**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 September 30, 2005
   ̈
              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  ̈




As
      of
      November 18, 2005, there were 14,433,266 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**
 **September
          30, 2005**
 **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 September 30, 2005
                  P.
                      1Condensed
                      Consolidated Statements of Operations for the Three and Nine
                      Months Ended
                      September 30, 2005 and 2004
                  P.
                      2Condensed
                        Consolidated Statements of Stockholders' Equity for the Nine
                        Months Ended
                        September 30, 2005
                  P.
                      3Condensed
                      Consolidated Statements of Cash Flows for the Nine Months Ended
                      September
                      30, 2005 and 2004
                  P.
                      5Notes
                        to Condensed Consolidated Financial Statements
                  P.
                      6ITEM
                      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                      OPERATION
                  P.
                      29ITEM
                      3. CONTROLS AND PROCEDURES
                  P.
                      39**PART
                      II - OTHER INFORMATION**ITEM
                      1. LEGAL PROCEEDINGS
                  P.
                      40ITEM
                      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
                  P.
                      40ITEM
                      3. DEFAULTS UPON SENIOR SECURITIES
                  P.
                      40ITEM
                      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                  P.
                      40ITEM
                      5. OTHER INFORMATION
                  P.
                      40ITEM
                      6. EXHIBITS AND REPORTS ON FORM 8-K
                  P.
                      41SIGNATURES
                  P.
                      42EXHIBITS
                      31.1 and 31.2EXHIBITS
                      32.1 and 32.2
  
 Part
          I
          Financial Information
 Item
            1.     FINANCIAL STATEMENTS
 
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 
 **Condensed
            Consolidated Balance Sheet**
 **September
            30, 2005**
 **(Unaudited)**
 **ASSETS**Current
                        assets:Cash
                    
                    $
                    809,940Accounts
                        receivable, net of allowance for doubtfulaccounts
                        of $617,705
                    
                    
                    2,116,790Prepaid
                        expenses and other current assets
                    
                    
                    122,701Total
                        current assets
                    
                    
                    3,049,431Property
                        and equipment, net
                    
                    
                    223,531Other
                        assets:Intangible
                        assets, net
                    
                    
                    1,133,411Goodwill
                    
                    
                    4,400,621Security
                        deposits
                    
                    
                    53,963Total
                        other assets
                    
                    
                    5,587,995Total
                        assets
                    
                    $
                    8,860,957**LIABILITIES
                        AND STOCKHOLDERS' EQUITY**Current
                        liabilities:Line
                        of credit
                    
                    $
                    143,139Accounts
                        payable
                    
                    
                    1,018,386Accrued
                        compensation and related benefits
                    
                    
                    569,704Note
                        payable for CBR acquistion
                    
                    
                    942,923Due
                        to former stockholder of CBR
                    
                    
                    492,094Other
                        current liabilities
                    
                    
                    383,590Total
                        current liabilities
                    
                    
                    3,549,836Stockholders'
                        equity:Preferred
                        stock, $0.001 par value,14,984,000
                        shares authorized, no sharesissued
                        or outstanding
                    
                    
                    —Series
                        A convertible preferred stock, voting, $0.001 parvalue,
                        16,000 shares authorized, 7,750 sharesissued
                        and outstanding, liquidation preference $7,750,000
                    
                    
                    8Common
                        stock, $.001 par value; 85,000,000 shares
                        authorized;14,433,266
                        shares issued and outstanding
                    
                    
                    14,433Additional
                        paid-in capital
                    
                    
                    11,319,852Accumulated
                        deficit
                    
                    
                    (6,023,172
                    )Total
                        stockholders' equity
                    
                    
                    5,311,121Total
                        liabilities and stockholders' equity
                    
                    $
                    8,860,957
  See
              notes
              to these condensed consolidated financial statements.
 1
 **GLOBALOPTIONS
            GROUP, INC. AND SUBSIDIARIES**
 
 **Condensed
            Consolidated Statements of Operations**
 **(Unaudited)**
 For
                        the Three Months Ended
                    
                    For
                        the Nine Months Ended,September
                        30,
                    
                    September
                        30,2005
                    
                    2004
                    
                    2005
                    
                    2004Revenues
                    
                    $
                    2,509,693
                    
                    $
                    1,378,197
                    
                    $
                    4,762,268
                    
                    $
                    4,022,223Cost
                        of revenues
                    
                    
                    1,483,786
                    
                    
                    1,055,092
                    
                    
                    2,572,431
                    
                    
                    2,627,201Gross
                        profit
                    
                    
                    1,025,907
                    
                    
                    323,105
                    
                    
                    2,189,837
                    
                    
                    1,395,022Operating
                        expenses:Selling
                              and marketing, includingcompensatory
                              element of stock issuances of $--, $15,500, $38,500
                              and $24,000,
                              respectively
                    
                    
                    232,912
                    
                    
                    202,098
                    
                    
                    519,172
                    
                    
                    515,667General
                              and administrative,including
                              compensatory element of stock issuances of $--, $--,
                              $337,850, and
                              $--
                    
                    
                    2,037,202
                    
                    
                    834,517
                    
                    
                    4,383,676
                    
                    
                    1,845,358Total
                        operating expenses
                    
                    
                    2,270,114
                    
                    
                    1,036,615
                    
                    
                    4,902,848
                    
                    
                    2,361,025Loss
                        from operations
                    
                    
                    (1,244,207
                    )
                    
                    (713,510
                    )
                    
                    (2,713,011
                    )
                    
                    (966,003
                    )Other
                        income (expense):Interest
                        income
                    
                    
                    15,688
                    
                    
                    116
                    
                    
                    16,563
                    
                    
                    312Interest
                        expense
                    
                    
                    (18,493
                    )
                    
                    (19,692
                    )
                    
                    (81,497
                    )
                    
                    (42,831
                    )Other
                        expense, net
                    
                    
                    (2,805
                    )
                    
                    (19,576
                    )
                    
                    (64,934
                    )
                    
                    (42,519
                    )Net
                        loss
                    
                    
                    (1,247,012
                    )
                    
                    (733,086
                    )
                    
                    (2,777,945
                    )
                    
                    (1,008,522
                    )Deemed
                        dividends to Series A convertible preferred stockholders
                    
                    
                    (147,250
                    )
                    
                    —
                    
                    
                    (979,750
                    )
                    
                    —Net
                        loss applicable to common stockholders
                    
                    $
                    (1,394,262
                    )
                    $
                    (733,086
                    )
                    $
                    (3,757,695
                    )
                    $
                    (1,008,522
                    )Basic
                            and diluted net loss per share applicable to common
                            stockholders
                    
                    $
                    (0.10
                    )
                    $
                    (0.08
                    )
                    $
                    (0.34
                    )
                    $
                    (0.12
                    )Weighted
                            average number of common shares outstanding - basic and
                            diluted
                    
                    
                    14,433,266
                    
                    
                    8,666,972
                    
                    
                    11,181,480
                    
                    
                    8,370,643
  See
            notes
            to these condensed consolidated financial statements.
  2
 **GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**


**Condensed
        Consolidated Statements of Stockholders' Equity**
 **For
        the Nine Months Ended September 30, 2005**
 **(Unaudited)**


**Series
                            A convertible**
                        
                        
                        **Additional**
                        
                        
                        
                        
                        
                        **Total****Common
                            stock**
                        
                        
                        **preferred
                            stock**
                        
                        
                        **paid-in**
                        
                        
                        **Accumulated**
                        
                        
                        **stockholders'****Shares**
                        
                        
                        **Amount**
                        
                        
                        **Shares**
                        
                        
                        **Amount**
                        
                        
                        **capital**
                        
                        
                        **deficit**
                        
                        
                        **equity**Balance,
                            January 1, 2005
                        
                        
                        9,331,325
                        
                        $
                        9,331
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        $
                        3,342,331
                        
                        $
                        106,435Issuance
                            of stock options for services
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        38,500
                        
                        
                        38,500Issuance
                            of common stock in connection with exercise of
                            warrants for
                            cash
                        
                        
                        176,471
                        
                        
                        176
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        119,824
                        
                        
                        120,000Issuance
                            of common stock in connection with exercise of cashless
                            warrants
                        
                        
                        20,579
                        
                        
                        21
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        (21
                        )
                        
                        —Issuance
                            of common stock upon conversion of principal and interest
                            of convertible
                            note payable - stockholder
                        
                        
                        361,891
                        
                        
                        362
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        266,721
                        
                        
                        267,083Issuance
                            of common stock for services
                        
                        
                        145,000
                        
                        
                        145
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        337,705
                        
                        
                        337,850Issuances
                            of Series A convertible preferred stock for cash in connection
                            with
                            private placements
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        7,750
                        
                        
                        8
                        
                        
                        7,749,992
                        
                        
                        7,750,000Outstanding
                            common stock of GlobalOptions Group, Inc. at date of
                            reverse
                            merger
                        
                        
                        4,398,000
                        
                        
                        4,398
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        (4,398
                        )
                        
                        —Offering
                            costs in connection with private placements of Series
                            A convertible
                            preferred stock
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        (530,802
                        )
                        
                        (530,802
                        )Net
                            loss
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        —
                        
                        
                        
                        
                        
                        (2,777,945
                        )Balance,
                            September 30, 2005
                        
                        
                        14,433,266
                        
                        $
                        14,433
                        
                        
                        
                        
                        $
                        7,750
                        
                        $
                        8
                        
                        $
                        11,319,852
                        
                        $
                        5,311,121




See
      notes to these condensed consolidated financial
      statements.





