable for Secure Source
                    acquisition
                
                
                500,000Note
                    payable to seller for JLWA acquisition
                
                
                400,000Due
                    to former stockholders of CBR
                
                
                375,857Due
                    to former members of JLWA for earnout
                
                
                2,242,139Accounts
                    payable
                
                
                4,640,266Deferred
                    revenues
                
                
                183,471Accrued
                    compensation and related benefits
                
                
                791,787Other
                    current liabilities
                
                
                788,142Total
                    current liabilities
                
                
                11,825,891Notes
                    payable for Secure Source acquistion, less current portion
                
                
                750,000Total
                    liabilities
                
                
                12,575,891CommitmentsStockholders'
                    equity:Preferred
                    stock, $0.001 par value,14,968,000
                    shares authorized, no sharesissued
                    or outstanding
                
                
                -Series
                    A convertible preferred stock, voting, $0.001 parvalue,
                    16,000 shares authorized, 7,505 sharesissued
                    and outstanding, liquidation preference $7,505,000
                
                
                8Series
                    B convertible preferred stock, voting, $0.001 par value,60,000
                    shares authorized, 53,073 shares issued andoutstanding,
                    liquidation preference $53,073,000
                
                
                53Common
                    stock, $.001 par value; 85,000,000 shares
                    authroized;18,774,399
                    shares issued and outstanding
                
                
                18,775Deferred
                    consulting fees
                
                
                (1,826,009
                )Additional
                    paid-in capital
                
                
                77,306,559Accumulated
                    deficit
                
                
                (18,563,199
                )Total
                    stockholders' equity
                
                
                56,936,187Total
                    liabilities and stockholders' equity
                
                $
                69,512,078
  See
          notes
          to these condensed consolidated financial statements.
  P.1
  **GLOBALOPTIONS
                    GROUP, INC. AND SUBSIDIARIES****Condensed
                    Consolidated Statements Of Operations****(Unaudited)**
  For
                    the Three Months Ended
                
                
                For
                    the Six Months EndedJune
                    30,
                
                
                June
                    30,2006
                
                
                2005
                
                
                2006
                
                
                2005Revenues
                
                $
                17,359,789
                
                $
                1,196,567
                
                $
                23,594,614
                
                $
                2,252,575Cost
                    of revenues
                
                
                8,778,654
                
                
                594,990
                
                
                12,122,809
                
                
                1,088,645Gross
                    profit
                
                
                8,581,135
                
                
                601,577
                
                
                11,471,805
                
                
                1,163,930Operating
                    expenses:Selling
                    and marketing, includingcompensatory
                    element of stockissuances
                    of $186,560, $15,500, $186,560 and$38,500
                    for the three and six monthsended
                    2006 and 2005, respectively
                
                
                2,953,774
                
                
                144,760
                
                
                3,768,205
                
                
                286,260General
                    and administrative, includingcompensatory
                    element of stockissuances
                    of $1,022,230, $337,850, $1,372,549,and
                    $ –,
                    for the three and six months ended2006
                    and 2005, respectively
                
                
                5,516,950
                
                
                1,542,104
                
                
                8,643,984
                
                
                2,346,474Total
                    operating expenses
                
                
                8,470,724
                
                
                1,686,864
                
                
                12,412,189
                
                
                2,632,734Income
                    (loss) from operations
                
                
                110,411
                
                
                (1,085,287
                )
                
                (940,384
                )
                
                (1,468,804
                )Other
                    income (expense):Interest
                    income
                
                
                16,537
                
                
                -
                
                
                16,537
                
                
                875Interest
                    expense
                
                
                (506,280
                )
                
                (24,293
                )
                
                (607,050
                )
                
                (63,004
                )Amortization
                    of debt discounts
                
                
                (7,522,602
                )
                
                -
                
                
                (7,522,602
                )
                
                -Amortization
                    of deferred financing costs
                
                
                (2,613,521
                )
                
                -
                
                
                (2,694,500
                )
                
                -Other
                    expense, net
                
                
                (10,625,866
                )
                
                (24,293
                )
                
                (10,807,615
                )
                
                (62,129
                )Net
                    loss
                
                
                (10,515,455
                )
                
                (1,109,580
                )
                
                (11,747,999
                )
                
                (1,530,933
                )Deemed
                    dividends to Series B convertiblepreferred
                    stockholders
                
                
                (24,413,362
                )
                
                (832,500
                )
                
                (24,413,362
                )
                
                (832,500
                )Net
                    loss applicable to common stockholders
                
                $
                (34,928,817
                )
                $
                (1,942,080
                )
                $
                (36,161,361
                )
                $
                (2,363,433
                )Basic
                    and diluted net loss per share
                
                $
                (2.04
                )
                $
                (0.20
                )
                $
                (2.28
                )
                $
                (0.25
                )Weighted
                    average number of common sharesoutstanding
                    - basic and diluted
                
                
                17,084,382
                
                
                9,723,783
                
                
                15,889,747
                
                
                9,528,638
  See
          notes
          to these condensed consolidated financial statements.
 P.2
  **GLOBALOPTIONS
                    GROUP, INC. AND SUBSIDIARIES****Condensed
                    Consolidated Statement of Stockholders'
                    Equity****For
                    the Six Months Ended June 30, 2006****(Unaudited)**
 **Common
                      Stock**
                  
                  **Series
                      A Convertible**
                    **Preferred
                      Stock**
                  
                  **Series
                      B Convertible**
                    **Preferred
                      Stock**
                  
                  **Additional**
                    **Paid-in**
                  
                  **Deferred**
                    **Consulting**
                  
                  **Accumulated**
                  
                  **Total**
                    **Stockholders'****Shares**
                  
                  **Amount**
                  
                  **Shares**
                  
                  **Amount**
                  
                  **Shares**
                  
                  **Amount**
                  
                  **Capital**
                  
                  **Fees**
                  
                  **Deficit**
                  
                  **Equity**Balance,
                      January 1, 2006
                  
                  
                  14,490,582
                  
                  $
                  14,490
                  
                  
                  7,750
                  
                  $
                  8
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  12,435,321
                  
                  $
                  (848,181
                  )
                  $
                  (6,815,200
                  )
                  $
                  4,786,438Issuance
                      of common stock in connection with the purchase of JLWA
                  
                  
                  819,672
                  
                  
                  820
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,999,180
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,000,000Issuance
                      of stock options for services
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,354,249
                  
                  
                  (1,354,249
                  )
                  
                  -
                  
                  
                  -Revaluation
                      of stock options granted to consultants
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  74,717
                  
                  
                  -
                  
                  
                  -
                  
                  
                  74,717Amortization
                      of deferred consulting fees
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  376,421
                  
                  
                  -
                  
                  
                  376,421Issuance
                      of common stock for services
                  
                  
                  87,061
                  
                  
                  87
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  174,913
                  
                  
                  -
                  
                  
                  -
                  
                  
                  175,000Issuance
                      of Series B convertible preferred preferred stock upon exchage
                      of 
                      convertible notes payable and  accrued interest
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  53,073
                  
                  
                  53
                  
                  
                  46,150,678
                  
                  
                  -
                  
                  
                  -
                  
                  
                  46,150,731Issuance
                      of common stock for services
                  
                  
                  58,539
                  
                  
                  59
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  117,019
                  
                  
                  -
                  
                  
                  -
                  
                  
                  117,078Issuance
                        of common stock in connection with purchase of Safir
                  
                  
                  2,985,075
                  
                  
                  2,985
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  5,997,015
                  
                  
                  -
                  
                  
                  -
                  
                  
                  6,000,000Issuance
                      of common stock in connection with purchase of Secure
                      Source
                  
                  
                  210,970
                  
                  
                  211
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  499,789
                  
                  
                  -
                  
                  
                  -
                  
                  
                  500,000Amortization
                      of debt discounts on  convertible notes payable
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  7,522,602
                  
                  
                  -
                  
                  
                  -
                  
                  
                  7,522,602Amortization
                      of stock options costs
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  981,199
                  
                  
                  -
                  
                  
                  -
                  
                  
                  981,199Issuance
                      of common stock in connection with the conversion of shares
                      of Series
                      A
                      convertible preferred stock.
                  
                  
                  122,500
                  
                  
                  123
                  
                  
                  (245
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (123
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -Net
                      loss
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (11,747,999
                  )
                  
                  (11,747,999
                  )Balance,
                      June 30, 2006
                  
                  
                  18,774,399
                  
                  $
                  18,775
                  
                  
                  7,505
                  
                  $
                  8
                  
                  
                  53,073
                  
                  $
                  53
                  
                  $
                  77,306,559
                  
                  $
                  (1,826,009
                  )
                  $
                  (18,563,199
                  )
                  $
                  56,936,187
  See
          notes
          to these condensed consolidated financial statements.
  P.3
  **GLOBALOPTIONS
                    GROUP, INC. AND SUBSIDIARIES****Condensed
                    Consolidated Statements of Cash
                    Flows****(Unaudited)**
  For
                    the Six Months Ended June
                    302006
                
                2005Cash
                    flows from operating activities:Net
                    loss
                
                $
                (11,747,999
                )
                $
                (1,530,933
                )Adjustments
                    to reconcile net loss to net cash used in operating
                    activities:Provision
                    for bad debts
                
                
                86,812
                
                
                (19,591
                )Depreciation
                    and amortization
                
                
                704,394
                
                
                21,166Stock
                    based compensation
                
                
                1,549,415
                
                
                38,500Amortization
                    of debt discounts
                
                
                7,522,602
                
                
                -Amortization
                    of deferred financing cost
                
                
                2,694,500
                
                
                -Reverse
                    merger expense paid with common stock
                
                
                -
                
                
                337,850Changes
                    in operating assets:Accounts
                    receivable
                
                
                (7,592,127
                )
                
                38,906Prepaid
                    expenses and other current assets
                
                
                (33,922
                )
                
                (60,985
                )Security
                    deposits and other assets
                
                
                26,575
                
                
                -Changes
                    in operating liabilites:Accounts
                    payable
                
                
                1,321,774
                
                
                104,087Deferred
                    revenue
                
                
                66,554
                
                
                -Accrued
                    compensation and related benefits
                
                
                (231,908
                )
                
                81,091Due
                    to former stockholder of CBR
                
                
                (219,463
                )
                
                -Due
                    to former members of JLWA for earnout
                
                
                2,242,139
                
                
                -Other
                    current liabilites
                
                
                490,961
                
                
                (5,648
                )Total
                    adjustments
                
                
                8,628,306
                
                
                535,376Net
                    cash used in operating activities
                
                
                (3,119,693
                )
                
                (995,557
                )Cash
                    flows from investing activities:Purchases
                    of property and equipment
                
                
                (16,197
                )
                
                -Purchase
                    of certificate of deposit
                
                
                (1,747,282
                )
                
                -Purchase
                    of client list
                
                
                (65,000
                )
                
                -Acquisition
                    of Safir, less cash acquired of $447,115
                
                
                (1,693,534
                )
                
                -Acquisition
                    of JLWA
                
                
                (6,003,540
                )
                
                -Net
                    cash used in investing activities
                
                
                (9,525,553
                )
                
                -
 See
          notes
          to these condensed consolidated financial statements.
  P.4
  **GLOBALOPTIONS
                    GROUP, INC. AND SUBSIDIARIES****Condensed
                    Consolidated Statements of Cash Flows, continued****(Unaudited)**For
                    the Six Months EndedJune
                    30,2006
                
                2005Cash
                    flows from financing activities:Net
                    repayments (proceeds) of line of credit
                
                $
                (543,453
                )
                $
                211,250Proceeds
                    from issuance of Series A convertible preferred stock
                
                
                -
                
                
                7,500,000Proceeds
                    from convertible notes payable
                
                
                45,050,000
                
                
                -Repayment
                    of convertible notes payable
                
                
                (7,500,000
                )
                
                -Deferred
                    financing costs
                
                
                (1,933,500
                )
                
                (458,550
                )Net
                    cash provided by financing activities
                
                
                35,073,047
                
                
                7,252,700Net
                    increase in cash
                
                
                22,427,801
                
                
                6,257,143Cash
                    - beginning
                
                
                528,602
                
                
                533,018Cash
                    - ending
                
                $
                22,956,403
                
                $
                6,790,161Supplemental
                    disclosure of cash flow information:Cash
                    paid during the period for interest
                
                $
                100,131
                
                $
                51,000Supplemental
                    discolsures of non-cash investing and financing
                    activities:Common
                    stock of GlobalOptions Inc. issued upon conversion ofSeries
                    A convertible prefered stock
                
                $
                123
                
                $
                -Common
                    stock of GlobalOptions, Inc. issued upon conversion ofconvertible
                    note payable - stockholder and related accrued interest
                
                $
                -
                
                $
                267,083Issuance
                    of Series B convertible preferred stock upon exchange ofof
                    convertible notes payable and accrued interest
                
                $
                46,150,731
                
                $
                -Deferred
                    financing costs incurred through the issuance ofconvertible
                    notes payable
                
                $
                761,000
                
                $
                -Supplemental
                    non-cash investing and financial activity - acquisition of
                    JLWA:Assets
                    acquired and liabilities assumed:Current
                    assets
                
                $
                4,345,154Property
                    and equipment
                
                
                185,235Intangible
                    assets
                
                
                4,930,000Goodwill
                    recognized on purchase business combination
                
                
                883,766Security
                    deposits and prepaid expenses
                
                
                99,892Accounts
                    payable, accrued expenses and deferred revenues
                
                
                (2,040,507
                )Total
                    purchase price
                
                
                8,403,540Less:
                    Cash paid to acquire JLWA
                
                
                (6,003,540
                )Non-cash
                    consideration to seller
                
                $
                2,400,000Non-cash
                    consideration, consisting of:Common
                    stock issued to acquire JLWA
                
                $
                2,000,000Note
                    payable issued to seller
                
                
                400,000Total
                    non-cash consideration
                
                $
                2,400,000
 See
          notes
          to these condensed consolidated financial statements.
  P.5
  **GLOBALOPTIONS
                    GROUP, INC. AND SUBSIDIARIES****Condensed
                    Consolidated Statements of Cash Flows,
                    continued****(Unaudited)**Supplemental
                    non-cash investing and financial activity - acquisition of
                    Safir:Assets
                    acquired and liabilities assumed:Current
                    assets
                
                $
                2,852,888Property
                    and equipment
                
                
                180,906Intangible
                    assets
                
                
                1,770,000Goodwill
                    recognized on purchase business combination
                
                
                11,534,765Security
                    deposits and prepaid expenses
                
                
                156,525Accounts
                    payable, accrued expenses and deferred revenues
                
                
                (1,179,435
                )Total
                    purchase price
                
                
                15,315,649Less:
                    Cash paid to acquire Safir
                
                
                (1,940,649
                )Less:
                    Cash paid as finders fee
                
                
                (200,000
                )Non-cash
                    consideration to seller
                
                $
                13,175,000Non-cash
                    consideration, consisting of:Common
                    stock issued to acquire Safir
                
                
                6,000,000Common
                    stock issued as finders fee
                
                
                175,000Note
                    payable issued to seller
                
                
                7,000,000Total
                    non-cash consideration
                
                $
                13,175,000Supplemental
                    non-cash investing and financial activity - acquisition of Secure
                    Source:Assets
                    acquired and liabilities assumed:Property
                    and equipment
                
                $
                101,459Intangible
                    assets
                
                
                1,640,000Goodwill
                    recognized on purchase business combination
                
                
                1,578,866Other
                    assets
                
                
                1,795Accounts
                    payable, accrued expenses and deferred revenues
                
                
                (72,120
                )Non-cash
                    consideration to seller
                
                $
                3,250,000Non-cash
                    consideration, consisting of:Common
                    stock issued to acquire Secure Source
                
                
                500,000Note
                    payable issued to seller
                
                
                2,750,000Total
                    non-cash consideration
                
                $
                3,250,000
 See
          notes
          to these condensed consolidated financial statements.
  P.6
 **GLOBALOPTIONS
              GROUP, INC. AND SUBSIDIARIES**
 **Notes
              To Condensed Consolidated Financial Statements**
 **(Unaudited)**