3


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Condensed
        Consolidated Statements of Cash Flows**
 **(Unaudited)**


For
                  the Nine MonthsEnded
                  September 30,2005
              
              2004Cash
                  flows from operating activities:Net
                  loss
              
              $
              (2,777,945
              )
              $
              (1,008,522
              )Adjustments
                    to reconcile net loss to net cash used in operating
                    activities:Provision
                  for bad debt expense
              
              
              228,686
              
              
              54,545Depreciation
                  and amortization
              
              
              100,099
              
              
              40,168Stock
                  based compensation
              
              
              38,500
              
              
              24,000Reverse
                  merger expenses paid with common stock
              
              
              337,850
              
              
              —Change in
                  operating assets:Accounts
                  receivable
              
              
              (266,655
              )
              
              (2,138
              )Prepaid
                  expenses and other current assets
              
              
              (93,476
              )
              
              (1,469
              )Change in
                  operating liabilities:Accounts
                  payable
              
              
              (159,158
              )
              
              101,415Accrued
                  compensation and related benefits
              
              
              63,828
              
              
              25,390Due
                  to former stockholder of CBR
              
              
              (116,313
              )
              
              —Other
                  current liabilities
              
              
              31,640
              
              
              94,849Deferred
                  revenue and customer deposits
              
              
              —
              
              
              (146,922
              )Total
                  adjustments
              
              
              165,001
              
              
              189,838Net
                  cash used in operating activities
              
              
              (2,612,944
              )
              
              (818,684
              )




See
        notes to these condensed consolidated financial
        statements.




4


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Condensed
        Consolidated Statements of Cash Flows, continued**
 **(Unaudited)**


For
                  the Nine MonthsEnded
                  September 30,2005
              
              2004Cash
                  flows from investing activities:Purchases
                  of property and equipment
              
              $
              (3,691
              )
              $
              —Acquisition
                  of CBR, less cash acquired
              
              
              (4,362,877
              )
              
              —Net
                  cash used in investing activities
              
              
              (4,366,568
              )
              
              —Cash
                  flows from financing activities:Net
                  proceeds from line of credit
              
              
              37,236
              
              
              209,403Proceeds
                  from issuance of convertible note payable - stockholder
              
              
              —
              
              
              250,000Proceeds
                  from issuance of common stock
              
              
              —
              
              
              750,000Proceeds
                    from issuance of Series A convertible preferred
                    stock
              
              
              7,750,000
              
              
              —Offering
                    costs in connection with private placements of Series A convertible
                    preferred stock
              
              
              (530,802
              )
              
              —Net
                  cash provided by financing activities
              
              
              7,256,434
              
              
              1,209,403Net
                  increase in cash
              
              
              276,922
              
              
              390,719Cash
                  - beginning
              
              
              533,018
              
              
              288,244Cash
                  - ending
              
              $
              809,940
              
              $
              678,963Supplemental
                  disclosure of cash flow information:Cash
                  paid during the period for interest
              
              $
              72,747
              
              $
              40,632Supplemental
                    disclosures of non-cash investing and financing
                    activities:Common
                      stock issued upon conversion of convertible note payable stockholder
                      and
                      related accrued interest
              
              $
              267,083
              
              $
              —Common
                    stock issued upon the cashless exercise of warrants
              
              $
              21
              
              $
              —




See
        notes to these condensed consolidated financial
        statements.
  5


**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, Global Options consummated a “reverse merger” transaction (See Note
        12), 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 Global
        Options 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 the GlobalOptions. The historical
        condensed consolidated financial statements prior to June 24, 2005 are those
        of
        the 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 (See Note 4).
  6
 **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 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
        principles generally accepted in the United States of America. In the opinion
        of
        management, all adjustments (consisting of normal accruals) considered for
        a
        fair presentation have been included. Operating results for the nine months
        ended September 30, 2005 are not necessarily indicative of the results that
        may
        be expected for the year ending December 31, 2005. For further information,
        refer to the financial statements and footnotes thereto for GlobalOptions,
        Inc.,
        included in the Company’s Form 8-K/A filed on September 7, 2005 for the year
        ended December 31, 2004.
  **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 options, Series A convertible preferred stock and convertible
        note
        payable - stockholder, 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 convertible preferred stock as of September 30, 2005 and
        2004
        was 10,061,821 and 2,516,860, respectively.
  ***Intangible
        Assets***
 
 In
        accordance with the requirements of Statement of Financial Accounting Standards
        No. 141 (“SFAS No. 141”), “Business Combinations”, on August 14, 2005, the
        Company recognized certain intangible assets acquired in the CBR acquisition
        (See Note 4), primarily goodwill, tradenames, 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.
 
 
 7
 **GLOBALOPTIONS
          GROUP, INC. AND SUBSIDIARIES**
 **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **3.**
                        **Summary
                            of Significant Accounting Policies,
                            continued**
 
 ******  ***Stock
        Based Compensation/Stock Options***
 
 As
        permitted by SFAS No. 123, “Accounting for Stock-Based Compensation” ("SFAS
        123"), which establishes a fair value based method of accounting for
        equity-based compensation plans, the Company has elected to follow Accounting
        Principles Board Opinion 25, “Accounting for Stock Issued to Employees” ("APB
        25") for recognizing equity-based compensation expense for financial statement
        purposes. Under APB 25, no compensation expense is recognized at the time
        of
        option grant if the exercise price of the employee stock option is fixed
        and
        equals or exceeds the fair market value of the underlying common stock on
        the
        date of grant and the number of shares to be issued pursuant to the exercise
        of
        such options are known and fixed at the grant date.
 
 The
        Company accounts for equity instruments issued to non-employees in accordance
        with the provisions of SFAS 123 and the Emerging Issues Task Force 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,”
        which requires that such equity instruments are recorded at their fair value
        on
        the measurement date, which is typically the date the services are
        performed.
 
 In
        December 2002, the FASB issued SFAS 148, “Accounting for Stock-Based
        Compensation-Transition and Disclosure” ("SFAS 148"). This standard amended the
        disclosure requirements of SFAS 123 for fiscal years ending after December
        15,
        2002 to require prominent disclosure in both annual and interim financial
        statements about the method used and the impact on reported results. The
        Company
        follows the disclosure-only provisions of SFAS 123 which require disclosure
        of
        the pro-forma effects on net income (loss) as if the fair value method of
        accounting prescribed by SFAS 123 had been adopted, as well as certain other
        information.
 
 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.
 
 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***
 
 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
        fair
        value of each option grant is estimated on the date of grant using the
        Black-Scholes option pricing model with the following assumptions
        used:
 
  **Three
                  and Nine Months Ended**
                **September
                  30,****2005**
              
              **2004**Dividend
                  yield
              
              
              0%
              
              
              
              0%Expected
                  volatility
              
              
              55%
              
              
              
              55%Risk-free
                  interest rate
              
              
              3.0%
              
              
              
              2.8%Expected
                  lives
              
              
              3 years
              
              
              
              3
                  years
 
 The
        weighted average fair value of the options on the date of grant, using the
        fair
        value based method, for the three months and nine months ended September
        30,
        2005 and 2004 $ -, $ -, $ - and $0.14, respectively.
 
 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.
 
 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***
  (All
                      numbers in 000’s except per share data.)
                  
                  **Three
                      Months Ended**
                    **September
                      30,**
                  
                  **Nine
                      Months Ended**
                    **September
                      30,****2005**
                  
                  **2004**
                  
                  **2005**
                  
                  **2004**Net
                      loss applicable to common stockholders, as reported
                  
                  $
                  (1,394
                  )
                  $
                  (733
                  )
                  $
                  (3,758
                  )
                  $
                  (1,009
                  )Deduct:
                      total stock-based employee compensation expense determined
                      under fair
                      value based method for all awards, net of related tax effects,
                      if
                      any
                  
                  
                  12
                  
                  
                  41
                  
                  
                  112
                  
                  
                  124Pro-forma
                      net loss
                  
                  $
                  (1,406
                  )
                  $
                  (774
                  )
                  $
                  (3,870
                  )
                  $
                  (1,133
                  )Net
                      loss per share applicable to common stockholders - basic and
                      diluted:As
                      reported
                  
                  $
                  (0.10
                  )
                  $
                  (0.08
                  )
                  $
                  (0.34
                  )
                  $
                  (0.12
                  )Pro
                      forma
                  
                  $
                  (0.10
                  )
                  $
                  (0.09
                  )
                  $
                  (0.35
                  )
                  $
                  (0.14
                  )
  ***Recent
        Accounting Pronouncements***
 
 In
        December 2004, the FASB issued SFAS No. 123R “Shared Based Payment.” This
        statement is a revision of SFAS 123 and supersedes APB 25 and its related
        implementation guidance. SFAS 123R addresses all forms of shared based payment
        (“SBP”) awards, including shares issued under employee stock purchase plans,
        stock options, restricted stock and stock appreciation rights. Under SFAS
        123R,
        SBP awards result in a cost that will be measured at fair value on the awards’
        grant date, based on the estimated number of awards that are expected to
        vest
        and will be reflected as compensation cost in the historical financial
        statements. This statement is effective for public entities that file as
        small
        business issuers as of the beginning of the first annual reporting period
        that
        begins after December 15, 2005. The Company does not expect SFAS 123R will
        have
        a significant impact on its overall consolidated financial
        statements.
 
 In
        December, 2004, the FASB issued SFAS 153, “Exchanges of Nonmonetary Assets - an
        amendment of APB Opinion No. 29” (“SFAS 153”). APB Opinion No. 29 provided an
        exception to the basic measurement principle (fair value) for exchanges of
        similar productive assets. That exception required that some nonmonetary
        exchanges, although commercially substantive, be recorded on a carryover
        basis.
        SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception to fair
        value
        for exchanges of similar productive assets and replace it with a general
        exception for exchange transactions that do not have commercial substance,
        which
        are defined as transactions that are not expected to result in significant
        changes in the cash flows of the reporting entity. SFAS No. 153 is effective
        for
        nonmonetary exchanges occurring in fiscal periods beginning after June 15,
        2005.
        The Company does not expect that SFAS No. 153 will have a material affect
        on its
        consolidated financial statements.
  10
 ****GLOBALOPTIONS
          GROUP, INC. AND SUBSIDIARIES**** **Notes
              To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **3.**
                      **Summary
                          of Significant Accounting Policies,
                          continued**
 ***Recent
        Accounting Pronouncements, continued***
 
 In
        May
        2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections -
        a replacement of APB No. 20 and FASB Statement No. 6”. Under SFAS No. 154,
        changes in accounting principles will generally be made by the retrospective
        application of the new accounting principle to the financial statements of
        prior
        periods unless it is impractical to determine the effect of the change on
        prior
        periods. The reporting of a change in accounting principles as a cumulative
        adjustment to net income in the period of the change permitted under APB
        No. 20
        will no longer be permitted unless it is impractical to determine the effect
        of
        the change on prior periods. Corrections of errors in the application of
        accounting principles will continue to be reported by retroactively restating
        the affected financial statements. The provisions of SFAS No. 154 will not
        apply
        to new accounting standards that contain specific transition provisions.
        SFAS
        No. 154 is applicable to accounting changes made in fiscal years beginning
        on or
        after December 15, 2005. The early application of SFAS No. 154 is permitted
        for
        accounting changes made in fiscal years that began after the issuance of
        SFAS
        No. 154. The Company does not expect that SFAS No. 154 will have a material
        affect on its consolidated financial statements.
 
 In
        June
        2005, the EITF reached consensus on Issue No. 05-6, “Determining the
        Amortization Period for Leasehold Improvements (“EITF 05-6”). EITF 05-6 provides
        guidance on determining the amortization period for leasehold improvements
        acquired in a business combination or acquired subsequent to lease inception.
        The guidance in EITF 05-6 will be applied prospectively and is effective
        for
        periods beginning after June 30, 2005. EITF 05-6 is not expected to have
        a
        material effect on our consolidated financial position or results of
        operations.
 
 **4.**
              **Acquisition
                  of CBR**
 
 On
        August
        14, 2005, GlobalOptions purchased substantially all of the assets and business
        activities of CBR. The
        aggregate purchase price paid for CBR’s assets and business was approximately
        $5,189,000 subject to certain future working capital purchase price adjustments
        as defined in the agreement.
 
 The
        aggregate purchase price of approximately $5,189,000 consisted of a cash
        payment
        of $2,500,000, a cash payment of $1,746,000 to pay off CBR’s line of credit
        balance and, a note payable to the seller of $943,000 due August 14, 2006.
        The
        company also incurred a broker fee of approximately $143,000, which was included
        in goodwill. The purchase is subject to change based upon future adjustments
        to
        working capital, as defined, for working capital acquired from CBR as of
        the
        acquisition date.
 
 11
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **4.**
              **Acquisition
                  of CBR, continued**
 
 The
        assets and liabilities of CBR 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 CBR on August 14, 2005, the Company acquired
        identifiable intangible assets of approximately $1,192,000. Of the identifiable
        intangibles acquired, $80,000 has been assigned to trade names, $52,000 to
        developed technology, $550,000 to customer relationships, and $510,000 to
        non-compete agreements. These valuations are management’s estimates and are
        subject to change based upon a final valuation report by an independent
        appraiser in conjunction with the audit of the Company for the year ending
        December 31, 2005. Trade names are deemed to have an indefinite life and
        are not
        subject to amortization. The remaining balance of 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
                  Periodin
                  YearsDeveloped
                  technology
              
              3
                  yearsNon-compete
                  agreements
              
              3
                  yearsCustomer
                  relationships
              
              5
                  years
  The
        following table details the allocation of the purchase price for the acquisition
        of CBR:
 
 Fair
                  ValueCash
              
              $
              26,086Accounts
                  receivable
              
              
              1,465,352Prepaid
                  expenses
              
              
              20,549Property
                  and equipment
              
              
              153,802Security
                  deposits
              
              
              16,032Intangible
                  asset - trade names
              
              
              80,000Intangible
                  asset - developed technology
              
              
              52,000Intangible
                  asset - customer relationships
              
              
              550,000Intangible
                  asset - non-compete agreements
              
              
              510,000Accounts
                  payable and accrued expenses
              
              
              (909,923
              )Accrued
                  compensation and related benefits
              
              
              (379,231
              )Due
                  to former stockholder of CBR
              
              
              (618,407
              )Other
                  current liabilities
              
              
              (34,995
              )Net
                  fair values assigned to assets acquired andliabilities
                  assumed
              
              
              931,265Goodwill
              
              
              4,257,752Total
              
              $
              5,189,017
  12
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
  **4.**
              **Acquisition
                  of CBR - continued**
 
 The
        following represents a summary of the purchase price consideration:
 
 Cash
              
              $
              4,246,094Note
                  payable
              
              
              942,923Total
                  Purchase Price Consideration
              
              $
              5,189,017
  The
        results of operations for CBR for the period from August 14, 2005
        to
        September 30, 2005, are reflected in the Company’s results for the three and
        nine months ended September 30, 2005 in the accompanying condensed consolidated
        statements of operations.
 
 The
        following table presents the unaudited pro-forma combined results of operations
        of the Company and CBR for each of the three and nine month periods ending
        September 30, 2005 and 2004, respectively as if CBR had been acquired at
        the
        beginning of each of the periods.
 
 Three
                  Months Ended September 30,2005
              
              Three
                  Months Ended September 30,2004
              
              Nine
                  Months
                Ended
                September
                  30,2005
              
              Nine
                  Months Ended September 30,2004Revenue
              
              $
              3,847,993
              
              $
              3,906,224
              
              $
              11,149,718
              
              $
              9,926,544Net
                  loss applicable to common stockholders
              
              $
              (1,536,403
              )
              $
              (750,978
              )
              $
              (4,989,662
              )
              $
              (1,531,808
              )Pro-forma basic
                  and diluted net loss per common share
              
              
              ($0.11
              )
              
              ($0.09
              )
              
              ($0.45
              )
              
              ($0.18
              )Weighted
                  average common shares outstanding - basic and diluted
              
              
              14,433,266
              
              
              8,666,972
              
              
              11,181,480
              
              
              8,370,643
 
 The
        pro
        forma combined results are not necessarily indicative of the results that
        actually would have occurred if the CBR acquisition had been completed as
        of the
        beginning of 2004, nor are they necessarily indicative of future consolidated
        results.
 
  13
 GLOBALOPTIONS
          GROUP, INC. AND SUBSIDIARIES **Notes
              To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
  **5.**
                      **Intangible
                            Assets**
 Intangible
                assets consist exclusively of amounts related to the CBR acquisition
                (See Note
                4).
 
 The
                estimated amortization of amortizable intangible assets for the five
                years
                ending September 30, 2010 is as follows:
  For
                  the years endingSeptember
                  30,
              
              Total
              
              DevelopedTechnology
              
              Non-CompeteAgreements
              
              CustomerRelations2006
              
              $
              303,000
              
              $
              20,000
              
              $
              167,000
              
              $
              116,0002007
              
              $
              303,000
              
              $
              20,000
              
              $
              167,000
              
              $
              116,0002008
              
              $
              270,000
              
              $
              8,000
              
              $
              146,000
              
              $
              116,0002009
              
              $
              116,000
              
              
              
              
              
              
              
              $
              116,0002010
              
              $
              63,000
              
              
              
              
              
              
              
              $
              63,000
  During
          the three and nine months ended September 30, 2005, the Company recorded
          amortization expense related to the acquired amortizable intangibles of
          $58,590.
 
 The
          weighted average amortization period for amortizable intangibles is 3.7
          years
          and has no residual value.
 
 **6.**
              **Property
                  and Equipment**
 
 At
        September 30, 2005, property and equipment is comprised of the following:
 
 Computer
                  and equipment
              
              $
              379,753Furniture
                  and fixtures
              
              
              147,717Automobiles
              
              
              56,374Leasehold
                  improvements
              
              
              125,039708,883Less:
                  accumulated depreciation and amortization
              
              
              485,352Total
              
              $
              223,531
  Depreciation
        and amortization for the three and nine months ended September 30, 2005 and
        2004
        was $20,343 and $9,685, and $41,509 and $40,168, respectively.
  14
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **7.**
              **Line
                  of Credit**
 
 During
        November 2003, the Company signed a $1,000,000 line of credit with a financial
        institution with an interest rate of prime plus 1.5% (6.75% at September
        30,
        2005) 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 deemed to be de-minimus. These warrants
        were exercised on June 24, 2005 on a cashless basis, and were exchanged for
        20,579 shares of common stock.
  This
        line
        of credit was renewed on May 4, 2005 and expires on February 3, 2006, increasing
        the facility amount to $1,875,000. The balance outstanding under the line
        of
        credit at September 30, 2005 was $143,139.
 
 **8.**
                **Due
                    to Former Stockholder of
                    CBR**
  During
            2001, CBR entered into an agreement to purchase certain assets and assume
            certain liabilities of Gallagher Bassett Services, Inc. (“Gallagher”). The
            purchase agreement required that CBR make additional payments to Gallagher,
            as
            consideration for the acquisition over a five year period ending during
            August
            2006. These additional payments are equal to a percentage of revenues
            generated
            on a calendar year basis by Gallagher on behalf of CBR as defined in
            the
            purchase agreement.
  The Company
            assumed the liability of $618,407 in connection with the acquisition
            of CBR (See
            Note 4). At September 30, 2005, the balance due under this agreement
            is
            $492,094.
 Related
                      Revenue
                  
                  Applied
                      percentage to calculate additional considerationUp
                      to $3,000,000
                  
                  5%Between
                      $3,000,000 and $5,000,000
                  
                  7%Between
                      $5,000,000 and $6,000,000
                  
                  9%Over
                      $6,000,000
                  
                  10%
 
 **9.**
              **Other
                  Current Liabilities**
 
 At
        September 30, 2005, other current liabilities consisted of the following:
 
 Accrued
                  client expenses
              
              $
              160,763Corporate
                  development expenses
              
              
              112,461Deferred
                  rent
              
              
              38,868Advisory
                  board compensation
              
              
              31,000Miscellaneous
              
              
              40,498Total
              
              $
              383,590
 
 15
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **10.**
              **Convertible
                    Note Payable -
                    Stockholder**
 During
          August 2004, the Company received $250,000 in the form of a four year
          convertible note to QuanStar I, LLC (“QuanStar”), an existing stockholder. This
          convertible note bore interest at a rate of 10% per annum, with interest
          payable
          quarterly commencing October 1, 2004. The principal amount was due upon
          maturity
          in August 2009. On June 24, 2005, at the option of QuanStar, the $250,000
          convertible note and accrued interest of $17,083 was converted into 361,891
          shares of common stock.
 
 **11.**
                **Commitments
                    and Contingencies**
  ***Employment
          Agreements***
 
 GlobalOptions
          entered into employment agreements that are renewed on an annual basis
          with both
          its Chief Executive Officer and President. Base compensation is $260,000
          and
          $250,000, per annum for its Chief Executive Officer and its President,
          respectively.