**1. 
        Nature of Operations**
  GlobalOptions,
        LLC was formed in November 1998 as a limited liability company (“LLC”) in the
        state of Delaware.  On January 24, 2002, with the approval of the members
        of the LLC, the LLC converted to a corporation under Delaware law with the
        name
        GlobalOptions, Inc. (“GlobalOptions”)
  On
        June
        24, 2005, GlobalOptions consummated a “reverse merger” transaction, with
        Creative Solutions with Art, Inc., (“Creative Solutions”) a Nevada corporation,
        and the newly formed GlobalOptions Acquisition Corp., (“GlobalOptions
        Acquisition”) a Delaware corporation, a wholly-owned subsidiary of Creative
        Solutions.  GlobalOptions Acquisition merged with and into GlobalOptions
        with the result that on June 24, 2005, GlobalOptions became the subsidiary
        of a
        public company.
  Following
        the merger, Creative Solutions changed its name to GlobalOptions Group, Inc.
        (“GlobalOptions Group” or the “Company”) and began trading on the OTC (over the
        counter) Bulletin Board under the new symbol “GLOI.OB.”  As a result of the
        reverse merger, GlobalOptions became the wholly-owned subsidiary of the newly
        renamed GlobalOptions Group, with GlobalOptions’ former stockholders acquiring a
        majority of the outstanding shares of the Company’s common stock, par value
        $.001 per share, and GlobalOption’s officers and directors replaced the officers
        and directors of Creative Solutions.  The reverse merger was consummated
        under Delaware law and pursuant to an Agreement and Plan of Merger, dated
        June 24, 2005 (the “Merger Agreement”).  For accounting purposes, the
        reverse merger has been treated as an acquisition of Creative Solutions by
        GlobalOptions and a recapitalization of GlobalOptions.  The historical
        condensed consolidated financial statements prior to June 24, 2005 are those
        of
        GlobalOptions.  Pursuant to the reverse merger, GlobalOptions has restated
        its statements of stockholders’ equity on a recapitalization basis, so that all
        accounts are now presented as if the reverse merger had occurred at the
        beginning of the earliest period presented.
  The
        Company is a provider of risk mitigation services to Fortune 500 corporations,
        governmental organizations and high-profile individuals throughout the
        world.  The Company’s risk mitigation services currently include (1) risk
        management and security, (2) investigations and litigation support, and (3)
        crisis management and corporate governance.
  On
        August
        14, 2005, the Company acquired Confidential Business Resources (“CBR”), a
        privately-held nationwide investigations firm based in Nashville,
        Tennessee.
  On
        March
        10, 2006, the Company acquired James Lee Witt Associates, LLC (“JLWA”), a
        nationwide crisis and emergency management consulting firm headquartered
        in
        Washington, D.C. with three additional offices nationwide. (See Note
        4).
  On
        May
        12, 2006 the Company acquired Safir Rosetti, LLC (“Safir”) and Secure Source,
        Inc. (“Secure Source”). Safir is a security consulting, investigative and
        intelligence firm headquarterd in New York City. Secure Source is an
        international risk consulting firm with offices in the Dallas and Washington
        D.C. areas (see Note 4).
  P.7
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **2** **.
        Basis of Presentation**
 
 The
        accompanying unaudited condensed consolidated financial statements have been
        prepared in accordance with United States generally accepted accounting
        principles for interim financial information and with the instructions to
        Form
        10-QSB. Accordingly, they do not include all of the information and footnotes
        required by accounting United States generally accepted accounting principles.
        In the opinion of management, all adjustments (consisting of normal accruals)
        considered for a fair presentation have been included. Operating results
        for the
        three and six months ended June 30, 2006 are not necessarily indicative of
        the
        results that may be expected for the year ending December 31, 2006.  For
        further information, refer to the financial statements and footnotes thereto
        for
        GlobalOptions Group, Inc., included in the Company’s Form 10-KSB filed on April
        17, 2006 for the year ended December 31, 2005.
   **3. 
        Summary of Significant Accounting Policies**
 
 ***Net
        Loss Per Common Share***
  Basic
        net
        loss per common share is computed based on the weighted average number of
        shares
        of common stock outstanding during the periods presented on a recapitalization
        basis in accordance with the reverse merger.  Common stock equivalents,
        consisting of stock options, convertible preferred stock and warrants, as
        further discussed in the notes to the condensed consolidated financial
        statements, were not included in the calculation of the diluted loss per
        share
        because their inclusion would have been anti-dilutive.  The total common
        shares issuable upon the exercise of stock options, warrants, and the Series
        A
        and Series B convertible preferred stock as of June 30, 2006 and 2005 was
        60,840,617 and 9,405,571, respectively.
 
 ***Stock
        Based Compensation/Stock Options***
  On
        January 24, 2002, the Board of Directors and stockholders of GlobalOptions
        approved the 2002 Stock Option Plan (the “2002 Plan”). The Plan is administered
        by the Board of Directors (“the Board”) of GlobalOptions. Directors and
        stockholders, officers, employees, and consultants of the Company were
        eligible to participate.  The Plan provided for the awards of incentive and
        nonstatutory stock options.  The Plan initially provided for 1,685,000
        shares of common stock to be reserved for issuance under
        the Plan.  On August 4, 2004, the Company authorized an
        additional 1,585,095 shares of common stock to be reserved for
        issuance under the Plan.  The Committee determined the vesting
        schedule to be up to five years at the time of grant of any
        options under the Plan, and unexercised options will expire in ten
        years.  The exercise price was equal to at least 100% of the fair
        market value of a share of common stock, as determined by the Committee,
        on the grant date.
  On
        August
        5, 2005, the Board of Directors and stockholders of the
        Company approved the 2005 Stock Option Plan (the
“2005 Plan”), which replaced the 2002 Plan. The 2005 Plan is
        administered by the Company’s compensation committee and provides for 6,500,000
        shares of common stock to be reserved for issuance under the 2005 Plan. 
Directors, officers, employees, and consultants of the Company are
        eligible to participate.  The 2005 Plan provides for the awards
        of incentive and nonstatutory stock options.    The Committee
        determined the vesting schedule to be up to five years at the
        time of grant of any options under the Plan, and unexercised options will
        expire in ten years.  The exercise price is to be equal to at least
        100% of the fair market value of a share of common stock, as determined by
        the
        Committee, on the grant date.
   P.8
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **3. 
        Summary of Significant Accounting Policies, continued**
 
 ***Stock
        Based Compensation/Stock Options, continued***
 
 Prior
        to
        January 1, 2006, the Company accounted for the stock option plans under the
        recognition and measurement provisions of Accounting Principles Board Opinion
        No. 25 ("APB 25"). Accordingly, the Company would recognize employee stock
        based
        compensation expense only if it granted options at a price lower than the
        closing price on the date of grant. Any resulting compensation expense would
        then have been recognized ratably over the associated service period.  No
        stock-based employee compensation expense relating to the Company’s stock option
        plan was reflected in net loss for the three and six months ended June 30,
        2005,
        as all options granted under its plans had an exercise price equal to or
        greater
        than the market value of the underlying common stock on the date of grant.
        Prior
        to January 1, 2006, the Company provided pro-forma disclosure amounts in
        accordance with SFAS No. 148, "Accounting for Stock-Based
        Compensation--Transition and Disclosure" ("SFAS 148"), as if the fair value
        method defined by SFAS 123 had been applied to its stock-based
        compensation.
  Effective
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        SFAS 123R, using the modified prospective transition method and therefore
        has
        not restated prior periods' results. Under this transition method, employee
        stock-based compensation expense for the three and six months ended June
        30,
        2006 included compensation expense for all stock-based compensation awards
        granted, but not yet fully vested, prior to January 1, 2006.  The fair
        value of the options granted was determined at the original grant date in
        accordance with the provisions of SFAS 123.  Stock-based compensation
        expense for all share-based payment awards granted after December 31, 2005
        is
        based on the grant-date fair value estimated in accordance with the provisions
        of SFAS 123R. The Company recognizes these compensation costs over the requisite
        service period of the award, which is generally the vesting term of the options
        associated with the underlying employment agreement, where
        applicable.
 
 As
        a
        result of adopting SFAS 123R, the impact to the consolidated condensed financial
        statements for the three and six months ended June 30, 2006 was $702,964
        and
        $981,189, respectively, greater than if the Company had continued to account
        for
        stock-based compensation under APB 25. The impact of the adoption of SFAS
        123R
        on both basic and diluted net loss per share for the three and six months
        ended
        June 30, 2006 was $.04 and $.06 per share, respectively. At June 30, 2006,
        the
        unamortized value of employee stock options under SFAS 123R was approximately
        $5,738,000. The unamortized portion will be expensed over a weighted average
        period of approximately 4.0 years.
  The
        Company accounts for equity instruments issued to non-employees in accordance
        with the provisions of SFAS 123 and the Emerging Issues Task Force (“EITF”)
        Issue No.  96-18,  “Accounting  for  Equity 
Instruments  That Are Issued to Other Than  Employees  for 
Acquiring,  or In  Conjunction  with Selling,  Goods or
        Services” (EITF 96-18) which require that such equity instruments are recorded
        at their fair value on the measurement  date, which is typically the date
        the services are performed.  Stock based compensation for non-employees
        accounted for under EITF 96-18 was $496,132 and $568,216 for the three and
        six
        months ended June 30, 2006, respectively.
  Option
        valuation models require the input of highly subjective assumptions including
        the expected life of the option. Because the Company's employee stock options
        have characteristics significantly different from those of traded options,
        and
        because changes in the subjective input assumptions can materially affect
        the
        fair value estimate, in management's opinion, the existing models do not
        necessarily provide a reliable single measure of the fair value of its employee
        stock options.
 
 The
        fair
        value of each option grant during the three and six months ended June 30,
        2006
        was estimated on the date of grant using the Black-Scholes option pricing
        model
        with the following assumptions used:
 
 P.9
 **GLOBALOPTIONS
              GROUP, INC. AND SUBSIDIARIES**
 **Notes
              To Condensed Consolidated Financial Statements**
 **(Unaudited)**
 **3. 
        Summary of Significant Accounting Policies, continued**
 
 ***Stock
        Based Compensation/Stock Options, continued***
  For
                  the Three Months
                Ended
                  June 30, 2006
              
              For
                  the Six Months
                Ended
                  June 30, 2006Dividend
                  yield
              
              0%
              
              0%Expected
                  volatility
              
              87%
              
              87%Risk-free
                  interest rate
              
              4.8%
              
              4.9%Expected
                  lives
              
              5
                  years
              
              5
                  years
 
 The
        weighted average fair value of the options on the date of grant, using the
        fair
        value based methodology for the three and six months ended June 30, 2006
        was
        $1.53 and $1.53, respectively
 
 For
        the
        three and six months ended June 30, 2005, under APB 25, no stock-based employee
        compensation expense relating to the Company’s stock option plans was reflected
        in net loss, as all options granted under its plan had an exercise price
        equal
        to or greater than the market value of the underlying common stock on the
        date
        of grant.
 
 The
        following table illustrates the effect on net loss and net loss per
        share if the Company had applied the fair value recognition method under
        the
        provisions of SFAS 123.
 
 
 (All
                  numbers in 000’s except per share data.)
              
              For
                  the Three MonthsEnded
                  June 30, 2005
              
              For
                  the Six MonthsEnded
                  June 30, 2005Net
                  loss applicable to common stockholders, as reported
              
              $
              (1,942
              )
              $
              (2,363
              )Deduct:
                  total stock-based employee compensation expense determined under
                  fair
                  value based method for all awards, net of related tax effects,
                  if
                  any
              
              
              44
              
              
              87Pro-forma
                  net loss
              
              $
              (1,986
              )
              $
              (2,450
              )Net
                  loss per share applicable to common stockholders - basic and
                  diluted:As
                  reported
              
              $
              (0.20
              )
              $
              (0.25
              )Pro-
                  forma
              
              $
              (0.20
              )
              $
              (0.26
              )
 
  P.10
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **3. 
        Summary of Significant Accounting Policies, continued**
 
 ***Stock
        Based Compensation/Stock Options, continued***
 
 A
        summary
        of the status of the options under the Company’s stock option plans and the
        changes during the six months ended June 30, 2006 is presented in the table
        below:
  Number
                  of Options
              
              Weighted
                  Average Exercise PriceBalance,
                  December 31, 2005
              
              
              4,977,472
              
              $
              1.42Granted
              
              
              3,043,431
              
              
              2.15Exercised
              
              
              -
              
              
              -Forfeited
              
              
              (15,294
              )
              
              -Balance,
                  June 30, 2006
              
              
              8,005,609
              
              $
              1.70
  A
        summary
        of the Company’s stock options outstanding and exercisable at June 30, 2006 is
        presented in the table below:
  Total
              
              IntrinsicValueOption
                  Exercise Price
              
              $
              .068
              
              $
              0.600
              
              $
              0.68
              
              $
              0.85
              
              $
              2.01-2.50Outstanding
              
              
              708,659
              
              
              1,193,824
              
              
              641,471
              
              
              58,824
              
              
              5,402,831
              
              
              8,005,609
              
              $
              8,042,469Weighted
                  average remaining contractual life of options outstanding (in
                  years)
              
              
              0.6
              
              
              0.6
              
              
              0.8
              
              
              7.1
              
              
              4.7
              
              
              3.4Exercisable
              
              
              708,659
              
              
              1,084,666
              
              
              411,888
              
              
              58,823
              
              
              272,491
              
              
              2,536,527
              
              $
              5,139,749
  The
        Company has determined that shares of common stock for future exercises shall
        be
        newly issued shares of stock.
   P.11
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **3. 
        Summary of Significant Accounting Policies, continued**
 
 ***Stock
        Based Compensation/Stock Options, continued***
 
 A
        summary
        of non-vested options at June 30, 2006 is shown below:
  Non-Vested
              
              
              Weighted
                  Average
                Grant
                  DateShares
              
              
              Fair
                  ValueNon-vested
                  at January 1, 2006
              
              
              2,723,029
              
              $
              1.47Granted
              
              
              222,223
              
              
              1.59Vested
              
              
              (176,739
              )
              
              1.09Forfeited
              
              
              -
              
              
              -Non-vested
                  at March 31, 2006
              
              
              2,768,513
              
              $
              1.50Granted
              
              
              3,043,431
              
              
              2.14Vested
              
              
              (324,683
              )
              
              2.23Forfeited
              
              
              -
              
              
              -Non-vested
                  at June 30, 2006
              
              
              5,487,261
              
              $
              2.17
  
 ***Revenue
        Recognition***
  Revenue
        is recognized as the services are performed pursuant to the applicable
        contractual arrangements. Revenue related to time and materials arrangements
        is
        recognized in the period in which the services are performed. Revenue related
        to
        fixed price arrangements are recognized based upon the achievement of certain
        milestones or progress points within the project plan. The impact of any
        revisions in estimated total revenue and direct contract costs is recognized
        in
        the period in which they become known. Expenses incurred by professional
        staff
        in the generation of revenue are billed to the client and recorded as revenue
        when incurred. For certain foreign accounts, revenues are recognized and
        the
        related expenses are recorded only after the receipt in cash of the revenue
        amounts. The Company incurs no obligations to third parties for expenses
        related
        to these certain foreign accounts until such time that invoiced revenues
        are
        received in cash. Revenues received in advance of when earned are credited
        to
        the deferred revenues account.
 ******
 ***Intangible
        Assets***
  In
        accordance with the requirements of Statement of Financial Accounting Standards
        No. 141 (“SFAS No. 141”), “Business Combinations”, the Company recognizes
        certain intangible assets acquired in acquisitions, primarily goodwill, trade
        names, covenants not to compete, and customer relationships.  In
        accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible
        Assets”, on a regular basis, the Company performs impairment analysis of the
        carrying value of goodwill and certain other intangible assets by assessing
        the
        recoverability when there are indications of potential impairment based on
        estimates of undiscounted future cash flows. The amount of impairment is
        calculated by comparing anticipated discounted future cash flows with the
        carrying value of the related asset. In performing this analysis, management
        considers such factors as current results, trends, and future prospects,
        in
        addition to other economic factors.
  P.12
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **3. 
        Summary of Significant Accounting Policies, continued**
 
  ***Deferred
        Financing Costs***
  The
        costs
        incurred in connection with issuance of certain notes payable (See Note 8)
        was
        capitalized to deferred financing costs and is amortized over the term of
        the
        related debt.
 
 ***Recent
        Accounting Pronouncements***
  In
        February 2006, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standard No. 155 - Accounting for Certain
        Hybrid Financial Instruments (“SFAS 155”), which eliminates the exemption from
        applying SFAS 133 to interests in securitized financial assets so that similar
        instruments are accounted for similarly regardless of the form of the
        instruments. SFAS 155 also allows the election of fair value measurement
        at
        acquisition, at issuance, or when a previously recognized financial instrument
        is subject to a remeasurement event. Adoption is effective for all financial
        instruments acquired or issued after the beginning of the first fiscal year
        that
        begins after September 15, 2006. Early adoption is permitted. The adoption
        of SFAS 155 is not expected to have a material effect on the Company’s
        consolidated financial position, results of operations or cash
        flows. ****
  In
        March 2006, the FASB issued Statement of Financial Accounting Standard No.
        156 - Accounting for Servicing of Financial Assets (“SFAS 156”), which requires
        all separately recognized servicing assets and servicing liabilities be
        initially measured at fair value. SFAS 156 permits, but does not require,
        the
        subsequent measurement of servicing assets and servicing liabilities at fair
        value. Adoption is required as of the beginning of the first fiscal year
        that
        begins after September 15, 2006. Early adoption is permitted. The adoption
        of SFAS 156 is not expected to have a material effect on the Company’s
        consolidated financial position, results of operations or cash
        flows.
 