On
        January 29, 2004, the Company entered into an employment agreement with its
        Chairman of the Board. This agreement provided for base compensation of $200,000
        per annum. The agreement provided for a sign-on grant of an option to purchase
        441,177 shares of common stock and a one year bonus consisting of a grant
        of an
        option to purchase 441,177 shares of common stock. For both stock option
        grants
        the exercise price is $0.60 per share
 
 GlobalOptions
        employment agreement with its Chairman was assigned to the Company effective
        as
        of June 27, 2005. Pursuant to the assignment, (i) the Chairman’s salary was
        increased to the annual rate of $300,000 retroactive to January 1, 2005,
        (ii)
        all of the Chairman’s stock options in GlobalOptions were confirmed to have
        vested with the consummation of the reverse merger, (iii) the Chairman agreed
        to
        forego receiving any 2005 annual bonus that he is entitled to under the
        employment agreement, and (iv) and the Company and the Chairman agreed to
        negotiate in good faith bonus arrangements after December 31, 2005.
 
 In
        connection with the acquisition of CBR, (See Note 4) GlobalOptions, entered
        into
        a three year employment agreement with Halsey Fischer, the former president
        and
        chief executive officer of CBR. Under the terms of the agreement, Mr. Fischer
        will serve the company as President of the Investigations Division (See Note
        16)
        and shall receive an annual salary of $200,000 per annum and be eligible
        for a
        discretionary annual bonus segment of the Company of up to $50,000. In addition,
        the Company has assumed the employment agreements of three former employees
        of
        CBR, with such agreements having remaining terms of one year from the date
        of
        the acquisition of CBR, representing in the aggregate a remaining obligation
        of
        approximately $200,000 at September 30, 2005.
 
 
 16
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **11.**
              **Commitments
                  and Contingencies -
                  continued**
 
 ***Operating
        Leases***
 
 In
        connection with the purchase of assets and assumption of liabilities of CBR,
        GlobalOptions assumed the obligations for the leases of the eight CBR offices.
        Such lease obligations are through the year 2010 and carry terms that allow
        for
        renewals.
 
 Future
        minimum lease payments under this lease are as follows:
 
 For
                  the Years Ending September 30,2006
              
              $
              256,7482007
              
              
              184,2572008
              
              
              121,6842009
              
              
              64,3262010
              
              
              42,540Total
              
              $
              669,560
 ***Consulting
        Agreement***
  GlobalOptions
        has been a party to a consulting agreement with BKS Advisors, LLC
        (“BKS”)
        pursuant to which BKS Advisors provides GlobalOptions management with certain
        business, strategy and financial services. The agreement with BKS has a term
        that extends through October 2006. The consulting agreement provides for
        a
        monthly fee of $25,000 which may be adjusted based on the level of services
        provided. On June 1, 2005, BKS assigned its rights under this agreement to
        Jeffrey O. Nyweide, Chief Financial Officer and Executive Vice President
        of
        Corporate Development of GlobalOptions Group.
 
 **12.**
              **Stockholders’
                  Equity**
 
 ***Common
        Stock***
 
 The
        Company has authorized 85,000,000 shares of common stock. The holders of
        the
        Company’s common stock are entitled to one vote per share. The certificate of
        incorporation does not provide for cumulative voting. The holders of common
        stock are entitled to receive ratably such dividends, if any, as may be declared
        by the Board of Directors out of legally available funds. However, the current
        policy of the Board of Directors is to retain earnings, if any, for the
        operation and expansion of the business. Upon liquidation, dissolution or
        winding-up of the Company, the holders of common stock are entitled to share
        ratably in all assets of the Company which are legally available for
        distribution, after payment of or provision for all liabilities and the
        liquidation preference of any outstanding Series A convertible preferred
        stock.
        The holders of common stock have no preemptive, subscription, redemption
        or
        conversion rights.
 
 During
        August 2004, the Company issued 1,102,941 shares of common stock for proceeds
        of
        $750,000, and warrants to purchase 176,471 shares of common stock at $0.68
        per
        share to QuanStar I, LLC, who was a holder of a convertible note payable
        issued
        by GlobalOptions (See Note 10) and a compensated financial advisor to
        GlobalOptions (See Note 15).
  17
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **12.**
              **Stockholders’
                  Equity, continued**
 
 ***Stock
        Based Compensation***
 
 On
        June
        24, 2005, the Company issued 145,000 shares of common stock at a value of
        $337,850 to an advisor for its services related to the reverse merger. This
        cost
        is reflected in general and administrative costs in the condensed consolidated
        statements of operations for the three and nine months ended September 30,
        2005.
  During
        the three and nine month periods ended September 30, 2005 and 2004, the Company
        issued stock options to certain members of its advisory boards in exchange
        for
        their advisory services to the Company valued at $ --, $15,500, $38,500 and
        $24,000, respectively.
  ***GlobalOptions
        Shares Immediately Prior to the Reverse Merger***
 
 On
        June
        24, 2005, in anticipation of and in connection with the reverse merger
        agreement, each of the holders of its Series A, Series A-1 and Series A-2
        convertible preferred stock agreed to exchange the holders’ full rights,
        including accrued dividends of $1,381,099, in their convertible preferred
        shares
        on the basis of one share of the common stock of GlobalOptions Group for
        each
        1.7 shares of convertible preferred stock. This transaction resulted in the
        issuance of 6,596,032 shares of common stock of GlobalOptions Group in exchange
        for 11,213,254 shares of convertible preferred stock of GlobalOptions on
        June
        24, 2005.
  Pursuant
        to the Merger Agreement, stockholders of
        GlobalOptions received one share of GlobalOptions Group common stock
        for
        each 1.7 issued and outstanding shares of GlobalOptions common stock at closing
        for which 4,650,000 shares of GlobalOptions common stock was exchanged for
        2,735,294 shares of common stock of GlobalOptions Group.
 The
        convertible preferred shares of GlobalOptions exchanged included the issuance
        of
        20,579 shares of common stock resulting from the cashless exercise in June
        2005
        of a warrant held by a financial institution for the purchase of 29,411 shares
        of stock of the Company (See Note 7), the issuance of 361,891 shares of common
        stock of the Company resulting from the surrender of QuanStar’s $250,000
        Convertible Note and accrued interest of $17,083 and the issuance of 176,471
        shares of common stock of the Company resulting from the exercise of a warrant
        to purchase 176,471 shares held by the QuanStar Group, LLC.
 
 ***Reverse
        Merger and Private Placement - Summary of
        Transactions***
 
 On
        June 24, 2005, the Company consummated a reverse merger transaction
        (See
        Note 1).
  At
        closing GlobalOptions Group issued 9,890,266 shares of its common stock to
        the
        former common and convertible preferred stockholders of GlobalOptions, in
        exchange for 100% of their outstanding shares of GlobalOptions.
 
 GlobalOptions
        Group has assumed all of GlobalOption’s obligations under its outstanding stock
        option plan and has reserved 6,500,000 shares of GlobalOptions Group common
        stock for stock options issuable under a newly adopted 2005 Stock Option
        Plan
        (See Note 13). At the time of the reverse merger, GlobalOptions had outstanding
        stock options to purchase 4,450,721 shares of common stock, which outstanding
        options became stock options to purchase 2,618,071 shares of common stock
        of
        GlobalOptions Group, after giving effect to the reverse merger exchange ratio.
        Neither GlobalOptions nor GlobalOptions Group had any warrants to purchase
        shares of common stock outstanding immediately prior to the closing of the
        reverse merger. The pricing of all stock options has been adjusted on a 1.7
        to 1
        basis.
  18
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **12.**
              **Stockholders’
                  Equity, continued**
 
 ***Reverse
        Merger and Private Placement - Summary of Transactions,
        continued***
 
 Simultaneous
        with closing of the reverse merger, GlobalOptions Group sold to its majority
        stockholders its historical art business operations, and they assumed the
        historical liabilities of those operations. After giving effect to the
        cancellation of 79,702,000 shares held by the former stockholders, there
        were
        4,398,000 shares of GlobalOptions Group common stock outstanding before
        giving effect to the stock issuances in the reverse merger and private
        placement.
 
 In
        connection with the reverse merger, GlobalOptions Group completed the closing
        of
        a private placement of a total of 7,500 each unit consisting of one share
        of our
        Series A convertible preferred stock, par value $.001 per share, and
        a
        detachable, transferable warrant to purchase shares of the Company’s common
        stock, at a purchase price of $1,000 per unit, to accredited investors pursuant
        to the terms of a Confidential Private Offering Memorandum, dated April 18,
        2005, as supplemented. Each share of Series A convertible preferred stock
        is
        initially convertible into 500 shares of common stock at any time.
        Each
        warrant entitles the holder to purchase 125 shares of common stock at an
        exercise price of $2.50 per share through June 24, 2009, subject to certain
        redemption provisions. The Company received proceeds from the tranches of
        the
        private placement of approximately $7,041,000, net of offering costs of
        approximately $459,000.
 
 Brookshire
        Securities Corporation served as placement agent in connection with the private
        placement. The placement agent received a cash fee in the aggregate of $200,000,
        four-year warrants to purchase 150,000 shares of GlobalOptions Group’s common
        stock at an exercise price of $2.00 per share, and four-year warrants to
        purchase an additional 350,000 shares of the Company’s common stock at an
        exercise price of $2.50 per share on terms which are identical to those warrants
        included in the units.
  19
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **12.**
              **Stockholders’
                  Equity, continued**
 
 ***Reverse
        Merger and Private Placement - Summary of Transactions,
        continued***
 
 Verus
        International Group served as advisor to the Company on the structuring and
        execution of the reverse merger. In connection with the identification and
        structuring of the reverse merger and effective as of the closing of the
        reverse
        merger, the Company paid Verus or its designees a fee equal to 145,000 shares
        of
        common stock valued at $337,850 and a fee paid in warrants as an advisor
        for the
        private placement equal to 396,095 cashless four-year warrants to purchase
        the
        Company’s common stock exercisable at $2.00 per share, and a fee paid in
        warrants equal to 1,053,905 warrants to purchase the Company’s common stock
        exercisable at $2.50 per share on terms which are identical to those warrants
        included in the units.
 