 In
        July
        2006,  the FASB  issued  FASB  Interpretation  No.
        48,  "Accounting  for Uncertainty in Income Taxes - an 
interpretation  of FASB Statement No. 109" ("FIN 48"),  which 
clarifies the accounting  for  uncertainty  in tax
        positions.  This Interpretation  requires  that the Company
        recognize  in its financial  statements,  the impact of a
        tax  position,  if that  position  is more  likely than
        not of being sustained  on  audit,  based  on 
the  technical  merits  of the  position.  The
        provisions  of FIN 48 are effective as of the beginning of the
        Company's 2007 fiscal year, with the cumulative effect of the change in
        accounting  principle recorded as an adjustment to opening retained
        earnings.  The Company is currently evaluating the impact of adopting
        FIN 48 on its consolidated financial statements.
 
 **4.**  **Acquisition** **s**
 
 **Acquisition
        of JLWA**
  The
        acquisition of JLWA was made pursuant to a certain Asset Purchase Agreement
        (the
“JLWA Agreement”) dated January 13, 2006, as amended, between GlobalOptions
        Group and JLWA. The aggregate purchase price paid for JLWA’s assets and business
        was $8,403,540, after finalization and payment of the purchase price adjustment
        of $546,244 on June 9, 2006. The aggregate purchase price consisted of a
        cash payment at closing of $3,600,000, a cash payment of $1,857,296 to pay
        off
        JLWA’s line of credit balance and related accrued interest, the issuance of
        819,672 shares of common stock of GlobalOptions Group, valued at $2,000,000,
        a
        4.6% note payable to JLWA of $400,000 due March 9, 2007, and a non-interest
        bearing working capital purchase price adjustment obligation of $546,244.
 
  P.13
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **4.****Acquisitions,
        continued**
 
 **Acquisition
        of JLWA, continued**
  The
        assets and liabilities of JLWA have been recorded in the Company’s condensed
        consolidated balance sheet at their fair values at the date of
        acquisition.  As part of the purchase of JLWA on March 10, 2006, the
        Company acquired identifiable intangible assets of approximately
        $4,930,000.  Of the identifiable intangibles acquired, $1,870,000 has been
        assigned to trade names and $3,060,000 to client relationships. The amounts
        of
        these intangibles have been estimated based upon information available to
        management and is subject to change based upon an outside appraisal being
        performed. The acquired intangibles have been assigned definite lives and
        are
        subject to amortization, as described in the table below.
  The
        following table details amortization periods for the identifiable, amortizable
        intangibles:
 
 Intangible
                  Asset Category
              Amortization
                  PeriodTrade
                  names
              10
                  yearsClient
                  relationships
              3
                  years
 
 The
        following table details the allocation of the final purchase price for the
        acquisition of JLWA, after the purchase price adjustment recorded on June
        9,
        2006:
  Fair
                  ValueAccounts
                  receivable
              
              $
              4,345,154Prepaid
                  expenses
              
              
              35,154Property
                  and equipment
              
              
              185,235Security
                  deposits
              
              
              64,738Intangible
                  asset - trade names
              
              
              1,870,000Intangible
                  asset - client relationships
              
              
              3,060,000Accounts
                  payable
              
              
              (1,830,599
              )Deferred
                  revenues
              
              
              (116,917
              )Accrued
                  expenses
              
              
              (92,991
              )Net
                  fair values assigned to assets acquired andliabilities assumed
              
              
              7,519,774Goodwill
              
              
              883,766Total
              
              $
              8,403,540
  The
        following presents a summary of the purchase price consideration for the
        purchase of JLWA.
 
 Cash
              
              $
              5,457,296Note
                  payable
              
              
              400,000Working
                  capital purchase price adjustment
              
              
              546,244Value
                  of common stock issued
              
              
              2,000,000Total
                  Purchase Price Consideration
              
              $
              8,403,540
   P.14
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **4.** **Acquisitions,
        continued**
 
 **Acquisition
        of JLWA, continued**
 
 The
        note
        payable of $400,000 is due March 9, 2007 and bears interest at a rate of
        4.6%
        per annum and is subordinated to the Company’s line of credit (See Note
        2).   On June 8, 2006, in connection with the finalization of the
        working capital adjustment for the purchase of JLWA, the Company recorded
        an
        adjustment of approximately $1,779,000, primarily related to uncollected
        accounts receivable, to reduce the total purchase price to $8,403,540 and
        paid
        the final adjusted note and obligation payable of $546,244. In addition,
        the
        agreement provides for JLWA to obtain up to an additional $15,400,000 in
        earnout
        payments upon the attainment of certain revenue goals subsequent to the closing
        of the transaction and the continued employment of James Lee Witt, the former
        president and chief executive officer or JLWA (See Note 9).
 
 The
        results of operations for JLWA for the period from March 10, 2006 to June
        30,
        2006, are reflected in the Company’s results for the three and six month periods
        ended June 30, 2006 in the accompanying condensed consolidated statement
        of
        operations.
 
 **Acquisition
        of Safir**
 
 On
        May
        12, 2006 GlobalOptions, a wholly owned subsidiary of the Company, acquired
        substantially all of the business and assets of Safir, a Delaware limited
        liability company. Safir is a security consulting, investigative and
        intelligence firm headquartered in New York City with seven additional offices
        nationwide.
 
 The
        acquisition was made pursuant to a certain Asset Purchase Agreement (the
“Safir
        Agreement”) dated January 27, 2006, as amended on May 12, 2006. The aggregate
        purchase price paid for Safir’s assets and business was approximately
        $15,300,000 consisting of $6,000,000 in 8% convertible promissory notes paid
        on
        June 29, 2006, $1,000,000 in 4% promissory notes of the Company due on May
        12,
        2007, $6,000,000 in the common stock of GlobalOptions Group, consisting of
        2,985,075 shares at $2.01 per share, payments to retire certain indebtedness
        of
        $1,940,649 of Safir, previously advanced and a finders fee of $375,000 paid
        to a
        related party.
 
 The
        $6,000,000 8% convertible promissory note contains a feature that allows,
        upon
        the election of the conversion option by the holder, for the holder to receive
        a
        premium of 10% of the note, just prior to conversion of the note into
        common stock. The Company has recorded for $600,000 the value of this beneficial
        conversion premium feature as a conversion option liability in accordance
        with
        EITF 00-19 as the number of shares of common stock required to repay the
        note
        were not fixed and determinable. The debt discount is amortized
        to expense over the term of the note. As of June 29, 2006, the Company
        had recorded $367,500 of amortization of the debt discount.  On June 29,
        2006, the Company repaid this debt in full. Upon extinguishment, the
        Company reclassified the conversion option liability to paid-in capital and
        the unamortized debt discount of $232,500 was adjusted to loss on
        extinguishment of debt and classified as amortization of debt discount on
        the
        accompanying condensed consolidated statement of operations for the three
        and
        six months ended June 30, 2006.
  The
        assets and liabilities of Safir have been recorded in the Company’s condensed
        consolidated balance sheet at their fair values at the date of
        acquisition.  As part of the purchase of Safir on May 12, 2006, the Company
        acquired identifiable intangible assets of approximately $1,770,000, consisting
        of a trade name for $420,000, $70,000 for the value of non-servicing agreements
        and $1,280,000 for the value of customer relationships.  The amounts of
        these intangibles have been estimated based upon information available to
        management and is subject to change based upon an outside appraisal being
        performed. The acquired intangibles have been assigned definite lives and
        are
        subject to amortization, as described in the table below.
  P.15
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **4.
        Acquisitions, continued**
 
 **Acquisition
        of Safir, continued**
 
 The
        following table details amortization periods for the identifiable, amortizable
        intangibles:
 
 Intangible
                  Asset Category
              Amortization
                  PeriodTrade
                  names
              5
                  yearsClient
                relationships
              5
                  yearsNon-compete
                  agreements
              3
                  years
 
 The
        following table details the allocation of the purchase price for the acquisition
        of Safir:
  Fair
                  ValueCash
              
              $
              447,115Accounts
                  receivable
              
              
              2,405,773Prepaid
                  expenses
              
              
              107,729Property
                  and equipment
              
              
              180,906Intangible
                  assets - customer relationships
              
              
              1,280,000Intangible
                  assets - trade name
              
              
              420,000Intangible
                  assets - non-servicing agreements
              
              
              70,000Other
                  assets
              
              
              48,796Accounts
                  payable
              
              
              (487,383
              )Accrued
                  compensation
              
              
              (393,773
              )Accrued
                  expenses
              
              
              (298,279
              )Net
                  fair values assigned to assets acquired andliabilities assumed
              
              
              3,780,884Goodwill
              
              
              11,534,765Total
              
              $
              15,315,649
  The
        following presents a summary of the purchase price consideration for the
        purchase of Safir.
 
 Cash
              
              $
              1,940,649Notes
                  payable
              
              
              7,000,000Value
                  of common stock issued
              
              
              6,000,000Finders
                  fee paid - cash
              
              
              200,000Finders
                  fee paid - value of common stock issued
              
              
              175,000Total
                  Purchase Price Consideration
              
              $
              15,315,649
 
 The
        results of operations for Safir for the period from May 12, 2006 to June
        30,
        2006, are reflected in the Company’s results for the three and six month periods
        ended June 30, 2006 in the accompanying condensed consolidated statement
        of
        operations.
  P.16
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **4.
        Acquisitions, continued**
 
 **Acquisition
        of Secure Source**
 
 On
        May
        12, 2006, the Company acquired substantially all of the business and assets
        of
        Secure Source, a Delaware corporation.
  The
        acquisition was made pursuant to a certain Asset Purchase Agreement dated
        May
        12, 2006, (the "Secure Source Agreement"), between the Company, Secure Source,
        Marian E. Nicastro and David W. Nicastro. The aggregate purchase price paid
        for
        Secure Source’s assets and business of $3,250,000 consisted of $750,000 in 5%
        promissory notes due May 12, 2009, $1,500,000 in 3% promissory notes paid
        on
        June 29, 2006, $500,000 in 5% promissory notes due May 12, 2007 and $500,000
        in
        common stock of GlobalOptions Group, consisting of 210,970 shares at $2.37
        per
        share.
  The
        assets and liabilities of Secure Source have been recorded in the Company’s
        condensed consolidated balance sheet at their fair values at the date of
        acquisition.  As part of the purchase of Secure Source on May 12, 2006, the
        Company acquired identifiable intangible assets of approximately $1,640,000,
        consisting of a trade name of $60,000 and the value of a non-compete agreement
        of $1,580,000.    The amounts of these intangibles have been
        estimated based upon information available to management and is subject to
        change based upon an outside appraisal being performed. The acquired intangibles
        have been assigned definite lives and are subject to amortization, as described
        in the table below.
 
 The
        following table details amortization periods for the identifiable, amortizable
        intangibles:
 
 Intangible
                  Asset Category
              Amortization
                  PeriodTrade
                  names
              10
                  yearsNon-compete
                  agreements
              3
                  years
  The
        following table details the allocation of the purchase price for the acquisition
        of Secure Source:
  Fair
                  ValueProperty
                  and equipment
              
              $
              101,459Other
                  assets
              
              
              1,795Intangible
                  asset - non-compete agreement
              
              
              1,580,000Intangible
                  asset - trade names
              
              
              60,000Fair
                  value of liabilities assumed
              
              
              (72,120
              )Net
                  fair values assigned to assets acquired andliabilities assumed
              
              
              1,671,134Goodwill
              
              
              1,578,866Total
              
              $
              3,250,000
 
 The
        following presents a summary of the purchase price consideration for the
        purchase of Secure Source.
 
 Notes
                  payable
              
              $
              2,750,000Value
                  of common stock issued
              
              
              500,000Total
                  Purchase Price Consideration
              
              $
              3,250,000
  The
        results of operations for Secure Source for the period from May 12, 2006
        to June
        30, 2006, are reflected in the Company’s results for the three month period
        ended June 30, 2006 in the accompanying condensed consolidated statement
        of
        operations.
  **Unaudited
        Pro-Forma Financial Information**
 
 The
        following table presents the unaudited pro-forma combined results of operations
        of the Company with CBR, JLWA, Safir and Secure Source added in for the periods
        preceding the acquisition of their respective net assets. The respective
        acquisition dates are August 14, 2005 for CBR, March 10, 2006 for JLWA and
        May
        12, 2006 for both Safir and Secure Source.
  For
                  the Three Months
                Ended
                  June 30,
              
              For
                  the Six Months
                Ended
                  June 30,2006
              
              2005
              
              2006
              
              2005Revenues
              
              $
              18,721,279
              
              $
              8,921,395
              
              $
              35,268,035
              
              $
              18,968,468Net
                  loss available to
                common
                  stockholders
              
              $
              (34,928,817
              )
              $
              (2,183,609
              )
              $
              (36,161,361
              )
              $
              (3,010,820
              )Pro-forma
                  basic and diluted net loss per common share
              
              $
              (1.87
              )
              $
              (0.16
              )
              $
              (1.84
              )
              $
              (0.22
              )Pro-forma
                  weighted average
                common
                  shares outstanding -
                basic
                  and diluted
              
              
              18,504,846
              
              
              13,739,500
              
              
              18.503,102
              
              
              13,544,355
  The
        pro
        forma combined results are not necessarily indicative of the results that
        actually would have occurred if the CBR, JLWA, Safir and Secure Source
        acquisitions had been completed as of the beginning of 2006 or 2005, nor
        are
        they necessarily indicative of future consolidated results.
  P.17
 **GLOBALOPTIONS
              GROUP, INC. AND SUBSIDIARIES**
 **Notes
              To Condensed Consolidated Financial Statements**
 **(Unaudited)**
 
 **5. 
        Intangible Assets**
  Intangible
        assets consist of amounts related to the acquisitions of CBR, JLWA, Safir
        and
        Secure Source as well as an additional $40,000 for a client list purchased
        on
        February 28, 2006.  At June 30, 2006, intangible assets are comprised of
        the following:
  Trade
                  names
              
              $
              2,430,000Developed
                  technology
              
              
              52,000Non-compete
                  agreements
              
              
              2,225,000Client
                  relationships
              
              
              5,068,8089,775,808Less: accumulated amortization
              
              
              (764,183
              )Intangible
                  assets, net
              
              $
              9,011,625
  
 The
        estimated amortization of amortizable intangible assets for the five years
        ending June 30, 2011 is as follows:
 For
                  the Years
                Ending
                June
                  30,
              
              Total
              
              Trade
                  Names
              
              Developed
                Technology
              
              Non-CompeteAgreements
              
              Client
                Relationships2007
              
              $
              2,520,000
              
              $
              297,000
              
              $
              21,000
              
              $
              753,000
              
              $
              1,449,0002008
              
              
              2,511,000
              
              
              297,000
              
              
              12,000
              
              
              753,000
              
              
              1,449,0002009
              
              
              1,869,000
              
              
              297,000
              
              
              -
              
              
              482,000
              
              
              1,090,0002010
              
              
              684,000
              
              
              297,000
              
              
              -
              
              
              5,000
              
              
              382,0002011
              
              
              472,000
              
              
              264,000
              
              
              -
              
              
              -
              
              
              208,000Totals
              
              $
              8,056,000
              
              $
              1,452,000
              
              $
              33,000
              
              $
              1,993,000
              
              $
              4,578,000
  During
        the three and six months ended June 30, 2006, the Company recorded amortization
        expense related to the acquired amortizable intangibles of $478,162, and
        $626,862, respectively.  There was no amortizable of intangibles during the
        three and six months ended June 30, 2005.
  The
        weighted average amortization period for amortizable intangibles is 4.9 years
        and has no residual value.
 
 
  P.18
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **6. 
        Property and Equipment**
  At June 30, 2006, property and equipment is comprised of the following:
  Computer
                  and equipment
              
              $
              454,359Furniture
                  and fixtures
              
              
              214,999Automobiles
              
              
              162,029Leasehold
                  improvements
              
              
              216,3121,047,699Less:
                  accumulated
                depreciation
                  and amortization
              
              
              421,121Property
                  and equipment, net
              
              $
              626,578
  Depreciation
        and amortization for the three and six months ended June 30, 2006 was $45,733,
        and $77,493 and for the three and six months ended June 30, 2005 was $10,583
        and
        $21,166, respectively.
  **7. 
        Line of Credit**
  During
        November 2003, GlobalOptions signed a $1,000,000 line of credit with a financial
        institution with an interest rate of prime plus 1.25%, secured by accounts
        receivable and subject to monthly covenants.
 
 In
        conjunction with the establishment of this line of credit, the financial
        institution was granted warrants to purchase 29,411 shares of the Company’s
        common stock at $0.60 per share.  The value of these warrants, computed
        using the Black-Scholes option pricing model was de-minimus.  These
        warrants were exercised on June 24, 2005 on a cashless basis, and were exchanged
        for 20,579 shares of the Company’s common stock.
  On
        May 4,
        2005, this line of credit agreement was amended to increase the facility
        amount
        to $1,875,000.  This line of credit was renewed on February 3, 2006 and
        expires on February 3, 2007.   During March 2006, the Company entered
        into an agreement to guarantee the obligations of GlobalOptions under this
        line
        of credit.  There was no balance outstanding under the line of credit at
        June 30, 2006.
  The
        Company was in violation of certain working capital covenants at February
        28,
        2006 with respect to its line of credit.  The financial institution has
        waived this violation and effective upon March 31, 2006, the Company was
        in
        compliance within the covenant requirements of the agreement.
  P.19
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  
 **8. 
        Notes Payable**
 ****
 On
        March
        10, 2006, the Company closed the private placement of an aggregate of
        $12,500,000 in principal amount of 8% promissory notes due on June 30,
        2006.  Pursuant to the notes, as amended, upon the consummation
        of a qualified follow-on financing, holders are required to exchange these
        promissory notes through the issuance of shares of the Company’s capital stock
        equal to 115% of the principal amount of the notes being exchanged, plus
        accrued
        and unpaid principal, subject to the terms of the agreement.  Under the
        promissory note agreements, the Company may extend the maturity for two
        successive 30 day periods. In connection with raising these funds, the Company
        incurred a total fee of approximately $416,000 to Burnham Hill Partners (See
        Note 10) and others, for which $306,000 was paid in cash and $110,000 of which
        Company issued additional 8% promissory notes. The holders of these promissory
        notes subordinated their interest to the Company’s obligations to the bank under
        the line of credit facility.
 
 On
        May
        12, 2006, the Company closed on an additional $2,000,000 in principal amount
        of
        their 8% promissory notes due on June 30, 2006, the initial closing of which
        took place on March 10, 2006.  The terms of these notes require the
        holder to make the election to exchange the notes for the Company’s capital
        stock, subject to the terms of the agreement. In connection herewith, the
        Company incurred an obligation to BHP for financing costs aggregating $140,000,
        of which $100,000 is payable in cash.  The remaining $40,000 is payable in
        additional promissory notes.
 
 On
        June
        28, 2006, the Company closed on an additional $30,550,000 in principal amount
        of
        their 8% promissory notes due on June 30, 2006, the initial closing of which
        took place on March 10, 2006.  The Company may convert these promissory
        notes at a 115% conversion premium into common stock of the Company. In
        connection herewith, the Company incurred an obligation to Burnham Hill Partners
        for financing costs aggregating $2,138,500, of which $1,527,500 was paid
        in
        cash.  The remaining $611,000 was paid in additional promissory
        notes.
 
 On
        June
        29, 2006, the notes issued on March 10, 2006, May 12, 2006 and June 28, 2006,
        with an aggregate principal amount of $45,811,000 and aggregate accrued interest
        of $339,731, were exchanged for 53,073 units of the company’s Convertible
        Preferred Stock - Series B (See Convertible Preferred Stock - Series
        B).
  In
        accordance with Emerging Issues Task Force (“EITF”) 00-27, the notes issued on
        June 28, 2006 are considered to have a conversion premium feature as the
        premium is equal to 115% of the principal amount of the notes. The Company
        recorded a debt discount of $6,922,602 relating to the conversion premium.
        On
        June 29, 2006 these notes were exchanged for units of Series B convertible
        preferred stock. The exchange of these notes caused the debt discount to be
        fully amortized.
  The
        Company incurred costs in conjunction with the notes payable issued on March
        10,
        2006, May 12, 2006 and June 28, 2006. Total cash fees associated with these
        note
        issuances were $1,933,500. In addition, $761,000 was paid in additional
        promissory notes. The total of the fees and the additional promissory notes
        were
        recorded as deferred financing costs. The aggregate $2,694,500 of deferred
        financing costs were amortized through June 29, 2006, the date the notes
        were
        exchanged for units of Series B convertible preferred stock (See Note 11).
        Of
        the total, $2,613,521 and $2,694,500 was amortized during the three and six
        months ended June 30, 2006, respectively.
   P.20
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **9. 
        Due to Former Members of JLWA for Earnout**
  In
        connection with the purchase of JLWA, the JLWA Agreement provides for JLWA
        to
        obtain up to an additional $15,400,000 in earnout payments upon the attainment
        of certain revenue goals subsequent to the closing of the transaction and
        the
        continued employment of James Lee Witt.
  As
        set
        forth in the JLWA Agreement, the Company has agreed to pay the former members
        of
        JLWA (the “Sellers”) an earnout (the “Earnout”), based upon the achievement of
        certain revenue goals subsequent to March 10, 2006 (the “Closing
        Date”).
  For
        the
        twelve (12) month periods ending on the first, second, third and fourth
        anniversaries of the Closing Date, the Sellers shall be paid such Earnout
        based
        upon the achievement of certain revenues, as set forth below.  The total
        amount of the Earnout shall be limited to a cumulative amount of $15,400,000.
  The
        Earnout shall be paid to Seller within sixty (60) days of the dates of the
        respective anniversaries of the Closing Date as described below:
  • the
        first $4,000,000 of the Earnout shall be paid in cash; and
  •
the
        remainder of the Earnout shall be paid 50% in cash and 50% in shares of common
        stock of the Company (which number of shares shall be calculated by dividing
        the
        total amount of the Earnout payable in shares of common stock by the closing
        price of the Company’s common stock on the last day of each of the respective
        Earnout periods).
  The
        Earnout is payable based upon revenue generated by the JLWA division of the
        Company, so long as such revenue generates a gross margin of at least 50%,
        and
        may include revenues generated by certain acquisitions of the JLWA division
        of
        the Company, as provided in the agreement.  Revenues of the JLWA division
        whereupon the gross margin falls below 50% are not eligible for the Earnout.
  The
        Earnout is computed by the application of the percentages to JLWA earned
        revenues according to the table, below:
 Percentage
                    AppliedRelated
                    Revenue Earnout Periods
                
                to
                    JLWA earned RevenuesMarch
                    10, 2006 - March 9, 2007Up
                    to $6,000,000
                
                
                0
                %Between
                    $6,000,000 and $16,000,000
                
                
                40
                %Between
                    $16,000,000 and $36,000,000
                
                
                10
                %March
                    10, 2007 - March 9, 2008Up
                    to $7,000,000
                
                
                0
                %Between
                    $7,000,000 and $38,000,000
                
                
                10
                %March
                    10, 2008 - March 9, 2009Up
                    to $8,000,000
                
                
                0
                %Between
                    $8,000,000 and $40,000,000
                
                
                10
                %March
                    10, 2009 - March 9, 2010Up
                    to $9,000,000
                
                
                0
                %Between
                    $9,000,000 and $40,000,000
                
                
                10
                %
 
 At
        June
        30, 2006, the amount due to the former member of JLWA for the Earnout liability
        due under the Agreement was $2,242,139.
  P.21
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **10. 
        Commitments**
  ***Employment
        Agreements***
   In
        March
        2006, concurrently with the acquisition of JLWA, GlobalOptions entered into
        a
        four year employment agreement with James Lee Witt. Pursuant to the agreement,
        Mr. Witt became the Chief Executive Officer of the James Lee Witt Division
        of
        GlobalOptions and agreed to perform such other duties and responsibilities
        as
        the Board of Directors may assign, and has agreed to devote his full time
        to
        GlobalOptions at a salary of $300,000 per year plus a discretionary annual
        bonus. The employment agreement may be terminated for cause by GlobalOptions,
        upon the death or disability of the executive, or upon 30-days’ notice by either
        party. In the event GlobalOptions terminates the employment agreement without
        cause, GlobalOptions is required to pay Mr. Witt his base salary and certain
        benefits for twelve months following termination. The employment agreement
        also
        contains non-compete and non-solicitation provisions for 12 months following
        termination, as well as confidentiality provisions.  In addition, in
        connection with the acquisition of JLWA, GlobalOptions has assumed the
        obligations for three additional employment agreements representing a future
        commitment of approximately $4,200,000.
  In
        May
        2006, concurrently with the Company’s acquisition of Safir Rosetti,
        GlobalOptions entered into a three year employment agreement with Howard
        Safir,
        the former CEO of Safir. Pursuant to the agreement, Mr. Safir became the
        Vice
        Chairman of the Company and Chief Executive Officer of the division known
        as
        GlobalOptions/Safir Rosetti and agreed to perform such other duties and
        responsibilities as the Board of Directors may assign, and has agreed to
        devote
        his full time to GlobalOptions at a salary of $300,000 per year and a
        discretionary annual bonus. The employment agreement may be terminated for
        cause
        by GlobalOptions, upon the death or disability of the executive, or upon
        30-days’ notice by either party. In the event GlobalOptions terminates the
        employment agreement without cause during the initial term, it is required
        to
        pay Mr. Safir his base salary and certain benefits through March 21, 2009.
        The
        employment agreement also contains non-compete and non-solicitation provisions
        for 12 months following termination, as well as confidentiality
        provisions.
 
 In
        May
        2006, concurrently with the Company’s acquisition of Safir Rosetti,
        GlobalOptions entered into a three year employment agreement with Joseph
        Rosetti, the former President of Safir. Pursuant to the agreement, Mr. Rosetti
        became the President of the division known as GlobalOptions/Safir Rosetti
        and
        agreed to perform such other duties and responsibilities as the Board of
        Directors may assign, and has agreed to devote his full time to GlobalOptions
        at
        a salary of $200,000 per year and a discretionary annual bonus. The employment
        agreement may be terminated for cause by GlobalOptions, upon the death or
        disability of the executive, or upon 30-days’ notice by either party. In the
        event GlobalOptions terminates the employment agreement without cause during
        the
        initial term, it is required to pay Mr. Rosetti his base salary and certain
        benefits through March 21, 2009. The employment agreement also contains
        non-compete and non-solicitation provisions for 12 months following termination,
        as well as confidentiality provisions.
  In
        May
        2006, concurrently with the Company’s acquisition of Secure Source,
        GlobalOptions entered into a three year employment agreement with David W.
        Nicastro, the former President of Secure Source. Pursuant to the agreement,
        Mr.
        Nicastro became the senior Executive Officer of the divison known as Global
        Options/Secure Source and agreed to perform such other duties and
        responsibilities as the Board of Directors may assign, and has agreed to
        devote
        his full time to GlobalOptions at a salary of $180,000 per year and a
        discretionary annual bonus up to $50,000. The employment agreement may be
        terminated for cause by GlobalOptions, upon the death or disability of the
        executive, or upon 30-days’ notice by either party. In the event GlobalOptions
        terminates the employment agreement without cause, it is required to pay
        Mr.
        Nicastro his base salary and certain benefits for two months following
        termination. The employment agreement also contains non-compete and
        non-solicitation provisions for 12 months following termination, as well
        as
        confidentiality provisions.
  P.22
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  
 
 **10. 
            Commitments, continued**
 
 ***Consulting
            Agreements***
  On
            March
            9, 2006, the Company entered into an agreement with Burnham Hill Partners
            (“BHP”) , a division of Pali Capital, Inc. to act as its placement agent in
            connection the private placement of certain promissory notes payable
            (See Note
            8).   In connection with this agreement, the Company has agreed to pay
            BHP a fee of 7% of certain of the gross proceeds received in connection
            with the
            issuance of the promissory notes payable.
 
 In
            addition, on March 14, 2006, the Company entered into a financial advisory
            agreement with BHP, with a term of nine months.   Under this
            agreement, BHP has agreed to advise the Company in regard to potential
            strategic
            transactions.   Under this agreement, the Company has agreed to issue
            to BHP a common stock warrant to purchase 250,000 shares, exercisable
            at $2.50
            per share to compensate BHP.  These warrants shall have a term of five
            years, a cashless exercise provision and standard weighted average anti-dilution
            protection and piggyback registration rights.  The value of these warrants
            was approximately $388,000 utilizing the Black Scholes option pricing
            model with
            the following assumptions: 0% dividend yield, 87% expected
            volatility,  4.77% risk-free rate and a five year expected life. 
Stock based compensation expense of $152,541 has been recognized related
            to
            these warrants for the three and six months ended June 30, 2006. For
            a period of
            twelve months from the date of this agreement, should the Company request
            the
            assistance of BHP, then in connection with certain transactions, the
            Company
            will pay to BHP a fee of 3% of the aggregate transaction value.
  Through
            June 30, 2006, BHP was paid aggregate consideration of $2,694,500 in
            connection
            with certain private placements of debt securities (See Note 8), including
            $416,000 ($306,000 of cash and $110,000 of notes), $140,000 ($100,000
            of cash
            and $40,000 of notes) and $2,138,500 ($1,527,500 of cash and $611,000
            of notes).
 
 ***Operating
            Leases***
  In connection with the purchases of JLWA, Safir and Secure Source, GlobalOptions
            assumed the obligations for various office leases. Such lease obligations
            expire
            at various dates through June 2015.
 
 Future
            minimum lease payments under these leases are as follows:
  For
                      the Year Ending June 30,2007
                  
                  $
                  1,130,3472008
                  
                  
                  962,4282009
                  
                  
                  828,6472010
                  
                  
                  796,7382011
                  
                  
                  634,120Thereafter
                  
                  
                  1,305,140Total
                  
                  $
                  5,657,420
 
 ***Restricted
            Cash and Letter of Credit***
 
 Certain
            of the Company’s funds are in restricted cash, as a letter of credit. The
            Company provided the letter of credit in order to provide collateral
            for an
            office lease obligation.
   P.23
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  ****** **11.** ****** **Stockholders’
            Equity**
  ***Common
            Stock and Stock Options***
  On
            March
            10, 2006, in connection with the Company’s purchase of JLWA, the Company issued
            819,672 shares of common stock, valued at $2,000,000 (See Note 4) and
            granted
            222,222 options for the purchase of common stock at an exercise price
            of $2.25
            per share to various former employees of JLWA.  The options have a five
            year term, vest ratably upon the first, second and third anniversary
            of the date
            of grant and have a value of approximately $351,000 utilizing the Black
            Scholes
            option pricing model (also see Note 3).   Of the total option value,
            $29,465 and $36,341 were amortized during the three and six months ended
            June
            30, 2006, respectively.
 
 On
            April
            27, 2006, GlobalOptions Group granted, in the aggregate, options for
            the
            purchase of 123,000 shares of GlobalOptions Group common stock at an
            exercise
            price of $2.20 per share, consisting of options for the purchase of 17,000
            shares granted to certain employees of GlobalOptions and options for
            the
            purchase of 106,000 shares granted to certain members of the Company’s advisory
            boards in exchange for services. The options granted to employees have
            a five
            year term and vest ratably upon the first, second and third anniversary
            of the
            date of grant. The options granted to the members of the advisory boards
            have a
            five year term and vest ratably at the end of each of the four quarterly
            periods
            following the date of grant. In the aggregate, these options have a value
            of
            approximately $213,000 utilizing the Black-Scholes option pricing
            model with the following assumptions used: expected life of five years,
            volatility of 87%, dividends of 0%, and a risk free interest rate of
            $4.95%. Of
            the total option value, $50,826 was amortized during the three and six
            months
            ended June 30, 2006, respectively.
  During
            April 2006 and June 2006, the Company issued 58,539 shares of common
            stock
            valued at $117,078 to consultants who have provided prior services to
            the
            Company.
 
 On
            May
            12, 2006, GlobalOptions Group granted, in the aggregate, options for
            the
            purchase of 485,075 and 373,134 shares of GlobalOptions Group common
            stock at an
            exercise price of $2.01 per share, from the 2005 Plan, to employees and
            officers
            of Safir and Secure Source, respectively.  These options have a five year
            term and for Safir, vest ratably upon the first, second, third and fourth
            anniversaries of the date of grant and for Secure Source, vest ratably
            upon the
            first, second and third anniversaries of the date of grant.  In the
            aggregate, these options have a value of approximately $1,224,000 utilizing
            the
            Black-Scholes option pricing model  with the following assumptions used:
            expected life of five years, volatility of 87%, dividends of 0% and a
            risk-free
            interest rate of 5.08%. Of the total option value, $44,345 was amortized
            during
            the three and six months ended June 30, 2006, respectively. In addition,
            on May
            12, 2006, GlobalOptions Group issued 2,988,075 and 210,970 shares of
            GlobalOptions Group common stock to the sellers of Safir and Secure Source,
            which were valued at $6,000,000 and $500,000, respectively (See Note
            4).
 