 The
        Company’s placement agent entered into a selected dealer agreement with
        Starboard Capital Markets, LLC (“Starboard Capital”), a registered broker-dealer
        for the sale of certain of the units. Pursuant to the form of selected dealer
        agreement, for units sold by the selected dealer which were received and
        accepted by the Company and the placement agent, Starboard Capital received
        (i)
        a cash fee of $7,500 and (ii) warrants to purchase 150,000 shares of the
        Company’s common stock. These warrants are comprised of (i) warrants to purchase
        42,000 shares of common stock with an exercise price equal to $2.00 per share,
        exercisable for a four-year period commencing on the date of issuance, with
        cashless exercise features, and (ii) warrants to purchase 108,000 shares
        of
        common stock with an exercise price equal to $2.50 per share, exercisable
        for a
        four-year period commencing on the date of issuance, with features otherwise
        identical to the warrants sold in the private placement.
 
 The
        Company has agreed to engage Verus for a period of 24 months following
        the
        closing of the merger and private offering to provide capital markets advisory
        services at a monthly rate of $10,000, payable 50% in cash and 50% in common
        stock at the then-current market value.
 
 ***Series
        A Convertible Preferred Stock***
 
 The
        Company. has authorized a total of 15,000,000 shares of preferred stock.
        In
        conjunction with the reverse merger, the Company designated 16,000 shares
        as
        authorized for Series A convertible preferred stock.
 
 Holders
        of Series A convertible preferred stock will be entitled at any time to convert
        their shares of Series A convertible preferred stock into common stock, without
        any further payment thereafter. Each share of Series A convertible preferred
        stock is initially convertible into 500 shares of common stock at a conversion
        price of $2.00 per common share and is immediately convertible into common
        stock.
  20
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **12.**
              **Stockholders’
                  Equity, continued**
 
 ***Series
        A Convertible Preferred Stock, continued***
 
 On
        September 22, 2005 GlobalOptions Group closed out its initial private placement
        with the sale of 250 units, as detailed in the Company’s Confidential Private
        Offering Memorandum, dated April 18, 2005, as amended, the Company received
        proceeds from the private placement of approximately $178,000, net of offering
        costs of $72,000. In connections with this private placement, 31,250 of Series
        A
        warrants were issued to investors, 12,100 of the Series B warrants were issued
        to the placement agent and advisors and 4,563 of the Series C warrants were
        issued to the placement agent and advisors. In addition, in conjunction with
        the
        close out of the initial private placement, 350,994 of the Series B warrants
        and
        132,342 of the Series C warrants were issued to Versus International
        Group.
 
 ***Series
        A Convertible Preferred Stock - Beneficial Conversion Feature and Deemed
        Dividends***
  At
        June
        24, 2005, the date of issuance, the fixed conversion price of the Series
        A
        convertible preferred stock of $2.00 represented a discount to the market
        value
        of the Company’s common stock, which was at a quoted market price of $2.10 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 55%, risk-free interest rate of 3% and
        an
        expected term of two years. Based upon this calculation, the effective
        conversion price of the convertible preferred stock was determined to be
        $1.88
        per common share, resulting in a beneficial conversion feature of $832,500
        at
        June 24, 2005.
 
 At
        September 22, 2005, the fixed conversion price of the Series A convertible
        preferred stock of $2.00 represented a discount to the market value of the
        Company’s common stock, which was at a quoted market price of $3.00 per share.
        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 55%, risk-free interest rate of 3% and
        an
        expected term of two years. Based upon this calculation, the effective
        conversion price of the convertible preferred stock was determined to be
        $1.18
        per common share, resulting in a beneficial conversion feature of $147,250
        at
        September 22, 2005.
 
 The
        Company has presented the beneficial conversion feature as deemed dividends
        on
        the condensed statements of operations of $147,250 and $979,750, respectively
        for the three and nine months ended September 30, 2005.
  21
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **12.**
              **Stockholders’
                  Equity, continued**
 
 ***Series
        A Convertible Preferred Stock Features***
 
 The
        number of shares of common stock issuable upon conversion of the Series A
        convertible preferred stock is subject to adjustment upon the occurrence
        of
        certain events, including, among others, a stock split, reverse stock split
        or
        combination of the common stock; an issuance of common stock or other securities
        of the Company as a dividend or distribution on the common stock; a
        reclassification, exchange or substitution of the Company’s common stock; or a
        capital reorganization of the Company. In the event that the Company 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 rate will be that number
        of
        shares of common stock equal to $1,000 divided by the price per share at
        which
        we issue common stock (the “Denominator”), but in no event will the Denominator
        be less than $.765 per share.
 
 Holders
        of Series A 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 A
        convertible preferred stock will also have any voting rights to which they
        are
        entitled by law.
 
 In
        the
        event of any voluntary or involuntary liquidation, dissolution or winding-up
        of
        the Company, holders of Series A convertible preferred stock will be entitled
        to
        receive out of assets of the Company available for distribution to its
        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 A convertible preferred stock are entitled, holders of the Series
        A
        preferred stock will receive liquidating distributions pro rata with holders
        of
        common stock, based on the number of shares of common stock into which the
        Series A convertible preferred stock is convertible at the conversion rate
        then
        in effect.
  The
        Series A preferred stock may not be redeemed by the Company at any
        time.
 
 Holders
        of Series A convertible preferred stock will not be entitled to receive any
        dividends, except to the extent that any dividends are declared on the Company’s
        common stock, in which case holders of Series A convertible preferred stock
        will
        be entitled to receive such dividends on an as-if-converted basis.
 
 ****  ***Warrants
        (Series A & B*** *)*
  Each
        warrant, of which 937,500 of the Series A were issued to investors and 1,511,905
        of the Series B that were issued to the placement agent and advisors, entitles
        the holder thereof to purchase 125 shares of common stock at an exercise
        price
        of $2.50 per share from the date of issuance until the fourth anniversary
        thereof. The Company may call the warrants beginning 15 months after the
        closing
        of the private placement at a rate of 25% per quarter if at any time during
        such
        quarter the 30-day trailing average stock price is greater than $4.00 per
        share.
  22
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **12.**
              **Stockholders’
                  Equity, continued**
  ***Warrants
        (Series C)***
  Each
        warrant, of which 588,095 were issued to the placement agent and advisors,
        entitles the holder thereof to purchase 125 shares of common stock at an
        exercise price of $2.00 per share from the date of issuance until the fourth
        anniversary thereof. These warrants may be exercised upon surrender of the
        certificate therefore, accompanied by payment of the full exercise price
        for the
        number of warrants being exercised. The holder may also alternatively exercise
        these warrants on a cashless basis by surrendering the warrant with an executed
        notice of cashless exercise attached thereto, in which event we will issue
        to
        the holder the number of shares of stock determined following the formula
        contained therein.
  ***Adjustments
        (applicable to Warrants - Series A, B and C)***
  In
        the
        event that the Company issues any shares of its common stock or common stock
        equivalents following in a private placement, secondary offering or shelf
        offering for cash consideration at a price less than $2.50 per share of common
        stock for Series A and B warrants or $2.00 per share of common stock for
        Series
        C warrants, respectively, (i) the number of shares of common stock for which
        each warrant is exercisable will be adjusted to equal that number which is
        the
        result of the original number of shares of common stock for which each warrant
        is exercisable multiplied by $2.50 per share of common stock for Series A
        and B
        warrants and $2.00 per share of common stock for Series C warrants, and divided
        by the price per share at which the Company will issue such common stock,
        but in
        no event will the denominator be less than $.765 per share, and (ii) the
        exercise price of each warrant shall be reduced to equal the price per share
        at
        which GlobalOptions Group issues such common stock or common stock equivalents,
        but in no event will the exercise price be reduced to less than $.765 per
        share.
        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 the Company unless and until the holder exercises the
        warrant.
  23
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **13.**
              **Stock
                  Option Plan**
 
 On
        January 24, 2002, the Board of Directors and stockholders of GlobalOptions
        approved the 2002 Stock Option Plan (“the 2002 Plan”). The Plan is administered
        by the Board of Directors (“the Board”) of GlobalOptions. Directors and
        stockholders, officers, employees, and consultants of the Company were eligible
        to participate. The Plan provided for the awards of incentive and 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 “Plan”), which replaced the 2002 plan.. The Plan was
        administered by the Company’s compensation committee and provided for 6,500,000
        shares of common stock to be reserved for issuance under the Plan. Directors,
        officers, employees, and consultants of the Company were eligible to
        participate. The Plan provided 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 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.
  During
        the three and nine months ended September 30, 2004, the Company granted 12,059
        and 1,157,353 options respectively, at an exercise price of $0.60 per share
        that
        vest ratably over 3 years and expire five years from the date
        of
        grant. During the period from January 1, 2005 to June 30, 2005, the Company
        granted 25,588 options at an exercise price of $0.68 per share
        that expire five years from the date of grant. There were no
        options
        granted during the three months ended September 30, 2005.
  **14.**
              **Major
                  Clients**
 
 The
        Company’s top three clients represented 16%, 9%, and 7%; and 22%, 19%, and 8%,
        respectively, of revenues for the nine months ended September 30, 2005 and
        2004,
        respectively. The Company’s top three clients represented 9%, 11%, and 4%; and
        23%, 21%, and 20%, respectively, of revenues for three months ended September
        30, 2005 and 2004, respectively.
 
 The
        Company has foreign clients representing 1% and 1% of revenues for the nine
        months ended September 30, 2005, and foreign clients representing 22%, 3%,
        2%,
        respectively, of revenues for the nine months ended September 30, 2004. The
        Company has foreign clients representing 11%, 2% and 2%, respectively, of
        revenues for three months ended September 30, 2005, and a foreign client
        representing 23% of revenues for three months ended September 30, 2004. These
        foreign clients operate primarily in Russia. For each of these foreign clients
        the Company is paid in U.S. dollars.
  24
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **15.**
              **Related
                  Party Transactions**
 
 The
        Company is a party to an advisory agreement with the QuanStar Group, LLC
        (“QuanStar Group), pursuant to which QuanStar Group renders strategic and
        consulting services to the Company, particularly in the areas of corporate
        finance and strategic acquisitions, and is paid a monthly retainer of $15,000.
        During the three and nine months ended September 30, 2005 under this agreement,
        the Company incurred costs of $45,000 and $135,000 respectively and for three
        and nine months ended September 30, 2004 incurred costs of $30,000 and $30,000
        respectively. The advisory agreement was entered into as of August 2004 and
        has
        an initial term of 24 months renewing automatically for successive one-year
        periods, unless terminated by either party. Harvey W. Schiller, Ph.D., the
        Company’s Chairman and Chief Executive Officer, and Per-Olof Lööf, the Company’s
        Vice Chairman of the Board, are partners in the QuanStar Group.
 