 On
            June
            10, 2006, the Company issued 87,061 shares of common stock, valued at
            $175,000,
            to a service provider in connection with the conversion acquisition of
            Safir.
 
  P.24
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **11.
            Stockholders’ Equity, continued**
 
 ***Common
            Stock and Stock Options, continued***
 
 On
            June
            12, 2006, GlobalOptions Group granted, in the aggregate, from the 2006
            Plan,
            options for the purchase of 1,840,000 shares of GlobalOptions Group common
            stock
            at an exercise price of $2.20 per share, consisting of options for the
            purchase
            of an aggregate of 1,000,000 shares granted to the Company’s Chief Executive
            Officer and 500,000 shares to Company’s Chief Financial Officer, who is a
            consultant to the Company; and 340,000 shares to members of the Company’s board
            of directors.  The options granted to the Company’s officers have a five
            year term and vest ratably upon the first, second and third anniversary
            of the
            date of grant.   The options granted to the members of the board of
            directors have a five year term and vest ratably at the end of each of
            the four
            quarterly periods following the date of grant. In the aggregate, these
            options
            have a value of approximately $2,868,000 utilizing the Black-Scholes
            option
            pricing model with the following assumptions used: expected life of five
            years, volatility of 87%, dividends of 0% and a risk-free interest rate
            of
            4.95%. Of the total option value, $61,352 was amortized during the three
            and six
            months ended June 30, 2006, respectively.
  On
            June
            27, 2006, the Company issued 122,500 shares of common stock in connection
            with
            the conversion of 245 shares of Series A convertible preferred
            stock.
 
  P.25
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **11.
            Stockholders’ Equity, continued**
 
 ***Convertible
            Preferred Stock - Series B***
  On
            June
            29, 2006, the Company authorized the designation of a total of 60,000
            shares as
            Series B convertible preferred stock.
  On
            June
            29, 2006, in a private placement notes in the amount of $45,811,000 and
            accrued
            interest of $339,731 were exchanged for 53,073 units, valued at $1,000
            per unit
            for a total value of approximately $53,073,000.  Each unit consisted of one
            share of Series B convertible preferred stock and a detachable, transferable
            series B-1 warrant to purchase 175 shares of common stock at $2.15 per
            share and a detachable, transferable warrant series B-2 to purchase
            175 shares at $2.85 per share.
  ***Optional
            Conversion***
  **** Holders
            of Series B convertible preferred stock will be entitled at any time
            to convert
            their shares of Series B convertible preferred stock into the Company’s common
            stock, without any further payment. Each share of Series B convertible
            preferred
            stock is initially convertible into 500 shares of common stock at a conversion
            price of $2.00. The number of shares of the Company’s common stock issuable upon
            conversion of the Series B convertible preferred stock is subject to
            adjustment
            upon the occurrence of certain events, including, among others, a stock
            split,
            reverse stock split or combination of the Company’s common stock; an issuance of
            common stock or other securities of the company as a dividend or distribution
            on
            the Company’s common stock; a reclassification, exchange or substitution of the
            Company’s common stock; or a capital reorganization of the Company. In the event
            that the Company issues any shares of common stock or common stock equivalents
            in a private placement, secondary offering or shelf offering for cash
            consideration at a price less than $2.00 per share of common stock, the
            conversion price will be reduced based on weighted average anti-dilution
            protections subject to customary carve outs, but in no event will the
            conversion
            price be less than $.765 per share.
 
 ***Mandatory
            Conversion***
  Subject
            to an effective Registration Statement, beginning 12 months from the
            closing
            date of the offering of the Series B convertible preferred stock, if
            the closing
            bid price of the common stock exceeds $4.50 and trading volume of the
            Company’s
            common stock is not less than 100,000 shares for at least fifteen trading
            days
            out of a period of twenty (20) consecutive trading days, the Company
            may require
            the conversion of the Series B convertible preferred stock into shares
            of common
            stock at the applicable conversion price. In the event a holder of Series
            B
            convertible preferred stock is prohibited from converting into common
            stock
            under this provision due to the 4.99% ownership limitation discussed
            below, the
            excess portion of the Series B convertible preferred stock shall remain
            outstanding, but shall cease to accrue a dividend.
 
  P.26
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **11.
            Stockholders’ Equity, continued**
 ***Registration
              Rights***
  EITF
              Issue No. 05-4 “The Effect of a Liquidated Damages Clause on a Freestanding
              Financial Instrument Subject to EITF Issue No. 00-19, ‘Accounting for Derivative
              Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own
              Stock” (“EITF No. 05-4”) addresses financial instruments, such as stock purchase
              warrants, which are accounted for under EITF 00-19 that may be issued
              at the
              same time and in contemplation of a registration rights agreement that
              includes
              a liquidated damages clause. The consensus of EITF No. 05-4 has not
              been
              finalized. On June 29, 2006, the Company completed a private placement
              of
              convertible notes and entered into  registration rights and warrant
              agreement in connection with and following the private placement. The
              Company
              views its registration rights agreement as a free standing financial
              instrument
              that includes liquidated damages which could be deemed substantial. 
Accordingly,  the Company views that the interpretive guidance in EITF
              Issue No. 05-4, view C, provides the best fit for its circumstances
              and would
              require a company, in certain circumstances to record a derivative
              liability.  However due to various factors including the good filing
              history of the Company, the lower  likelihood of a penalty for liquidated
              damages relating to the requirement by the Company to file the registration
              statement related to the warrants, to have the registration statement
              declared
              effective and remain effective, the exposure to this registration rights
              damages
              was deemed to be de minimus and therefore no liability was recorded
              in the
              Condensed Consolidated financial statements.
 
 ******  ***Limitations on Conversion*** **
  Each
            holder of Series B convertible preferred stock may not convert his shares
            into
            the Company’s common stock such that the number of shares of the Company’s
            common stock issued after the conversion would exceed, when aggregated
            with all
            other shares of the Company’s common stock owned by such holder at such time, in
            excess of 4.99% of the then issued and outstanding shares of the Company’s
            common stock.
  ***Voting
            Rights***
  Holders
            of Series B convertible preferred stock are entitled to vote their shares
            on an
            as-if-converted to common stock basis, and will vote together with the
            holders
            of the common stock, and not as a separate class. Holders of Series B
            convertible preferred stock will also have any voting rights to which
            they are
            entitled by law.
  ***Liquidation
            Rights***
  In
            the
            event of any voluntary or involuntary liquidation, dissolution or winding-up
            of
            the Company, holders of Series B convertible preferred stock will be
            entitled to
            receive out of assets of the Company available for distribution to the
            Company’s
            stockholders, before any distribution is made to holders of the common
            stock, liquidating distributions in an amount equal to $1,000 per share.
            After payment of the full amount of the liquidating distributions to
            which the
            holders of the Series B convertible preferred stock are entitled, holders
            of the
            Series B convertible preferred stock will receive liquidating distributions
            pro
            rata with holders of the Company’s Series A convertible preferred stock and
            holders of the common stock, based on the number of shares of common
            stock into
            which the Series B convertible preferred stock is convertible at the
            conversion
            price then in effect.
   P.27
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **11.
            Stockholders’ Equity, continued**
 
 ***Dividends***
  Commencing
            18 months from the issuance date of June 29, 2006, dividends accumulate
            at the
            rate of 6% per annum for the first 12 months and 8% per annum thereafter.
            Dividends are payable in cash or in shares of the common stock at the
            holder’s
            election. To the extent that any dividends are declared on the common
            stock,
            holders of Series B convertible preferred stock will be entitled to receive
            such
            dividends on an as-if-converted basis. No dividends may be declared or
            paid on
            junior securities until the dividend on the Series B convertible preferred
            stock
            is paid in full.
 
 ***Adjustments***
  In
            the
            event that the Company issues any shares of common stock or common stock
            equivalents in a private placement, secondary offering or shelf offering
            for
            cash consideration at a price less than the current warrant exercise
            price then
            in effect, the warrant exercise price will be reduced based on weighted
            average
            anti-dilution protections subject to customary carve outs. Additionally,
            the
            warrants contain provisions that protect the holders thereof against
            dilution by
            adjustment of the purchase price in certain events, such as stock dividends,
            stock splits, and other similar events.
  The
            holders of any type of warrant will not possess any voting or other rights
            as a
            stockholder of our company unless and until the holder exercises the
            warrant.
 
 ***Series
            B Convertible Preferred Stock - Beneficial Conversion Feature and Deemed
            Dividends***
  At
            June
            29, 2006, the date of issuance, the fixed conversion price of the Series
            B
            convertible preferred stock of $2.00 represented a discount to the market
            value
            of the Company’s common stock, which was at a quoted market price of $2.20 per
            share. In accordance with EITF 00-27, “Application of Issue 98-5 to Certain
            Convertible Instruments” and EITF 98-5, “Accounting for Convertible Securities
            with Beneficial Conversion Features or Contingently Adjusted Conversion
            Ratios”,
            the Company determined the relative fair value of the warrants and the
            convertible preferred stock and allocated the proceeds received on a
            relative
            fair value basis. The fair value of the warrants was calculated using
            the
            Black-Scholes option pricing model with the following assumptions: dividend
            yield of 0%, expected volatility of 87%, risk-free interest rate of 5.21%
            and an
            expected term of two and a half years. Based upon this calculation, the
            effective conversion price of the Series B convertible preferred stock was
            determined to be $1.28 per common share, resulting in a beneficial conversion
            feature  for a deemed dividend of $24,413,362 at June 30, 2006.
  ***Warrants
            (Series B-1 and Series B-2)***
  Each
            Series B-1 warrant, of which 9,287,835 were issued in the closing of
            our Series
            B convertible preferred stock offering, entitles the holder thereof to
            purchase
            shares of our common stock at an exercise price of $2.15 per share from
            the date
            of issuance until the fifth anniversary thereof. Each Series B-2 warrant,
            of
            which 9,287,835 were also issued in the closing of our Series B convertible
            preferred stock offering, entitles the holder thereof to purchase shares
            of our
            common stock at an exercise price of $2.85 per share from the date of
            issuance
            until the fifth anniversary thereof. In the aggregate, these warrants
            have a
            fair value of approximately $20,800,000 utilizing the Black-Scholes option
            pricing model with the following assumptions used: expected life 2.5 years,
            volatility 87%, 0% dividends and a risk-free interest rate 5.21%.
 
  P.28
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **11.
            Stockholders’ Equity, continued**
 
 ***Warrants
            (Series B-1 and Series B-2), continued***
 
 The
            Series B-1 and Series B-2 warrants share the following features:
  In
            the
            event that we issue any shares of the Company’s common stock or common stock
            equivalents in a private placement, secondary offering or shelf offering
            for
            cash consideration at a price less than the current warrant exercise
            price then
            in effect, the warrant exercise price will be reduced based on weighted
            average
            anti-dilution protections subject to customary carve outs. Additionally,
            the
            warrants contain provisions that protect the holders thereof against
            dilution by
            adjustment of the purchase price in certain events, such as stock dividends,
            stock splits, and other similar events.
  The
            holders of any type of warrant will not possess any voting or other rights
            as a
            stockholder of our company unless and until the holder exercises the
            warrant.
  ***Transfer,
            Exchange and Exercise***
  The
            warrants may be exercised upon surrender of the certificate therefor
            on or prior
            to the expiration date (as explained below) at the Company’s offices with the
            form of “Election to Purchase” section of the warrant filled out and executed as
            indicated, accompanied by payment (in the form of certified or cashier’s check
            payable to the order of GlobalOptions Group, Inc.) of the full exercise
            price
            for the number of warrants being exercised.
 
 **12.
            Major Clients**
 
 The
            Company’s top three clients represented 47%, 14%, and 1%; and 22%, 18%, and 12%,
            respectively, of revenues for the six months ended June 30, 2006 and
            2005,
            respectively. The Company’s top three clients represented 12%, 9%, and 1%; and
            20%, 17%, and 10%, of revenues for the three months ended June 30, 2006
            and
            2005, respectively
  The
            Company has foreign clients representing 1% and 1% and 22% and 1% of
            revenues
            for the six months ended June 30, 2006 and 2005 respectively, and foreign
            clients representing 1% and negligible; and 20% and 3% of revenues for
            the three
            months ended June 30, 2006 and 2005 respectively.  These foreign clients
            operate primarily in Russia and the Caribbean.  For each of these foreign
            clients, the Company is paid in U.S. dollars.
 
 During
            the six months ended June 30, 2006, a client that represented approximately
            19%
            of revenues for the year ended December 31, 2005 has elected not to renew
            its
            relationship with the Company.
 
 **13. 
            Client and Segment Data**
  The
            Company’s reportable operating segments services consisted of the following
            three business segments: Investigations/Litigation Support, Crisis Management
            Services and Security.  The Company’s reportable segments are organized,
            managed and operated along product lines. These product lines are provided
            to
            similar clients, are offered together as packaged offerings, generally
            produce
            similar margins and are managed under a consolidated operations management
            JWLA
            is reflected within the Crisis Management Segment.
  The
            Investigations/Litigation Support Services segment includes activities
            from
            litigation support, due diligence, inventory control, asset recovery,
            and
            business intelligence.
  P.29
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **13. 
            Client and Segment Data, continued**
  The
            Crisis Management Services segment includes activities related to risk
            planning
            and response to natural disasters, kidnappings, labor disputes, bombings,
            product tampering and industrial espionage.
  The
            Security Services segment includes activities from threat and vulnerability
            assessments; fraud prevention; IT security, and technical
            systems/counter-measures both nationally and internationally.
  Total
            revenues by segment include revenues to unaffiliated customers. The Company
            evaluates performance based on income (loss) from operations.  Operating
            income (loss) is gross profit less operating expenses.
   P.30
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **13. 
            Client and Segment Data, continued**
 
 The
            following tables summarize financial information about the Company’s business
            segments for the three and six months ended June 30, 2006 and 2005 (in
            thousands):
  **For
              the Three Months Ended June 30, 2006**
  **Investigations/****Litigation**
                    
                    **Crisis****Support**
                    
                    **Management**
                    
                    **Security**
                    
                    **Corporate**
                    
                    **Consolidated**Revenues
                    
                    $
                    5,100
                    
                    $
                    12,043
                    
                    $
                    217
                    
                    $
                    -
                    
                    $
                    17,360Income
                        (loss) fromOperations
                    
                    $
                    (2,297
                    )
                    $
                    2,888
                    
                    $
                    (481
                    )
                    $
                    -
                    
                    $
                    110Depreciation
                        andAmortization
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    442
                    
                    $
                    442Interest
                        Expense
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    506
                    
                    $
                    506
   **For
              the Three Months Ended June 30, 2005**
 
 **Investigations/****Litigation**
                    
                    **Crisis****Support**
                    
                    **Management**
                    
                    **Security**
                    
                    **Corporate**
                    
                    **Consolidated**Revenues
                    
                    $
                    763
                    
                    $
                    242
                    
                    $
                    192
                    
                    $
                    -
                    
                    $
                    1,197Loss
                        fromOperations
                    
                    $
                    (659
                    )
                    $
                    (293
                    )
                    $
                    (133
                    )
                    $
                    -
                    
                    $
                    (1,085
                    )Depreciation
                        andAmortization
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    11
                    
                    $
                    11Interest
                        Expense
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    24
                    
                    $
                    24
 
  P.31
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
  **13. 
            Client and Segment Data, continued**
 
 **For
              the Six Months Ended June 30, 2006**
  **Investigations/****Litigation**
                    
                    **Crisis****Support**
                    
                    **Management**
                    
                    **Security**
                    
                    **Corporate**
                    
                    **Consolidated**Revenues
                    
                    $
                    8,265
                    
                    $
                    14,963
                    
                    $
                    367
                    
                    $
                    -
                    
                    $
                    23,595Income
                        (Loss) fromOperations
                    
                    $
                    (3,565
                    )
                    $
                    3,348
                    
                    $
                    (723
                    )
                    $
                    -
                    
                    $
                    (940
                    )Depreciation
                        andAmortization
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    704
                    
                    $
                    704Interest
                        Expense
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    607
                    
                    $
                    607
 
 **For
              the Six Months Ended June 30, 2005**
  **Investigations/****Litigation**
                    
                    **Crisis****Support**
                    
                    **Management**
                    
                    **Security**
                    
                    **Corporate**
                    
                    **Consolidated**Revenues
                    
                    $
                    1,468
                    
                    $
                    495
                    
                    $
                    290
                    
                    $
                    -
                    
                    $
                    2,253Loss
                        fromOperations
                    
                    $
                    (847
                    )
                    $
                    (489
                    )
                    $
                    (133)-
                    
                    $
                    -
                    
                    $
                    (1,469
                    )Depreciation
                        andAmortization
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    21
                    
                    $
                    21Interest
                        Expense
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    -
                    
                    $
                    63
                    
                    $
                    63
 
   P.32
 **GLOBALOPTIONS
                GROUP, INC. AND SUBSIDIARIES**
 **Notes
                To Condensed Consolidated Financial Statements**
 **(Unaudited)**
   
  
 **14.**  **Subsequent
            Events**
 
 *Hyperion
            Risk Acquisition*
 
 On
            August
            10, 2006, the Company acquired substantially all of the business and
            assets of
            Hyperion Risk, Inc. (“Hyperion Risk”), a Florida corporation.  
Hyperion Risk is a security consulting, investigative and intelligence
            firm.   The acquisition was made pursuant to a certain Asset Purchase
            Agreement (the “Hyperion Agreement”) between the Company and Hyperion Risk,
            dated August 10, 2006. The aggregate purchase price paid for Hyperion’s business
            and assets was $3,660,000, which consisted of cash in the amount of $1,900,000,
            and $1,500,000 in the Company’s stock, and cash payments to pay off Hyperion
            Risk’s credit line balance of approximately $260,000.
 
 *Conversion
            of Series A Convertible Preferred Stock*
 
 During
            July 2006, the Company issued 370,000 shares of common stock in connection
            with
            the conversion of 740 shares of Series A convertible preferred
            stock.
  *Registration
            of Shares for Stock Option Plan*
  On
            August
            9, 2006, in connection with the Company’s approval of its 2006 Stock Option
            Plan, the Company filed a Registration Statement on Form S-8 with the
            Securities
            and Exchange Commission to register 15,000,000 shares of common stock
            for
            issuance in its stock option plans.
 
 *Registration
            Statements*
  On
            August
            9, 2006, the Company filed a Form SB-2 to register 43,359,500 shares
            in
            connection with Series B convertible preferred stock and warrants issued
            on June
            29, 2006 (See Note 11).
 
 On
            August
            9, 2006, the Company filed a supplement on Form 424 b3 to its registration
            statement on Form SB-2 dated May 8, 2006.
    P.33


**ITEM
        2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION**
  *The
        following discussion of results of operations and financial condition is
        based
        upon, and should be read in conjunction with, our condensed consolidated
        financial statements and accompanying notes thereto included elsewhere herein.*
  **Forward-Looking
        Statements**
 
 This
        Quarterly Report on Form 10-QSB contains “forward-looking statements” within the
        meaning of the Private Securities Litigation Reform Act of 1995. These
        statements can sometimes be identified by the use of forward-looking words
        such
        as “anticipate,”  “believe,”  “estimate,”  “expect,” 
“intend,”  “may,”  “will” and similar expressions. These statements
        are based on management’s current expectations and are subject to risks,
        uncertainties and assumptions. Should one or more of these risks or
        uncertainties materialize or should underlying assumptions prove incorrect,
        actual results may vary materially from those anticipated, estimated, expected,
        intended or projected.
 
 The
        following factors, among others, could cause actual results to differ materially
        from those described in the forward-looking statements: changes in the demand
        for, or in the mix of, our services; project delays or cancellations; cost
        overruns with regard to fixed price projects; competitive pricing and other
        competitive pressures; changes in United States and foreign governmental
        regulation and licensing requirements; general economic conditions; political
        instability in foreign countries in which we operate; our ability to integrate
        and manage successfully any business we acquire; and other factors that are
        set
        forth in our Form 10-KSB dated December 31, 2005.
 
 **General**
  We
        are a
        provider of risk mitigation services to Fortune 500 corporations, governmental
        organizations and high-profile individuals throughout the world. Our risk
        mitigation services currently include investigations and litigation support,
        risk management, security, crisis management and corporate governance. Our
        investigations and litigation segment operates primarily domestically. We
        have
        many engagements in the remainder of our business that may take our staff
        around
        the world and are typically highly sensitive engagements where we are
        interacting with senior leaders in both corporations and governments. Our
        overall mission is to identify, evaluate, assess and prevent issues that
        may
        threaten people, organizations or strategic initiatives for companies and
        governments around the globe.
 
 Founded
        in 1998, the management, staff and advisory boards include security and
        terrorism experts from America’s elite military units, former intelligence and
        law enforcement officers, professional investigators, and legal and crisis
        communications specialists. We provide services to governments, law firms,
        private clients and corporations, including two of the ten largest corporations
        in the world.
 
 We
        have
        been awarded “approved” status as a vendor of consulting and related services to
        United States government agencies by the U.S. General Services Administration
        (GSA). We are a MOBIS (management, organizational and business improvement
        services) contractor and members of our staff have high-level security
        clearances.
 
 
 P.34
 
 On
        June 24, 2005, we completed a reverse merger transaction, in which
        GlobalOptions Acquisition Corp., a Delaware corporation and our newly-created,
        wholly-owned subsidiary (“GlobalOptions Acquisition”), merged with and into our
        operating company, GlobalOptions, Inc., a Delaware corporation
        (“GlobalOptions”). At the time of the reverse merger, our corporate name was
        Creative Solutions with Art, Inc. (“Creative Solutions”). Following the reverse
        merger we changed our name to GlobalOptions Group, Inc. (“GlobalOptions Group”)
        and our trading symbol to “GLOI.OB.” As a result of the reverse merger,
        GlobalOptions became our wholly-owned operating subsidiary, with GlobalOptions’
former security holders acquiring a majority of the outstanding shares of
        our
        common stock, par value $.001 per share. The reverse merger was consummated
        under Delaware law and pursuant to an Agreement and Plan of Merger, dated
        June 24, 2005. Concurrent with the closing of the reverse merger, and on
        September 22, 2005, we also completed a private offering to accredited investors
        of units consisting of one share of our series A convertible preferred
        stock and detachable, transferable warrants to purchase 125 shares of our
        common stock, and received proceeds of approximately $7,219,200 at the closing
        of the private placement, net of offering costs of approximately $530,800.
  On
        March
        10, 2006 we issued notes payable of $12,500,000 and received net proceeds
        of
        $12,194,060, On May 12, 2006, we issued notes payable of $2,000,000 and received
        net proceeds of $1,900,000. On June 28, 2006 we issued notes payable of
        $30,550,000 and received net proceeds of $29,022,500.
  Our
        principal corporate offices are located at 75 Rockefeller Plaza, 27 th Floor,
        New York, New York 10019. Our telephone number is (212) 445-6262.
  On
        June 24, 2005, Harvey W. Schiller, Ph.D. was named Chairman and Chief
        Executive Officer, Per-Olof Lööf was named Vice Chairman of the Board of
        Directors, and Jeffrey O. Nyweide was named Chief Financial Officer, Executive
        Vice President-Corporate Development and Secretary.
  On
        May
        19, 2005, GlobalOptions and Confidential Business Resources (“CBR”), a
        privately-held nationwide investigations firm based in Nashville, Tennessee,
        entered into an asset purchase agreement with respect to the proposed
        acquisition by GlobalOptions of all of the assets and business activities
        of
        CBR. The acquisition of CBR was completed August 14, 2005.
  On
        January 13, 2006, GlobalOptions and James Lee Witt Associates (“JLWA”), a
        privately-held emergency management firm based in Washington, DC, entered
        into
        an asset purchase agreement with respect to the proposed acquisition by
        GlobalOptions of all of the assets and business activities of JLWA. The
        acquisition of JLWA was completed March 10, 2006.
  On
        May
        12, 2006 the
        Company acquired Safir Rosetti, LLC (“Safir”) and Secure Source, LLC (“Secure
        Source). Safir is a security consulting, investigative and intelligence firm
        headquarterd in New York City. Secure Source is an international risk consulting
        firm with offices in the Dallas and Washington D.C. areas.
  On
        August
        10, 2006, the Company acquired substantially all of the business and assets
        of
        Hyperion Risk, Inc. (“Hyperion Risk”), a Florida corporation.  
Hyperion Risk is an investigative and intelligence firm based in Orlando,
        Florida .
  The
        following discussion and financial information is presented to aid in
        understanding our financial position and results of operations for the
        three and six month periods ended June 30, 2006, as compared to the three
        and
        six month periods ended June 30, 2005.
 P.35
  **Overview**
  We
          experienced increases in revenues of approximately $16,163,000 (1,351%)
          and
          $21,342,000 (947%), achieved an operating profit of approximately $110,000
          and
          an operating loss of $940,000 and a net loss of $10,626,000 and $11,748,000
          for
          the three and six months ended June 30, 2006, respectively when compared
          to the
          same periods in 2005. We had revenue of $17,360,000 for the three months
          ended
          June 30, 2006, as compared to revenue of $1,197,000 for the three months
          ended
          June 30, 2005 and had revenue of $23,595,000 for the six months ended June
          30,2006, as compared to revenue of $2,253,000 for the six month ended June
          30,
          2005. Of the revenue reported for the three and six months ended June 30,
          2006,
          approximately 98% were domestic and 2% related to international clients.
          The
          increase in revenues for the six month period is primarily attributable
          to the
          acquisition of CBR, JLWA, Safir, and Secure Source which provided revenues
          of
          $5,672,000, $14,831,000, $1,283,000 and $500,000, respectively.
 
 Although
          we do have some long-term relationships with our clients, our ability to
          generate revenue is generally dependent upon obtaining many new projects
          each
          year, most of which are relatively short-term. Accordingly, period-to-period
          comparisons within a given year or between years will need to take this
          normal
          fluctuation into consideration.
 
 Our
          gross
          profit for the three months ended June 30, 2006 was 49% as compared to
          50% for
          the three months ended June 30, 2005. Our gross profit for the six months
          ended
          June 30, 2006 was 49% as compared to 52% for the six months ended June
          30, 2005.
          The slight decrease for the three and six month periods ended June 30,
          2006 was
          primarily due to change in the mix of the types of client engagements,
          in
          connections with the recent acquisitions of CBR, JLWA, Safir and Secure
          Source.
 
 Net
          loss
          applicable to common stockholders for the three months ended June 30, 2006
          and
          2005 was $34,929,000 and $1,942,000 respectively, for an increase of $32,987,000
          or approximately 1,699%. Net loss applicable to common stock holders for
          the six
          months ended June 30, 2006 and 2005 was $36,161,000 and $2,263,000,
          respectively, for an increase of $33,798,00 or approximately 1,430%. The
          increased net loss was primarily attributable to the amortization of debt
          discounts of $7,523,000 and $7,523,000 and amortization of deferred financing
          costs of $2,614,000 and $2,695,000 related to our financing programs,
          respectively.
 
 While
          current financial results for GlobalOptions Group shows a significant increase
          in net loss applicable to common stockholders, we believe the Company represents
          a unique opportunity to build a profitable global leader in the highly
          fragmented risk mitigation industry. GlobalOptions Group is an established
          company that will serve as our nexus for a series of acquisitions that
          we
          believe will deliver capabilities, products and services designed to meet
          the
          ever increasing demand for the assessment and management of risk. We see
          no
          indication that the drivers of increased risk mitigation spending are likely
          to
          dissipate any time in the near future. Risk mitigation providers on both
          the
          product and services side are still fragmented and ripe for consolidation
          with
          no clear market leader or dominant brand. We believe there is an opportunity
          to
          provide comprehensive solutions which can drive increased revenues for
          a company
          that can build a comprehensive platform. We expect GlobalOptions Group
          to be
          that company.
  Our
        strategic vision is to build the first truly integrated enterprise risk
        mitigation company by selectively acquiring the best companies in the industry
        with proven management teams and a strategic long-term vision. Platform
        acquisitions will be geographically diverse and offer solutions in different
        risk mitigation segments to gain scope and synergies. Targets will have a
        combination of existing clients, revenue, significant channel presence and/or
        a
        high margin core business. Within the last twelve months, we acquired the
        five
        companies, CBR, JLWA, Safir, Secure Source and Hyperion Risk, and have
        identified one more target acquisition candidate.
 P.36
  On
        August
        14, 2005, GlobalOptions acquired CBR, a privately-held nationwide investigations
        firm based in Nashville, Tennessee. CBR’s revenues and net losses for the year
        ended December 31, 2004 were approximately $8.8 million and $990,000,
        respectively. The aggregate purchase price paid for CBR’s assets and business
        was approximately $5,293,000 subject to certain adjustments through August
        13,
        2006 to the opening balance working capital, as such purchase price adjustments
        are defined in the agreement. The aggregate purchase price of approximately
        $5,293,000 consisted of cash in the amount of $4,363,000 (net of cash acquired
        of $26,000) and inclusive of a broker fee of $143,000, and a note payable
        to the
        seller of $904,000 due August 14, 2006.
 On
          March
          10, 2006, GlobalOptions purchased substantially all of the assets and
          liabilities of JLWA, a privately held crisis and emergency consulting management
          firm based in Washington, D.C. The acquisition was made pursuant to a certain
          Asset Purchase Agreement (the “Agreement”) dated January 13, 2006, as amended,
          between GlobalOptions Group and JLWA. The aggregate purchase price paid
          for
          JLWA’s assets and business was approximately $8,404,000 after the purchase
          adjustment on June 9, 2006. The aggregate purchase price of approximately
          $8,404,000, consisted of a cash payment at closing of $3,600,000, a cash
          payment
          of $1,857,000 to pay off JLWA’s line of credit balance, the issuance of 819,672
          shares of common stock of GlobalOptions Group valued at $2,000,000, a 4.6%
          note
          payable to the seller of $400,000 due March 9, 2007, and a non-interest
          bearing
          working capital purchase price adjustment of approximately $546,000, paid
          on
          June 8, 2006. The purchase price is subject to a post-closing adjustment
          for
          working capital. In addition, the Agreement provides for the sellers to
          obtain
          up to an additional $15,400,000 upon the attainment of certain revenue
          goals
          subsequent to the closing of the transaction and the continued employment
          of
          James Lee Witt, the former president and chief executive officer of JLWA.
 
 On
          May
          12, 2006, GlobalOptions acquired substantially all of the business and
          assets of
          Safir Rosetti, LLC  (“Safir”),
          a Delaware limited liability company. Safir is a security consulting,
          investigative and intelligence firm headquartered in New York City with
          seven
          additional offices nationwide. The acquisition was made pursuant to a certain
          Asset Purchase Agreement dated January 27, 2006, as amended (the “Safir
          Agreement”), between GlobalOptions Group and Safir. The aggregate purchase price
          paid for Safir’s business and assets was approximately $15,316,000, and included
          $6,000,000 in 8% promissory notes issued by the Company and paid on June
          29,
          2006, $1,000,000 in 4% promissory notes of the Company due on May 12, 2007,
          $6,000,000 in common stock of the Company, consisting of 2,985,075 shares
          of
          $2.01 per share, payments to retire certain indebtedness of approximately
          $1,941,000 of Safir in anticipation of the closing, which includes as follows:
          approximately $553,000 on April 3, 2006 and $1,388,000 on April 28, 2006
          and a
          finders fee of $375,000 paid to QuanStar Group, LLC, a related
          party.
  On
          May
          12, 2006, GlobalOptions acquired substantially all of the business and
          certain
          assets of Secure Source, Inc. (“Secure Source”), a Delaware Corporation. Secure
          Source is an international risk consulting firm with offices in Washington
          D.C.
          and Dallas, Texas. The acquisition was made pursuant to a certain Asset
          Purchase
          Agreement dated May 12, 2006, (the “Secure Source Agreement”), between the
          Company, Secure Source, Marian E. Nicastro and David W. Nicastro. The aggregate
          purchase price paid for Secure Source’s business and assets of $3,250,000
          consists of $1,500,000 in 3% promissory notes paid on June 29, 2006 and
          $750,000
          in 5% promissory notes due May 12, 2009, and $500,000 in 5% promissory
          notes due
          May 12, 2007 and $500,000 in common stock of GlobalOptions Group, consisting
          of
          248,756 shares at $2.01 per share.
 P.37
 On
          August
          10, 2006, the Company acquired substantially all of the business and assets
          of
          Hyperion Risk, Inc. (“Hyperion Risk”), a Florida corporation.  
Hyperion Risk is a investigative and intelligence firm.   The
          acquisition was made pursuant to a certain Asset Purchase Agreement (the
          “Hyperion Agreement”) between the Company and Hyperion Risk, dated August 10,
          2006. The aggregate purchase price paid for Hyperion’s business and assets was
          $3,400,000, which consisted of cash in the amount of $1,900,000, and $1,500,000
          in the Company’s common stock, and the Company’s cash payments to pay off
          Hyperion Risk’s credit line balance of approximately $260,000
  Because
          of the personal and sensitive nature of risk mitigation and investigative
          engagements, the ability to provide services and retain clients is driven
          largely by reputation and personal relationships. Under the leadership
          of Harvey
          W. Schiller, Ph.D., executive Chairman of the Board of Directors and Chief
          Executive Officer of GlobalOptions Group, Neil C. Livingstone, Ph.D., Chief
          Executive Officer of GlobalOptions, Halsey R. Fischer, President of
          Investigations of GlobalOptions, and James Lee Witt, Chief Executive Officer
          of
          the GlobalOptions/James Lee Witt Division. Senior Chief Executive Officer
          of
          GlobalOptions/Safir Rosetti Division , Joseph R. Rosetti, President of
          GlobalOptions/Safir Rosetti Division and David Nicastro, Chief Executive
          Officer
          of GlobalOptions/Secure Source Division. GlobalOptions Group provides not
          only
          vision, management and leadership, but strong relationships with leaders
          in both
          corporate and government markets. GlobalOptions Group has the relationships
          to
          bring in high-margin, well-known clients, while our operational experience
          allows for execution of these sensitive and critical engagements. Once
          these
          projects are completed, there are a variety of annuity-based, long-term
          products
          and services that can be combined into a comprehensive suite of solutions
          to
          evolve the business into a more profitable and recurring revenue product-based
          business.
  Acquired
          companies will give GlobalOptions Group a substantial revenue base, a wide
          array
          of products and services, geographic reach into almost every country in
          the
          world and experienced operators that will complement the current GlobalOptions
          Group team. Our objective is to sell bundled solutions and services through
          each
          acquired companies’ channels. To achieve revenue growth targets, GlobalOptions
          Group will use its own and acquired companies’ relationships to attain high-end,
          well-known risk mitigation engagements to accelerate our internal growth
          rate.
          The expectation is to leverage other GlobalOptions Group members, as opposed
          to
          using sub-contractors and joint ventures, to perform solutions and services,
          thereby keeping higher internal margins.
  We
          will
          also use a shared corporate services approach in administrative areas to
          keep
          indirect costs reasonable and to help us achieve profitability sooner.
          We expect
          to find savings in shared services such as global marketing, human resources,
          finance, information technology, mergers and acquisitions, business integration
          and development, compliance and legal.
  **Critical
          Accounting Policies**
 