 **16.**
              **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.
 
 The
        Investigations/Litigation Support Services segment includes activities from
        litigation support, due diligence, inventory control, asset recovery, and
        business intelligence.
 
 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.
  25
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **16.**
              **Client
                  and Segment Data, continued**
 
 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.
 
 The
        following tables summarize financial information about the Company’s business
        segments for the three and nine months ended September 30, 2005 and 2004
        (in
        thousands):
 
 **For
                  the Three Months Ended September 30, 2005****Investigations/**
                **Litigation****Support**
              
              **Crisis****Management**
              
              **Security**
              
              **Corporate**
              
              **Consolidated**Revenues
              
              $
              1,916
              
              $
              267
              
              $
              327
              
              $
              —
              
              $
              2,510Loss
                  from Operations
              
              $
              (646
              )
              $
              (326
              )
              $
              (273
              )
              $
              —
              
              $
              (1,244
              )Depreciation
                  and Amortization
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              79
              
              $
              79Interest
                  Expense
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              18
              
              $
              18Capital
                  Expenditures
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              4
              
              $
              4
 
 
 **For
                  the Three Months Ended September 30, 2004****Investigations/**
                **Litigation****Support******
              
              **Crisis****Management**
              
              **Security**
              
              **Corporate**
              
              **Consolidated**Revenues
              
              $
              515
              
              $
              315
              
              $
              548
              
              $
              —
              
              $
              1,378Loss
                  from Operations
              
              $
              (168
              )
              $
              (221
              )
              $
              (325
              )
              $
              —
              
              $
              (714
              )Depreciation
                  and Amortization
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              10
              
              $
              10Interest
                  Expense
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              20
              
              $
              20Capital
                  Expenditures
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
  26
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**   **16.**
                    **Client
                          and Segment Data, continued**
 **For
                  the Nine Months Ended September 30, 2005****Investigations/**
                **Litigation****Support******
              
              **Crisis****Management**
              
              **Security**
              
              **Corporate**
              
              **Consolidated**Revenues
              
              $
              3,383
              
              $
              763
              
              $
              616
              
              $
              —
              
              $
              4,762Loss
                  from Operations
              
              $
              (1,536
              )
              $
              (824
              )
              $
              (353
              )
              $
              —
              
              $
              (2,713
              )Depreciation
                  and Amortization
              
              
              —
              
              
              —
              
              
              —
              
              $
              100
              
              $
              100Interest
                  Expense
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              65
              
              $
              65Capital
                  Expenditures
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
 
 
 **For
                  the Nine Months Ended September 30, 2004****Investigations/**
                **Litigation****Support******
              
              **Crisis****Management**
              
              **Security**
              
              **Corporate**
              
              **Consolidated**Revenues
              
              $
              1,957
              
              $
              1,089
              
              $
              976
              
              $
              —
              
              $
              4,022Loss
                  from Operations
              
              $
              (217
              )
              $
              (485
              )
              $
              (264
              )
              $
              —
              
              $
              (966
              )Depreciation
                  and Amortization
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              40
              
              $
              40Interest
                  Expense
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              43
              
              $
              43Capital
                  Expenditures
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
 
 27
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES **Notes
            To Condensed Consolidated Financial Statements**
 
 **(Unaudited)**
 **17.**
              **Subsequent
                  Event**
 
 ***Stock
        Options***
  On
        November 2, 2005, the Company granted to Mr. Halsey Fischer an option to
        purchase 375,000 shares of common stock and to CBR employees, options
        aggregating 108,696 shares of common stock at an exercise price based upon
        the
        closing price of the common stock of that day. These options shall vest ratably
        over three years and expire five years from the date of grant.
  28


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




*The
      following discussion of results of operations and financial condition is based
      upon, and should be read in conjunction with, our 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 8-K dated June 30, 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.





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. A copy of the Merger Agreement was included as an exhibit
      to
      our Current Report on Form 8-K, dated June 27, 2005, which was
      filed
      with the U.S. Securities and Exchange Commission on June 27, 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.




GlobalOptions’
      business is our sole line of business. 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.




29


In
      accordance with our by-laws for filling newly-created board vacancies,
      Carla L. Santia and Mary E. Lawler, existing Creative Solutions
      directors, appointed Harvey W. Schiller, Ph.D., Per-Olof Lööf, Daniel L.
      Burstein and Ronald M. Starr, previous directors of GlobalOptions, to serve
      as
      additional directors of our company effective at the closing of the reverse
      merger. Ms. Santia and Ms. Lawler also resigned as directors
      following
      the closing, with their resignations effective on June 24, 2005.
      Subsequently, on June 27, 2005, John P. Bujouves was appointed to our board
      of
      directors.




In
      connection with the private placement and reverse merger, in which Verus
      International Group, Inc. acted as an advisor to GlobalOptions, GlobalOptions
      agreed to allow a designee of Verus to be nominated to the board of directors
      of
      GlobalOptions Group. This agreement continues in effect for a period of two
      years. John P. Oswald was designated to be Verus’ board nominee to GlobalOptions
      Group. However, due to certain other commitments, John P. Bujouves will be
      acting as the Verus board nominee while John Oswald will be entitled to board
      observation rights. Verus has indicated that they intend to replace Mr. Bujouves
      with Mr. Oswald as soon as practicable.




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
      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.




The
      following discussion and financial information is presented to aid in
      understanding our financial position and results of operations. The emphasis
      of
      this discussion will be on the three and nine-month periods ended September
      30,
      2005, as compared to the three and nine-month periods ended September 30, 2004.





We
      experienced a decline in operating results in 2005 when compared to the same
      period in 2004. We had revenues of $4,762,268 for the nine months ended
      September 30, 2005, as compared to revenues of $4,022,223 for the nine months
      ended September 30, 2004, an increase of $740,045, or approximately 18%. Of
      the
      revenues reported in the nine months ended September 30, 2005, approximately
      81%
      were domestic and 19% related to international clients. The increase in revenues
      for the nine months ended September 30, 2005 is primarily attributable to CBR
      which provided revenues of $1,361,469 for the period from August 14, 2005 (date
      of acquisition) to September 30, 2005. Revenues for the three months ended
      September 30, 2005 were $2,509,693 as compared to $1,378,197 for the same
      quarter in 2004, reflecting an increase of $1,131,496, or approximately 82%.





Although
      GlobalOptions Group does have some long-term relationships with its 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 nine months ended September 30, 2005 was 45.9% as compared to
      34.6% for the nine months ended September 30, 2004. Gross profit for the three
      months ended September 30, 2005 was 40.8% as compared to 23.4% in the comparable
      2004 quarter. The increase for the nine and three month periods ended September
      30, 2005 was primarily due to an increase in client orders related to higher-end
      consulting services as compared to the nine-month and three-month periods ended
      September 30, 2004, where the orders mostly entailed lower-end operational
      services for lower gross profit services.





Net
      loss
      applicable to common stockholders for the nine months ended September 30, 2005
      and 2004 was $3,757,695 and $1,008,522, respectively, an increase of $2,749,173
      or approximately 273%. Net loss applicable to common stockholders for the three
      months ended September 30, 2005 and 2004 was $1,394,262 and $733,086,
      respectively, an increase of $661,176 or approximately 90%. The increased net
      loss applicable to common stockholders for the nine month period was primarily
      due to the deemed dividends on Series A convertible preferred stock of $979,750,
      the large increase in professional fees related to the reverse merger and to
      corporate development expenses.





While
      current financial results for GlobalOptions Group shows a large 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 it believes 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 (worldwide terror events such
      as
      the recent London railway and bus bomb attacks and the enactment of the
      Sarbanes-Oxley Act of 2002) 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.




30


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. Five initial acquisitions have been identified,
      including the first acquisition, CBR, as described below.




On
      May
      19, 2005, GlobalOptions, a wholly owned subsidiary of the Company, and 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 and the details of
      the
      asset purchase are more fully described in our filing on Form 8-K as filed
      with
      the Securities and Exchange Commission on August 18, 2005. The
      aggregate purchase price of approximately $5,189,000 consisted of a cash payment
      of $2,500,000, a cash payment of $1,746,000 to pay off the seller line of credit
      balance, a note payable to the seller of $943,000 due August 14, 2005. The
      purchase price is subject to change based upon adjustments to working capital. Based
      upon audited financial statements included in the Company’s 8-K/A filing on
      October 28, 2005, CBR’s revenues and net loss for the year ended December 31,
      2004 were approximately $8.8 million and $1.0 million, respectively. CBR
      estimates that its revenues for the year ending December 31, 2005 will be
      approximately $9.5 million.




CBR
      is a
      nationwide professional investigations firm with 8 United States offices and
      headquartered in Nashville, Tennessee. It specializes in servicing the
      insurance, business and legal communities, and significantly expands the
      investigation services currently being provided by GlobalOptions. CBR was
      created to meet a marketplace need that was not being addressed, giving rise
      to
      its value proposition and the essence of its business plan: “Through national
      coverage, regional management and internet communication, CBR applies a ‘best of
      the best’ philosophy to provide the highest quality investigative service in the
      industry.” CBR consists of approximately 60 licensed investigators operating
      from 8 nationwide offices and has international affiliates to assist clients
      around the world. CBR has senior management staffing offices in key regions
      throughout the United States to ensure implementation of training programs,
      adherence to quality standards and scheduling flexibility. CBR maintains a
      secure website to facilitate Internet communications with its clients. CBR’s
      clients are able to request services, review case status, receive case reports
      and view surveillance video, in addition to normal e-mail
      interaction.




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 and Halsey R. Fischer, President of the
      newly-acquired CBR, 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 the Company’s 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.




31


**Critical
      Accounting Policies**





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




*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.