 GlobalOptions
          Group’s significant accounting policies, including the assumptions and judgments
          underlying them, are more fully described in our “Notes to Consolidated
          Financial Statements” included in this Form 10-KSB for the year ended December
          31, 2005. Some of our accounting policies require the application of significant
          judgment by management in the preparation of the condensed consolidated
          financial statements, and as a result, they are subject to a greater degree
          of
          uncertainty. In applying these policies, management uses its judgment to
          determine the appropriate assumptions to be used in calculating estimates
          that
          affect the reported amounts of assets, liabilities, revenues and expenses.
          Management bases its estimates and assumptions on historical experience
          and on
          various other factors that are believed to be reasonable under the
          circumstances. GlobalOptions Group has identified certain of its accounting
          policies as the ones that are most important to the portrayal of our condensed
          consolidated financial condition and results of operations and which require
          management to make its most difficult and subjective judgments, often as
          a
          result of the need to make estimates of matters that are inherently uncertain.
          GlobalOptions Group’s critical accounting policies include the following:
 
  P.38
  *Revenue
          Recognition*
 
 Revenue
          is recognized as the services are performed pursuant to the applicable
          contractual arrangements. Revenue related to time and materials arrangements
          is
          recognized in the period in which the services are performed. Revenue related
          to
          fixed price arrangements are recognized based upon the achievement of certain
          milestones or progress points within the project plan. The impact of any
          revisions in estimated total revenue and direct contract costs is recognized
          in
          the period in which they become known. Expenses incurred by professional
          staff
          in the generation of revenue are billed to the client and recorded as revenue
          when incurred. For certain foreign accounts, revenues are recognized and
          the
          related expenses are recorded only after the receipt in cash of the revenue
          amounts. We incur no obligations to third parties for expenses related
          to these
          certain foreign accounts until such time that invoiced revenues are received
          in
          cash. Revenues received in advance of when earned are credited to the deferred
          revenues account.
  *Intangible
          Assets*
 
 In
          accordance with the requirements of Statement of Financial Accounting Standards
          No. 141 (“SFAS No. 141”), “Business Combinations”, the Company recognizes
          certain intangible assets acquired in acquisitions, primarily goodwill,
          trade
          names, covenants not to compete, and customer relationships.  In
          accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible
          Assets”, on a regular basis, the Company performs impairment analysis of the
          carrying value of goodwill and certain other intangible assets by assessing
          the
          recoverability when there are indications of potential impairment based
          on
          estimates of undiscounted future cash flows. The amount of impairment is
          calculated by comparing anticipated discounted future cash flows with the
          carrying value of the related asset. In performing this analysis, management
          considers such factors as current results, trends, and future prospects,
          in
          addition to other economic factors.
  *Allowance
          for Doubtful Accounts*
 
 We
          provide services to a variety of different clients across the United States
          and
          internationally and extend credit to our clients in the normal course of
          business.  We rarely obtain collateral to enhance the collection of
          receivables.  We determine the amount of the allowance for doubtful
          accounts primarily based upon an aging of the receivables balances, as
          well as
          upon the judgment our officers and managers.
 P.39
 
 **GlobalOptions
        Group’s Three Months Ended June 30, 2006 Compared to Three Months Ended June 30,
        2005**
  **Revenues**
  We
        had
        overall revenues of approximately $17,360,000 for the three months ended
        June
        30, 2006 as compared to revenues of approximately $1,197,000 for the three
        months ended June 30, 2005, for an increase of $16,163,000 or approximately
        1,351%. Of the revenues reported in the three months ended June 30, 2006,
        approximately 98% was domestic and 2% related to international clients. The
        increase in revenue for the three months ended June 30, 2006 was primarily
        attributable to the acquisitions of CBR, JLWA, Safir and Secure Source.
 
 **Investigations/Litigation
        Support Segment Revenues**
  In
        the
        investigations/litigation support segment, we had revenues of $5,100,000
        for the
        three months ended June 30, 2006, as compared to revenues of $763,000 for
        the
        three months ended June 30, 2005, for an increase of $4,337,000 or approximately
        568%. All of the investigations/litigation support revenues reported in the
        three months ended June 30, 2006 were domestic. The increase in
        investigations/litigation support segment revenues for the three months ended
        June 30, 2006 was primarily attributable to the expansion of our client base
        through the acquisition of CBR, Safir and Secure Source for which all revenues
        are included in this segment.
  **Crisis
        Management Segment Revenues**
 In
          the
          crisis management segment, we had revenues of $12,043,000 for the three
          months
          ended June 30, 2006 as compared to revenues of $242,000 for the three months
          ended June 30, 2005, for an increase of $11,801,000 or approximately
          4,876%. Over 99% of the crisis management revenue during the three months
          ended
          June 30, 2006 is primarily attributable to revenues from the JLWA operations,
          which were acquired on March 10, 2006.
  **Security
        Segment Revenues**
  In
        the
        security segment, we had revenues of $217,000 for the three months ended
        June
        30, 2006 as compared to revenues of $192,000 for the three months ended June
        30,
        2005, for an increase of $25,000 or approximately 13%. Of the security segment
        revenues reported in the three months ended June 30, 2006, all were domestic.
        This increase was due to a significant client generating a large amount of
        revenues within the three months ended June 30, 2006.
  **Cost
        of Revenues and Gross Profit**
  Our
        consolidated cost of revenues increased $8,184,000 or approximately 1,375%
        from
        $595,000 in the three months ended June 30, 2005 to $8,779,000 in the three
        months ended June 30, 2006, which was primarily due to the increases in the
        crisis management and investigations segments revenues. The increase in these
        segments is attributable to the additional volume from the CBR, JLWA, Safir
        and
        Secure Source acquisitions.
 
 
 P.40
 
 **Operating
        Expenses**
  We
        experienced a 1,937% increase in selling and marketing expenses for the three
        months ended June 30, 2006, when compared to the same period in 2005. Selling
        and marketing expenses for the three months ended June 30, 2006 were $2,954,000,
        compared to $145,000 for the three months ended June 30, 2005, for an increase
        $2,809,000. This increase is primarily attributable to the accrued earnout
        obligation of approximately $1,746,000 related to the JLWA
        acquisition.
 
 We
        experienced a 258% increase in overall operating expenses for the three months
        ended June 30, 2006, when compared to the same period in 2005. General and
        administrative expenses for the three months ended June 30, 2006 were
        $5,517,000, compared to $1,542,000 for the three months ended June 30, 2005.
        Of
        this increase, approximately $1,780,000 is attributable to CBR, $2,990,000
        to
        Witt and $3,064,000 related to legal, accounting and other professional fees
        incurred in order to fulfill our responsibilities as a public company and
        costs
        incurred for due diligence related to fulfillment of our growth plan.
 
 **Investigations/Litigation
        Support Segment Results**
  Our
        investigations segment had operating losses of $2,297,000 for the three months
        ended June 30, 2006 as compared to operating losses of $659,000 for the three
        months ended June 30, 2005, for an increase in our loss of $1,638,000 or
        approximately 248%. Reflected in this segment are all results of CBR, Safir
        and
        Secure Source. The overall general and administrative expenses, of which
        approximately 69% are allocated to the investigations division, have increased
        by 258% as compared to the three months ended June 30, 2005. This is
        attributable in part to the increased infrastructure associated with the
        Company’s acquisitions and in part to the increased corporate overhead costs of
        operating a public company.
 
 **Crisis
        Management Segment Results**
  Our
        crisis management segment had an operating profit of approximately $2,888,000
        for the three months ended June 30, 2006 as compared to an operating loss
        of
        $293,000 for the three months ended June 30, 2005, for an increased operating
        profit of $3,181,000 or approximately 1,086%. The significant increase in
        operating profit for three months ended June 30, 2006 was due most significantly
        to the operations of JLWA.
 
 **Security
        Segment Results**
  Our
        security segment had an operating loss of $481,000 for the three months ended
        June 30, 2006 as compared to an operating loss of $133,000 for the three
        months
        ended June 30, 2005, for an increase of $348,000. The increased loss is
        attributable to a higher level corporate of overhead borne within this segment.
  **Interest
        Expense**
  Interest
        expense increased by $482,000 to $506,000 in the three months ended June
        30,
        2006 from $24,000 in the three months ended June 30, 2005. The increase in
        interest expense is attributable to additional debt incurred in connection
        with
        the acquisitions of JLWA, Safir and Secure Source.
  
 P.41
 
 **Income
        Taxes**
  Although
        we have federal and state net operating losses available for income tax purposes
        that may be carried forward to offset future taxable income, the deferred
        tax
        assets are subject to a 100% valuation allowance because it is more likely
        than
        not that the deferred tax assets will not be realized as of June 30, 2006.
        Our
        ability to use our net operating loss carryforwards may be subject to an
        annual
        limitation in future periods pursuant to Section 382 of the Internal Revenue
        Code.
  **Net
        Loss Applicable to Common Stockholders**
  Net
        losses applicable to common stockholders for the three months ended June
        30,
        2006 and 2005 were $34,929,000 and $1,942,000, respectively, an increase
        of
        $32,987,000 or 1,699%. For the three month period ended June 30, 2006, we
        realized an overall gross profit of 49%, down from 50%. The gross profit
        amounts
        for the three months ended June 30, 2006 and 2005 were $8,581,000 and $602,000,
        an increase of $7,979,000 or 1,326%. This increased gross profit is offset
        by
        increases in operating expenses of $3,975,000 for the same period. The increased
        net loss for the three month period ended June 30, 2006 was primarily
        attributable deemed
        dividends on series B convertible preferred stock of
        $24,413,362 to the amortization of debt discounts of $7,523,000 and
        amortization of deferred financing costs of $2,614,000 related to our financing
        programs, respectively.
 
 Basic
        net
        loss per share is computed based on the weighted average number of shares
        of
        common stock outstanding during the periods presented. Common stock equivalents,
        consisting of options, warrants, Series A and Series B convertible
        preferred stock were not included in the calculation of the diluted net losses
        per share because their inclusion would have been anti-dilutive. Basic and
        diluted net losses per share applicable to common stockholders was $2.04
        for the three month period ending June 30, 2006 as compared to $0.20 in the
        corresponding 2005 period.
  **GlobalOptions
        Group’s Six Months Ended June 30, 2006 Compared to Six Months Ended June 30,
        2005**
  **Revenues**
  We
        had
        overall revenues of approximately $23,595,000 for the six months ended June
        30,
        2006 as compared to revenues of $2,253,000 for the six months ended June
        30,
        2005, for an increase of $21,342,000, or approximately 947%. Of the revenues
        reported in the six months ended June 30, 2006, approximately 98% was domestic
        and 2% related to international clients. The increase in revenue for the
        six
        months ended June 30, 2006 was primarily attributable to the acquisitions
        of
        CBR, JLWA, Safir and Secure Source.
 
 **Investigations/Litigation
        Support Segment Revenues**
  In
        the
        investigations/litigation support segment, we had revenues of $8,265,000
        for the
        six months ended June 30, 2006, as compared to revenues of $1,468,000 for
        the
        six months ended June 30, 2005, for an increase of $6,797,000 or approximately
        463%. All of the investigations/litigation support revenues reported in the
        six
        months ended June 30, 2006 were domestic. The increase in
        investigations/litigation support segment revenues for the six months ended
        June
        30, 2006 was primarily attributable to the expansion of our client base through
        the acquisitions of CBR, Safir and Secure Source.
  
 P.42
 
 **Crisis
        Management Segment Revenues**
  In
        the
        crisis management segment, we had revenues of $14,963,000 for the six months
        ended June 30, 2006 as compared to revenues of $495,000 for the six months
        ended
        June 30, 2005, for an increase of $14,468,000 or approximately 2,922%. 99%
        of the crisis management revenue during the six months ended June 30, 2006
        is
        attributable to revenues from the JLWA operations, which were acquired on
        March
        10, 2006.
  **Security
        Segment Revenues**
  In
        the
        security segment, we had revenues of $367,000 for the six months ended June
        30,
        2006 as compared to revenues of $290,000 for the six months ended June 30,
        2005,
        for an increase of $77,000 or approximately 26%. Of the security segment
        revenues reported in the six months ended June 30, 2006, all were domestic.
        This
        increase was due to a significant client generating a large amount of revenues
        within the six months ended June 30, 2006.
  **Cost
        of Revenues and Gross Profit**
  Our
        consolidated cost of revenues increased $11,034,000, or approximately 1,014%
        from $1,089,000 in the six months ended June 30, 2005 to $12,123,000 in the
        six
        months ended June 30, 2006, which was primarily due to the increases in the
        investigations and crisis management segments revenues. The increase in these
        segments is attributable to the additional volume from the JLWA, Safir and
        Secure Source acquisitions. The gross profit percentage declined from 52%
        to 49%
        from the six months ended as the product mix within the newly acquired
        operations has shifted slightly to lower margin client services.
 
 **Operating
        Expenses**
  We
        experienced a 1,216% increase in selling and marketing expenses for the six
        months ended June 30, 2006, when compared to the same period in 2005. Selling
        and marketing expenses for the six months ended June 30, 2006 were $3,768,000,
        compared to $286,000 for the six months ended June 30, 2005, for an increase
        $3,482,000. This increase is primarily attributable to the accrued earnout
        obligation of $2,242,000 related to the JLWA acquisition.
 
 We
        experienced a 268% increase in overall operating expenses for the six months
        ended June 30, 2006, when compared to the same period in 2005. General and
        administrative expenses for the six months ended June 30, 2006 were $8,644,000,
        compared to $2,346,000 for the six months ended June 30, 2005. Of this increase
        of $6,297,000 is attributable to the increased overhead associated with the
        Company’s acquisitions, as well as costs, such as legal, accounting and other
        professional fees incurred in order to fulfill our responsibilities as a
        public
        company and costs incurred for due diligence related to fulfillment of our
        growth plan.
 
 **Investigations/Litigation
        Support Segment**
  Our
        investigations segment had operating losses of $3,565,000 for the six months
        ended June 30, 2006 as compared to operating losses of $847,000 for the six
        months ended June 30, 2005, for an increase in our loss of $2,718,000 or
        approximately 320%. The overall general and administrative expenses, of which
        approximately 85% are allocated to the investigations division, have increased
        by 371% as compared to the six months ended June 30, 2005. This is attributable
        in part to the increased infrastructure associated with our acquisitions
        and in
        part to the increased corporate overhead costs of operating a public company.
 
 
 P.43
 
 **Crisis
        Management Segment Results**
  Our
        crisis management segment had operating profits of approximately $3,348,000
        for
        the six months ended June 30, 2006 as compared to operating losses of $489,000
        for the six months ended June 30, 2005, for an increase of $3,837,000 or
        approximately 785%. The increase in operating losses for the six months ended
        June 30, 2006 was in part due to the increased infrastructure associated
        with
        the acquisitions of JLWA, Safir and Secure Source and in part to the increased
        corporate overhead costs of operating a public company.
 