*Stock
      Based Compensation/Stock Options*





As
      permitted by SFAS 123, “Accounting for Stock-Based Compensation” ("SFAS 123"),
      which establishes a fair value based method of accounting for equity-based
      compensation plans, the Company has elected to follow Accounting Principles
      Board Opinion No. 25, “Accounting for Stock Issued to Employees” ("APB 25") for
      recognizing equity-based compensation expense for financial statement purposes.
      Under APB 25, no compensation expense is recognized at the time of option grant
      if the exercise price of the employee stock option is fixed and equals or
      exceeds the fair market value of the underlying common stock on the date of
      grant and the number of shares to be issued pursuant to the exercise of such
      options are known and fixed at the grant date.





We
      account for equity instruments issued to non-employees in accordance with the
      provisions of SFAS 123 and the Emerging Issues Task Force in 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,” which requires
      that such equity instruments are recorded at their fair value on the measurement
      date, which is typically the date the services are performed.





In
      December 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS
      148, “Accounting for Stock-Based Compensation -Transition and Disclosure” ("SFAS
      148"). This standard amended the disclosure requirements of SFAS 123 for fiscal
      years ending after December 15, 2002 to require prominent disclosure in both
      annual and interim financial statements about the method used and the impact
      on
      reported results. The Company follows the disclosure-only provisions of SFAS
      123
      which require disclosure of the pro-forma effects on net income (loss) as if
      the
      fair value method of accounting prescribed by SFAS 123 had been adopted, as
      well
      as certain other information.





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.





Under
      APB
      25, no stock-based employee compensation expense relating to our stock option
      plans was reflected in net loss, 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.





32


**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.





**GlobalOptions
      Group’s Three Months Ended September 30, 2005 Compared to Three Months Ended
      September 30, 2004**




**Revenues**




We
      had
      overall revenues of $2,509,693 for the three months ended September 30, 2005
      as
      compared to revenues of $1,378,197 for the three months ended September 30,
      2004, for an increase of $1,131,496, or approximately 82%. Of the revenues
      reported in the three months ended September 30, 2005, approximately 81% was
      domestic and 19% related to international clients. The increase in revenue
      for
      the three months ended September 30, 2005 was primarily attributable to the
      acquisition of CBR.





**Investigations/Litigation
      Support Segment Revenues**




In
      the
      investigations/litigation support segment, we had revenues of $1,915,825 for
      the
      three months ended September 30, 2005, as compared to revenues of $515,166
      for
      the three months ended September 30, 2004, for an increase of $1,400,659 or
      approximately 272%. All of the investigations/litigation support revenues
      reported in the three months ended September 30, 2005 were domestic. The
      increase in revenue for the three months ended September 30, 2005 was primarily
      attributable to the expansion of our client base through the acquisition of
      CBR
      for which all revenues are included in this segment..




**Crisis
      Management Segment Revenues**




In
      the
      crisis management segment, we had revenues of $267,163 for the three months
      ended September 30, 2005 as compared to revenues of $314,848 for the three
      months ended September 30, 2004, a decrease of $47,685 or approximately
      15%. All of the crisis management revenues reported in the three months ended
      September 30, 2005 related to international clients. The decrease in revenue
      for
      the three months ended September 30, 2005 was primarily attributable to prior
      successful resolution of several client crises.




**Security
      Segment Revenues**




In
      the
      security segment, we had revenues of $326,706 for the three months ended
      September 30, 2005 as compared to revenues of $548,183 for the three months
      ended September 30, 2004, a decrease of $221,477 or approximately 40%. Of the
      security segment revenues reported in the three months ended September 30,
      2005,
      all were domestic. The decrease in revenues for the three months ended September
      30, 2005 was primarily attributable to the conclusion of several large security
      projects at 2004 year end that were not replaced on an equivalent scale in
      the
      2005 period.




**Cost
      of Revenues and Gross Profit**




Our
      consolidated cost of revenues increased $428,694, or approximately 41% from
      $1,055,092 in the three months ended September 30, 2005 to $1,483,786 in the
      three months ended September 30, 2004, primarily due to the increase revenues
      in
      the crisis management and security segments. However, the increase in cost
      of
      revenues was less than the related decline in revenues due to the provision
      of
      higher gross profit on consulting services in the 2005 period.




Our
      gross
      profit percentage for the three months ended September 30, 2005 period was
      40.9%
      as compared to 23.4% for the three months ended September 30, 2004. The increase
      for the three months ended September 30, 2005 was primarily due to an increase
      in client orders related to higher-end consulting services as compared to the
      three months ended September 30, 2004, when the orders used more lower-end
      operational services.





**Operating
      Expenses**




Our
      overall operating expenses increased $1,233,499 or approximately 119% to
      $2,270,114 for the three months ended September 30, 2005 from $1,036,615 in
      the
      three months ended September 30, 2004. The increase was primarily in general
      and
      administrative expenses due to professional fees approximately $471,371 and
      corporate development expenses of $444,336 and additional operating expenses
      associated with the operations of CBR from August 14, 2005 (date of acquisition)
      to September 30, 2005.




33


**Investigations/Litigation
      Support Segment Profitability**




Our
      investigations/litigation segment had operating losses of $644,992 for the
      three
      months ended September 30, 2005 as compared to operating losses of $168,145
      for
      the three months ended September 30, 2004, for an increase in our loss of
      $476,847 or approximately 284%. Reflected in this segment are the results of
      CBR, which are wholly reflected within this segment. Our gross profit in this
      segment for the three months ended September 30, 2005 increased by $605,029,
      substantially from CBR. However, the general and administrative expenses
      increased by $975,552, $645,216 of which was attributable to CBR. The remaining
      increase in general administrative expenses of $330,336 is primarily
      attributable to professional fees and corporate development expenses.





**Crisis
      Management Segment Results**




Our
      crisis management segment had operating losses of $326,393 for the three months
      ended September 30, 2005 as compared to operating losses of $220,665 for the
      three months ended September 30, 2004, for an increase of $105,728 or
      approximately 48%. The increase in operating losses for the three months ended
      September 30, 2005 was primarily due to the decrease in revenues and an increase
      in general and administrative expenses of $138,437 primarily related to
      professional fees and corporate development expenses.







**Security
      Segment Results**




Our
      security segment had operating losses of $272,822 for the three months ended
      September 30, 2005 as compared to operating losses of $324,699 for the three
      months ended September 30, 2004, for an improvement, or decreased loss of
      $51,877 or approximately 16%. The decrease in operating losses for the three
      months ended September 30, 2005 was primarily due to the increase in gross
      margin of $70,527.




**Interest
      Expense**




Interest
      expense decreased by $1,199 to $18,493 in the three months ended September
      30,
      2005 from $19,692 in the three months ended September 30, 2004.




**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 September 30, 2005.
      The Company’s ability to use its 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
      loss
      applicable to common stockholders for the three months ended September 30,
      2005
      and 2004 were $1,394,262 and $733,086, respectively, an increase of $661,176
      or
      90%. For the three month period ended September 30, 2005, we realized an
      increase in gross profit of $702,802, of which $553,169 was attributable to
      CBR.
      This increase in gross profit was offset by an increase of $1,168,937 of general
      administrative expenses, of which $646,215 was attributable to CBR. The
      remaining increase in general and administrative expense was primarily
      attributable to an increase in professional fees associated with being a public
      company, and corporate development expenses. During the three months ended
      September 30, 2005, we recorded a deemed dividend to Series A convertible
      preferred stockholders of $147,250.





Basic
      net
      loss per share applicable to common stockholders is computed based on the
      weighted average number of shares of common stock outstanding during the periods
      presented. Common stock equivalents, consisting of options, convertible
      preferred stock and convertible notes payable 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 $0.10 for the three month period ending September
      30, 2005 as compared to $0.08 in the corresponding 2004 period.




34


**GlobalOptions
      Group’s Nine Months Ended September 30, 2005 Compared to Nine Months Ended
      September 30, 2004**




**Revenues**




We
      had
      overall revenues of $4,762,268 for the nine months ended September 30, 2005
      as
      compared to revenues of $4,022,223 for the nine months ended September 30,
      2004,
      for a increase of $740,045 or approximately 18%. Of the revenue reported in
      the
      nine months ended September 30, 2005, approximately 81% was domestic and 19%
      related to international clients. The increase in revenue for the nine months
      ended September 30, 2005 was primarily attributable to the purchase of CBR
      for
      which revenues were approximately $1,361,000 from the date of acquisition on
      August 14, 2005 through September 30, 2005, offset by revenue declines
      attributed to client crises segment and large security segment projects during
      2004 that were not replaced on an equivalent scale in the 2005 period.




**Investigations/Litigation
      Support Segment Revenues**




In
      the
      investigations/litigation segment, we had revenues of $3,383,296 for the nine
      months ended September 30, 2005, as compared to revenues of $1,956,964 for
      the
      nine months ended September 30, 2004, for an increase of $1,426,332 or
      approximately 73%. All of the investigations/litigation revenues reported in
      the
      nine months ended September 30, 2005 were domestic. The increase in revenue
      for
      the nine months ended September 30, 2005 was primarily attributable to the
      acquisition of CBR.




**Crisis
      Management Segment Revenues**




In
      the
      crisis management segment, we had revenues of $762,498 for the nine months
      ended
      September 30, 2005 as compared to revenues of $1,089,521 for the nine months
      ended September 30, 2004, a decrease of $ 327,023 or approximately 30%.
      All
      of the crisis management revenues reported in the nine months ended September
      30, 2005 related to international clients. The decrease in crisis management
      revenues for the nine months ended September 30, 2005 was primarily attributable
      to prior successful resolution of several client crises, which were not replaced
      on an equivalent scale in the 2005 period.




**Security
      Segment Revenues**




In
      the
      security segment, we had revenues of $616,473 for the nine months ended
      September 30, 2005 as compared to revenues of $975,738 for the nine months
      ended
      September 30, 2004, a decrease of $359,264 or approximately 37%. The decrease
      in
      security segment revenues for the nine months ended September 30, 2005 was
      primarily attributable to the conclusion of several large security projects
      at
      2004 year end that were not replaced on an equivalent scale in the 2005 period.




**Cost
      of Revenues and Gross Profit**




Consolidated
      cost of revenues decreased $54,770, or 2% from $2,627,201 in the first nine
      months of 2005 to $2,572,431 in the first nine months of 2004 and declined
      as a
      percentage of revenue to 59% from 77% for the same period. .