 **Security
        Segment Results**
  Our
        security segment had operating losses of $723,000 for the six months ended
        June
        30, 2006 as compared to operating losses of $133,000 for the six months ended
        June 30, 2005, for an increase of $590,000. The increased loss is attributable
        to a higher level corporate of overhead born within this segment.
  **Interest
        Expense**
  Interest
        expense increased by $544,000 to $607,000 in the six months ended June 30,
        2006
        from $63,000 in the six months ended June 30, 2005. The increase in interest
        expense is attributable to additional debt incurred in connection with the
        acquisitions of JLWA, Safir and Secure Source.
 
 **Income
        Taxes**
  Although
        we have federal and state net operating losses available for income tax purposes
        that may be carried forward to offset future taxable income, the deferred
        tax
        assets are subject to a 100% valuation allowance because it is more likely
        than
        not that the deferred tax assets will not be realized as of June 30, 2006.
        Our
        ability to use our net operating loss carryforwards may be subject to an
        annual
        limitation in future periods pursuant to Section 382 of the Internal Revenue
        Code.
  **Net
        Loss Applicable to Common Stockholders**
  Net
        losses applicable to common stockholders for the six months ended June 30,
        2006
        and 2005 were $ 36,161,361 and 2,363,000, respectively, an increase of
        $33,798,361 or 1,430 %. We realized an overall gross profit of 49%, down
        from
        52% for the six months ended June 30, 2005. The gross profit amounts for
        the six
        months ended June 30, 2006 and 2005 were $11,472,000 and $1,164,000, an increase
        of $10,308,000 or 885%. This increased gross profit is offset by increases
        in
        operating expenses of $9,779,000 for the same period. The increased net loss
        for
        the six month period ended June 30, 2006 was primarily attributable to the
        amortization of the debt discounts of $7,523,000 and amortization of the
        deferred financing costs of $2,695,000 related to our financing programs,
        respectively.
 
 Basic
        net
        loss per share is computed based on the weighted average number of shares
        of
        common stock outstanding during the periods presented. Common stock equivalents,
        consisting of options, warrants, Series A convertible preferred stock were
        not
        included in the calculation of the diluted net losses per share because their
        inclusion would have been anti-dilutive. Basic and diluted net losses per
        share
        applicable to common stockholders was $2.28  for the three month
        period ending June 30, 2006 as compared to $0.25 in the corresponding 2005
        period.
 
 **Liquidity
        and Capital Resources**
  We
        had
        cash balances on hand of $22,956,000 as of June 30, 2006, which resulted
        primarily from proceeds from issuance of convertible notes generated $45,050,000
        during the six months ended June 30, 2006. We incurred cash issuance costs
        of
        $1,933,500 in connection with the issuance of these notes. On June 29, 2006,
        these notes were exchanged for 53,073 units, at $1,000 per units of Series
        B
        convertible preferred stock. Approximately $7,600,000 and $7,500,000 of these
        funds were used to purchase of or fund the repayment of debt issued to JLWA,
        Safir and Secure Source for the acquisitions.
 
 P.44
 
 
  We
        historically have met our operating cash needs by using borrowings under
        our
        line of credit arrangement and through our private placement of equity and
        debt
        securities. At June 30, 2006, we had working capital of approximately
        $29,600,000. We currently believe that cash on hand, cash flows from operations,
        available borrowings under our line of credit facility and our intention
        to
        retire debt through the issuance of equity, will be sufficient to meet our
        current funding requirements and obligations over the next twelve
        months.
  Cash
        used
        in operating activities amounted to approximately $3,120,000 and $996,000
        during
        the six months ended June 30, 2006 and 2005, respectively. The 2006 increase
        in
        cash used in operations was primarily attributable to an increase in working
        capital requirements. In particular, there was a $7,592,000 increase in funding
        requirements related to accounts receivable, primarily attributable to our
        JLWA
        acquisition. It should be noted that our $11,748,000 net loss included
        $12,558,000 of non-cash charges.
 
 Cash
        used
        in investing activities of approximately $9,526,000 consisted primarily of
        approximately $7,697,000 related to our purchase of JLWA and Safir, plus
        $1,747,000 which was invested for approximately two months in a certificate
        of
        deposit in order to facilitate the acquisition of Secure Source.
 
 Financing
        activities provided net funds of approximately $35,073,000 and $7,252,700
        during
        the six months ended June 30, 2006 and 2005, respectively. The increase was
        primarily a result of the net proceeds from the sale of the convertible notes
        of
        $45,050,0000, net of repayments of notes aggregating $7,500,000 issued in
        connection with the acquisitions of Safir and Secure Source.
 
 On
        March
        10, 2006, GlobalOptions purchased substantially all of assets and liabilities
        of
        JLWA, a privately held crisis and emergency consulting management firm based
        in
        Washington, D.C. The acquisition was made pursuant to a certain Asset Purchase
        Agreement (the “Agreement”) dated January 13, 2006, as amended, between
        GlobalOptions Group and JLWA. The aggregate purchase price paid for JLWA’s
        assets and business was $8,403,540 consisting of a cash payment at closing
        of
        $3,600,000, a cash payment of $1,857,420 to pay off JLWA’s line of credit
        balance, the issuance of 819,672 shares of common stock of GlobalOptions
        Group,
        valued at $2,000,000, a 4.6% note payable to the seller of $400,000 due March
        9,
        2007, and a non-interest bearing working capital purchase price adjustment
        of
        $546,244 paid June 8, 2006. In addition, the Agreement provides for the sellers
        to obtain up to an additional $15,400,000 upon the attainment of certain
        revenue
        goals subsequent to the closing of the transaction.
 
 On
        May
        12, 2006, GlobalOptions acquired substantially all of the business and assets
        of
        Safir Rosetti, LLC (“Safir”), a Delaware limited liability company. Safir is a
        security consulting, investigative and intelligence firm headquartered in
        New
        York City with seven additional offices nationwide. The acquisition was made
        pursuant to a certain Asset Purchase Agreement dated January 27, 2006, as
        amended (the “Safir Agreement”), between GlobalOptions Group and Safir. The
        aggregate purchase price paid for Safir’s business and assets was $15,315,649,
        and included $6,000,000 in 8% promissory notes issued by the Company and
        paid on
        June 29, 2006, $1,000,000 in 4% promissory notes of the Company, due on May
        12,
        2007, a finders fee of $375,000 paid to QuanStar Group, LLC, a related party,
        $6,000,000 in common stock of the Company, consisting of 2,985,075 shares
        of
        $2.01 per share, plus payments to retire certain indebtedness of $1,940,649
        of
        Safir in anticipation of the closing, including $553,250 on April 3, 2006
        and
        $1,387,399 on April 28, 2006.
  On
        May
        12, 2006, GlobalOptions acquired substantially all of the business and certain
        assets of Secure Source, Inc. (“Secure Source”), a Delaware Corporation. Secure
        Source is an international risk consulting firm with offices in Washington
        D.C.
        and Dallas, Texas. The acquisition was made pursuant to a certain Asset Purchase
        Agreement dated May 12, 2006, (the “Secure Source Agreement”), between the
        Company, Secure Source, Marian E. Nicastro and David W. Nicastro. The aggregate
        purchase price paid for Secure Source’s business and assets of $3,250,000
        consisted of $750,000 in 5% promissory notes due May 12, 2009, and $1,500,000
        in
        3% promissory notes paid on June 29, 2006 and $500,000 in 5% promissory notes
        due May 12, 2007, plus $500,000 in common stock of GlobalOptions Group,
        consisting of 210,970 shares at $2.37 per share.
 
 P.45
 
 
 
 On
        August
        10, 2006, GlobalOptions acquired substantially all of the business and assets
        of
        Hyperion Risk, Inc. (“Hyperion Risk”), a Florida corporation.  
Hyperion Risk is an investigative and intelligence firm.   The
        acquisition was made pursuant to a certain Asset Purchase Agreement (the
        “Hyperion Agreement”) between the Company and Hyperion Risk, dated August 10,
        2006. The aggregate purchase price paid for Hyperion’s business and assets was
        $3,400,000, which consisted of cash in the amount of $1,900,000, and $1,500,000
        in the Company’s stock, and the Company’s cash payments to pay off Hyperion
        Risk’s credit line balance of approximately $260,000
 
  **Off-Balance
        Sheet Arrangements**
  We
        have
        not entered into any transactions with unconsolidated entities in which we
        have
        financial guarantees, subordinated retained interests, derivative instruments
        or
        other contingent arrangements that expose us to material continuing risks,
        contingent liabilities or any other obligations under a variable interest
        in an
        unconsolidated entity that provides us with financing, liquidity, market
        risk or
        credit risk support.
  **Recent
        Accounting Pronouncements**
  In
        February 2006, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standard 155 - Accounting for Certain Hybrid
        Financial Instruments (“SFAS 155”), which eliminates the exemption from applying
        SFAS 133 to interests in securitized financial assets so that similar
        instruments are accounted for similarly regardless of the form of the
        instruments. SFAS 155 also allows the election of fair value measurement
        at
        acquisition, at issuance, or when a previously recognized financial instrument
        is subject to a re-measurement event. Adoption is effective for all financial
        instruments acquired or issued after the beginning of the first fiscal year
        that
        begins after September 15, 2006. Early adoption is permitted. The adoption
        of SFAS 155 is not expected to have a material effect on our consolidated
        financial position, results of operations or cash flows.
 
 In
        March 2006, the FASB issued Statement of Financial Accounting Standard 156
        - Accounting for Servicing of Financial Assets (“SFAS 156”), which requires all
        separately recognized servicing assets and servicing liabilities be initially
        measured at fair value. SFAS 156 permits, but does not require, the subsequent
        measurement of servicing assets and servicing liabilities at fair value.
        Adoption is required as of the beginning of the first fiscal year that begins
        after September 15, 2006. Early adoption is permitted. The adoption of SFAS
        156 is not expected to have a material effect on our consolidated financial
        position, results of operations or cash flows
 
 In
        July
        2006,  the FASB  issued  FASB  Interpretation  No.
        48,  "Accounting  for Uncertainty in Income Taxes - an 
interpretation  of FASB Statement No. 109" ("FIN 48"),  which 
clarifies the accounting  for  uncertainty  in tax
        positions.  This Interpretation  requires  that the Company
        recognize  in its financial  statements,  the impact of a
        tax  position,  if that  position  is more  likely than
        not of being sustained  on  audit,  based  on 
the  technical  merits  of the  position.  The
        provisions  of FIN 48 are effective as of the beginning of the
        Company's 2007 fiscal year, with the cumulative effect of the change in
        accounting  principle recorded as an adjustment to opening retained
        earnings.  The Company is currently evaluating the impact of adopting
        FIN 48 on its consolidated financial statements.
 
 P.46
 
 
 **Item
        3.     CONTROLS AND PROCEDURES**
 
 *Evaluation
        of our Disclosure Controls and Internal Controls*
 
 As
        of the
        end of the period covered by this quarterly report, we carried out an evaluation
        of the effectiveness of the design and operation of our disclosure controls
        and
        procedures (as defined in Exchange Act Rule 13-d-15(e) and 15d-15(e)). Based
        upon that evaluation, our Chief Executive Officer (“CEO”) and Chief Financial
        Officer (“CFO”) concluded that as of the end of the period covered by this
        quarterly report on Form 10-QSB our disclosure controls and procedures were
        not
        effective.
 
 *Officers’
        Certifications*
 
 Appearing
        as exhibits to this quarterly report are “Certifications” of the CEO and the
        CFO. The Certifications are required pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of
        the quarterly report contains information concerning the Controls Evaluation
        referred to in the Section 302 Certifications and this information should
        be
        read in conjunction with the Section 302 Certifications for a more complete
        understanding of the topics presented.
 
 *Disclosure
        Controls and Internal Controls*
 **
 Disclosure
        controls are procedures that are designed with the objective of ensuring
        that
        information required to be disclosed in our reports filed under the Securities
        Exchange Act of 1934, as amended (the “Exchange Act”), such as this quarterly
        report, is recorded, processed, summarized and reported within the time periods
        specified in the SEC’s rules and forms. Disclosure controls are also designed
        with the objective of ensuring that such information is accumulated and
        communicated to our management, including the CEO and CFO, as appropriate
        to
        allow timely decisions regarding required disclosure. Internal controls are
        procedures which are designed with the objective of providing reasonable
        assurance that (1) our transactions are properly authorized, recorded and
        reported; and (2) our assets are safeguarded against unauthorized or improper
        use, to permit the preparation of our condensed consolidated financial
        statements in conformity with United States generally accepted accounting
        principles.
 
 We
        are
        not an accelerated filer (as defined in the Exchange Act) and are not required
        to deliver management’s report on internal controls over our financial reporting
        until our year ending December 31, 2007. We became a public company on June
        24,
        2005. In our efforts to comply with Section 404 of the Sarbanes-Oxley Act
        of
        2002, during the first half of 2005, we identified certain matters that would
        constitute material weakness (as such term is defined under the Public Company
        Accounting Oversight Board Auditing Standard No. 2) in our internal controls
        over financial reporting. The material weakness relates to the financial
        closing
        process, a lack of segregation of financial responsibilities and the need
        for
        additional qualified financial accounting personnel.
 
 During
        the three months ended June 30, 2006, we have taken specific actions to
        remediate the reportable conditions and material weakness, including the
        devotion of additional resources to the quarterly closing process, the hiring
        of
        additional qualified financial accounting personnel, and realignment of certain
        financial responsibilities to achieve stronger segregation of financial duties.
        We intend to continue to further strengthen our controls and procedures
        regarding the closing process.
 
 There
        were no significant changes in our internal controls over financial reporting
        that occurred during the current quarter that have materially affected, or
        are
        reasonably likely to materially affect, our internal controls over financial
        reporting.
 
 
 P.47
  
 **PART
        II**
  **OTHER
        INFORMATION**
  **Item
        1.     LegalProceedings.**
  None.
  **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.**
  The
        Company held its annual meeting of stockholders on June 12, 2006. At the
        meeting
        the stockholders took the following actions:
  (a)
              The
                  proposal to elect Harvey Schiller as a director of the Company
                  was
                  approved by a vote of 9,594,971 votes in favor of his election,
                  with
                  253,000 votes withheld and no abstentions or broker
                  non-votes.
  (b)
              The
                  proposal to elect Daniel Burstein as a director of the Company
                  was
                  approved by a vote of 9,845,971 votes in favor of his election,
                  with 2,000
                  votes withheld and no abstentions or broker
                  non-votes.
  (c)
              The
                  proposal to elect Ronald Starr as a director of the Company was
                  approved
                  by a vote of 9,845,971 votes in favor of his election, with 2,000
                  votes
                  withheld and no abstentions or broker non-votes.
  (d)
              The
                  proposal to elect Per-Olof Lööf as a director of the Company was approved
                  by a vote of 9,845,971 votes in favor of his election, with 2,000
                  votes
                  withheld and no abstentions or broker
                  non-votes.
  (e)
              The
                  proposal to elect John P. Bujouves as a director of the Company
                  was
                  approved by a vote of 9,845,971 votes in favor of his election,
                  with 2,000
                  votes withheld and no abstentions or broker
                  non-votes.
  (f)
              The
                  proposal to ratify Marcum & Kliegman LLP as the independent registered
                  public accounting firm for the Corporation for the fiscal year
                  ending
                  December 31, 2006 was approved by 9,217,866 votes cast for, 15,605
                  votes
                  cast against and no abstentions or broker
                  non-votes.
  (g)
              The
                  proposal to adopt the 2006 Stock Option Plan was approved by 7,694,550
                  votes cast for, 415,605 votes cast against and 1,737,816 broker
                  non-votes.
  P.48
  **Item
        5.     Other Information.**
  None.
  **Item
        6.**  **Exhibits.**
  The
        exhibits listed in the following Exhibit Index are filed as part of this
        Report.
  **Exhibit
                  No.**
              
              **Description**31.1
              
              Certification
                  of Chief Executive Officer pursuant to Section 302 of The Sarbanes-Oxley
                  Act of 2002.31.2
              
              Certification
                  of Chief Financial Officer pursuant to Section 302 of The Sarbanes-Oxley
                  Act of 2002.32.1
              
              Certification
                  of Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley
                  Act of 2002.32.2
              
              Certification
                  of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley
                  Act of 2002.
 
 P.49
 
 **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.
  GLOBALOPTIONS
                GROUP, INC.Dated:
                August 14, 2006
              By:
              /s/ Harvey
                W.
                SchillerHarvey W. Schiller
                Chairman of the Board and Chief Executive
                  Officer
                (Principal Executive Officer) Dated:
                August 14, 2006
              By:
              /s/ Jeffrey
                O. NyweideJeffrey O. Nyweide
                Chief Financial Officer, Executive Vice
                President, Corporate Developmentand
                  Secretary (Principal Financial Officer and
                Principal Accounting
                  Officer)
 
 P.50