Gross
      profit percentage for the nine months ended September 30, 2005 period was 46%
      as
      compared to 35% for the nine months ended September 30, 2004. The increase
      for
      the nine months ended September 30, 2005 was primarily due to an increase in
      client orders related to higher-end consulting services as compared to the
      nine
      months ended September 30, 2004, when the orders used more lower-end operational
      services.




**Operating
      Expenses**




Overall
      operating expenses increased $2,541,823 or approximately 108% to $4,902,848
      in
      the nine months ended September 30, 2005 from $2,361,025 in the nine months
      ended September 30, 2004. Of the total increase, $723,509 was attributable
      to
      CBR. The remaining increase of $1,818,314 was primarily general and
      administrative expenses that was attributable to merger related expenses as
      well
      as increased professional fees and corporate development expenses.




**Investigations/Litigation
      Segment Results**




Investigations/litigation
      segment had operating losses of $1,536,269 for the nine months ended September
      30, 2005 as compared to operating losses of $216,774 for the nine months ended
      September 30, 2004, for an increase of $1,319,495 or 609 %. During the nine
      months ended September 30, 2005 the gross profit increased by $712,921, offset
      by an increase in general and administrative expenses of $1,917,595. The
      increase in general and administrative expenses is primarily due to merger
      related expenses as well as increased professional fees and corporate
      development expenses




35


**Crisis
      Management Segment Results**




Crisis
      management segment had operating losses of $823,993 for the nine months ended
      September 30, 2005 as compared to operating losses of $485,224 for the nine
      months ended September 30, 2004, for an increase of $338,770 or 70%. The
      increase in operating losses for the nine months ended September 30, 2005 was
      primarily due to an increase in general and administrative expenses of $355,092
      related primarily to professional fees and corporate development expenses.




**Security
      Segment Results**




Security
      segment had operating losses of $352,749 for the nine months ended September
      30,
      2005 as compared to operating losses of $264,006 for the nine months ended
      September 30, 2004, for an increase of $88,743 of approximately 34%.
      The
      increase in operating loss for the nine months ended September 30, 2005 was
      primarily due to an increase in gross profit of $96,891 offset by an increase
      in
      general and administrative expenses of $226,699. The increase in general and
      administrative expenses is primarily attributable to merger expenses and
      increases in professional fees and corporate development expenses




**Interest
      Expense**




Interest
      expense increased by $38,666 or approximately 90% to $81,497 in the nine months
      ended September 30, 2005 from $42,831 in the nine months ended September 30,
      2004. The additional interest expense was primarily due to the increase in
      the
      total amount of borrowings under the credit line and the convertible debt.
      The
      increase in borrowings was a direct result of lower revenues and increased
      general and administrative expenses in the 2005 period as compared to
      2004.




**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 September 30, 2005.
      The Company’s ability to use its 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 nine months ended September
      30,
      2005 and 2004 were $3,757,695 and $1,008,522, respectively, an increase of
      $2,749,173 or approximately 273%. The increased net loss applicable to common
      stockholders for the nine month periods ended September 30, 2005 was due in
      part
      to the deemed dividend on the issuance of the convertible preferred stock of
      $979,750 and the increase in general and administrative expense of $2,499,386
      or
      140% during the nine months ended September 30, 2005 related primarily to merger
      related expenses and professional fees.




Basic
      net
      loss per share applicable to common stockholders is computed based on the
      weighted average number of shares of common stock outstanding during the periods
      presented. Common stock equivalents, consisting of options, convertible
      preferred stock and convertible notes payable were not included in the
      calculation of the diluted losses per share because their inclusion would have
      been anti-dilutive. Basic and diluted net losses per share applicable to common
      stockholders was $0.34 for the nine-month period ending September 30,
      2005
      as compared to $0.12 in the corresponding 2004 period.




**Liquidity
      and Capital Resources**




We
      had
      cash balances on hand of $809,940 as of September 30, 2005, which resulted
      primarily from net proceeds we received in June 2005 and September 2005 of
      approximately $7,219,200 from the issuance of our Series A convertible preferred
      stock and warrants in two tranches of a private offering. During August 2005,
      we
      utilized cash of $4,362,877 for the purchase of CBR. We are obligated to pay
      the
      remaining portion of the purchase price for acquiring CBR, estimated at
      September 30, 2005 to be approximately $942,000, during August
      2006.




36


On
      September 22, 2005, we closed out its initial private placement with the sale
      of
      250 additional units which consisted of series A convertible preferred stock
      and
      warrants, as detailed our Confidential Private Offering Memorandum, dated April
      18, 2005, as amended. We received proceeds from this tranche of the private
      placement of approximately $178,000




We
      historically have met our operating cash needs by using borrowings under our
      line of credit arrangement. We currently believe that cash on hand, cash flows
      from operations and available borrowings under our line of credit facility
      will
      be sufficient to meet our current funding requirements and obligations over
      the
      next twelve months.




Cash
      used
      in operating activities amounted to $2,612,944 and $818,684 during the nine
      months ended September 30, 2005 and 2004, respectively. The $1,294,260 increase
      in cash used in operations was primarily due to a large increase in our net
      loss
      of $1,769,423.





Cash
      used
      in investing activities, of $4,366,568 consisted primarily of $4,362,877 for
      our
      purchase of CBR.





Financing
      activities provided $7,256,434 and $1,209,403 during the nine months ended
      September 30, 2005 and 2004, respectively. We received net proceeds from the
      sale of Series A convertible preferred stock and warrants of approximately
      $7,219,200 (which is net of offering costs of approximately $530,800) that
      provided the majority of the financing in the 2005 period, as well as, $37,236
      of net financing from line of credit borrowings. Line of credit borrowings
      provided net financing of $209,403 in the 2004 period.




**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
      December 2004, the FASB issued SFAS No. 123R “Shared Based Payment.” This
      statement is a revision of SFAS 123 and supersedes APB 25 and its related
      implementation guidance. SFAS 123R addresses all forms of shared based payment
      (“SBP”) awards, including shares issued under employee stock purchase plans,
      stock options, restricted stock and stock appreciation rights. Under SFAS 123R,
      SBP awards result in a cost that will be measured at fair value on the awards’
      grant date, based on the estimated number of awards that are expected to vest
      and will be reflected as compensation cost in the historical financial
      statements. This statement is effective for public entities that file as small
      business issuers as of the beginning of the first annual reporting period that
      begins after December 15, 2005. We do not expect SFAS 123R to have a significant
      impact on our overall consolidated financial statements.




In
      December, 2004, the FASB issued SFAS 153, “Exchanges of Nonmonetary Assets - an
      amendment of APB Opinion No. 29” (“SFAS 153”). APB Opinion No. 29 provided an
      exception to the basic measurement principle (fair value) for exchanges of
      similar productive assets. That exception required that some nonmonetary
      exchanges, although commercially substantive, be recorded on a carryover basis.
      SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception to fair value
      for exchanges of similar productive assets and replace it with a general
      exception for exchange transactions that do not have commercial substance,
      which
      are defined as transactions that are not expected to result in significant
      changes in the cash flows of the reporting entity. SFAS No. 153 is effective
      for
      nonmonetary exchanges occurring in fiscal periods beginning after June 15,
      2005.
      We do not expect that SFAS No. 153 will have a material affect on our
      consolidated financial statements.




In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections -
      a replacement of APB No. 20 and FASB Statement No. 6”. Under SFAS No. 154,
      changes in accounting principles will generally be made by the retrospective
      application of the new accounting principle to the financial statements of
      prior
      periods unless it is impractical to determine the effect of the change on prior
      periods. The reporting of a change in accounting principles as a cumulative
      adjustment to net income in the period of the change permitted under APB No.
      20
      will no longer be permitted unless it is impractical to determine the effect
      of
      the change on prior periods. Corrections of errors in the application of
      accounting principles will continue to be reported by retroactively restating
      the affected financial statements. The provisions of SFAS No. 154 will not
      apply
      to new accounting standards that contain specific transition provisions. SFAS
      No. 154 is applicable to accounting changes made in fiscal years beginning
      on or
      after December 15, 2005. The early application of SFAS No. 154 is permitted
      for
      accounting changes made in fiscal years that began after the issuance of SFAS
      No. 154. We do not expect that SFAS No. 154 will have a material affect on
      our
      consolidated financial statements.




37


In
      June
      2005, the EITF reached consensus on Issue No. 05-6, “Determining the
      Amortization Period for Leasehold Improvements (“EITF 05-6”). EITF 05-6 provides
      guidance on determining the amortization period for leasehold improvements
      acquired in a business combination or acquired subsequent to lease inception.
      The guidance in EITF 05-6 will be applied prospectively and is effective for
      periods beginning after June 30, 2005. EITF 05-6 is not expected to have a
      material effect on our consolidated financial position or results of
      operations.





38


**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 consolidated financial statements in
      conformity with accounting principles generally accepted in the United States
      of
      America.





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, 2006. 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 nine months ended September 30, 2005, 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.





The re
      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.





39




**PART
      II**


**OTHER
      INFORMATION**




Item
      1. **Legal** **Proceedings.**




None.




Item
      2.UnregisteredSales of
      Equity Securities and Use of Proceeds.




Information
      is provided herein regarding the final funding tranche of our private placement,
      providing a net funding amount of approximately $178,000, which was consummated
      on September 22, 2005, of a total of 250 units, each unit consisting of one
      share of our Series A convertible preferred stock, par value $.001 per share,
      and a detachable, transferable warrant to purchase shares of our common stock,
      at a purchase price of $1,000 per unit, to accredited investors.




Item
      3.Defaults
      Upon Senior Securities.




None.




Item
      4.Submissionof
      Matters to a Vote of Security Holders.




None.




Item
      5.Other
      Information.




None.




40


**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.





41


**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:
              November 21, 2005
            By:
            /s/ Harvey
              W. SchillerHarvey
                W. Schiller
              Chairman
                of the Board and Chief Executive Officer
              (Principal
                Executive Officer)


Dated:
              November 21, 2005
            By:
            /s/ Jeffrey
              O. NyweideJeffrey
                O. Nyweide
              Chief
                Financial Officer, Executive Vice
              President,
                Corporate Development
              and
                Secretary (Principal Financial Officer and
              Principal
                Accounting Officer)




42