**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




(Mark
      One)




x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934




For
      the
      Quarterly Period Ended March
      31, 2008




 ̈
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                1934




For
      the
      transition period from __________________ to __________________




Commission
      file number: 001-33700




**GLOBALOPTIONS
                GROUP, INC**(Exact
                name of registrant as specified in its
                charter)





Delaware
            
            30-0342273(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)





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







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





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes x No
o




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




Large
      accelerated filer o Accelerated
      filer o




Non-accelerated
      filer   o (Do
      not
      check if a smaller reporting company)  Smaller reporting company x




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




As
      of May
      13, 2008, there were 9,983,390 shares of the issuer’s common stock
      outstanding.









**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Form
      10-Q**


**March
      31, 2008**


**TABLE
      OF CONTENTS**





PART
                IFINANCIAL
                INFORMATIONITEM
                1. Financial Statements.Condensed
                Consolidated Balance Sheets as of March 31, 2008 (Unaudited) and
                December
                31, 2007
            
            1Condensed
                Consolidated Statements of Operations for theThree
                Months Ended March 31, 2008 and 2007 (Unaudited)
            
            2Condensed
                Consolidated Statements of Stockholders’ Equity for theThree
                Months Ended March 31, 2008 (Unaudited)
            
            3Condensed
                Consolidated Statements of Cash Flows for theThree
                Months Ended March 31, 2008 and 2007 (Unaudited)
            
            4Notes
                to Condensed Consolidated Financial Statements (Unaudited)
            
            7ITEM
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations.
            
            21ITEM
                3. Quantitative and Qualitative Disclosures About Market
                Risk.
            
            29ITEM
                4T. Controls and Procedures.
            
            30PART
                IIOTHER
                INFORMATIONITEM
                1. Legal Proceedings.
            
            31ITEM
                1A. Risk Factors.
            
            31ITEM
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds.
            
            31ITEM
                3. Defaults Upon Senior Securities.
            
            32ITEM
                4. Submission of Matters to a Vote of Security Holders.
            
            32ITEM
                5. Other Information.
            
            32ITEM
                6. Exhibits.
            
            33Signatures.
            
            34








********GLOBALOPTIONS
        GROUP, INC. AND
        SUBSIDIARIES********
 **Condensed
        Consolidated Balance Sheets**
 **(dollars
        in thousands, except share data)**
 
 **March 31,**
              
              ******December 31,****2008**
              
              **2007****(unaudited)****ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              3,644
              
              $
              4,426Accounts
                  receivable, net of allowance for doubtful accounts of $2,298 at
                  March 31,
                  2008 and $2,459 at December 31, 2007, respectively
              
              
              21,399
              
              
              25,213Inventories
              
              
              2,431
              
              
              2,326Prepaid
                  expenses and other current assets
              
              
              625
              
              
              792Total
                  current assets
              
              
              28,099
              
              
              32,757Property
                  and equipment, net
              
              
              5,670
              
              
              5,570Intangible
                  assets, net
              
              
              6,593
              
              
              7,270Goodwill
              
              
              19,768
              
              
              19,768Security
                  deposits and other assets
              
              
              559
              
              
              578Total
                  assets
              
              $
              60,689
              
              $
              65,943**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:Notes
                  payable
              
              $
              497
              
              $
              800Obligation
                  to issue common stock
              
              
              -
              
              
              2,160Accounts
                  payable
              
              
              4,590
              
              
              5,723Deferred
                  revenues
              
              
              518
              
              
              543Accrued
                  compensation and related benefits
              
              
              3,151
              
              
              3,740Other
                  current liabilities
              
              
              2,344
              
              
              2,170Total
                  current liabilities
              
              
              11,100
              
              
              15,136Long-term
                  liabilities:Notes
                  payable, less current portion
              
              
              250
              
              
              396Other
                  long-term obligations
              
              
              520
              
              
              454Total
                  long-term liabilities
              
              
              770
              
              
              850Total
                  liabilities
              
              
              11,870
              
              
              15,986Commitments
                  and contingenciesStockholders'
                  equity:Preferred
                  stock, $0.001 par value, 14,900,000 shares authorized; no shares
                  issued or
                  outstanding
              
              
              -
              
              
              -Series
                  D convertible preferred stock, voting, $0.001 par value, 100,000
                  shares
                  authorized, 55,989.52 shares issued and outstanding, liquidation
                  preference $0
              
              
              -
              
              
              -Common
                  stock, $0.001 par value; 100,000,000 shares authorized; 9,987,253
                  shares
                  issued and 9,983,390 shares outstanding at March 31, 2008, and
                  9,660,269
                  shares issued and outstanding at December 31, 2007
              
              
              10
              
              
              10Additional
                  paid-in capital
              
              
              105,789
              
              
              102,537Accumulated
                  deficit
              
              
              (56,963
              )
              
              (52,590
              )Treasury
                  stock; at cost, 3,863 and 0 shares at March 31, 2008 and December
                  31,
                  2007, respectively
              
              
              (17
              )
              
              -Total
                  stockholders' equity
              
              
              48,819
              
              
              49,957Total
                  liabilites and stockholders' equity
              
              $
              60,689
              
              $
              65,943
 
 See
        notes
        to these condensed consolidated financial statements.
  1
 **GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Condensed
        Consolidated Statements of Operations**
 **(Unaudited)**
 **(dollars
        in thousands, except per share amounts)**
 
 **For the Three Months Ended March 31,****2008**
              
              **2007**Revenues
              
              $
              21,499
              
              $
              21,388Cost
                  of revenues
              
              
              12,366
              
              
              11,776Gross
                  profit
              
              
              9,133
              
              
              9,612Operating
                  expenses:Selling
                  and marketing
              
              
              2,502
              
              
              2,391General
                  and administrative
              
              
              10,996
              
              
              10,037Total
                  operating expenses
              
              
              13,498
              
              
              12,428Loss
                  from operations
              
              
              (4,365
              )
              
              (2,816
              )Other
                  income (expense):Interest
                  income
              
              
              16
              
              
              238Interest
                  (expense)
              
              
              (24
              )
              
              (26
              )Other
                  income
              
              
              -
              
              
              100Other
                  income (expense), net
              
              
              (8
              )
              
              312Net
                  loss
              
              $
              (4,373
              )
              $
              (2,504
              )Basic
                  and diluted net loss per share
              
              $
              (0.45
              )
              $
              (0.95
              )Weighted
                  average number of common shares outstanding - basic and
                  diluted
              
              
              9,641,684
              
              
              2,633,102
 
 See
        notes
        to these condensed consolidated financial statements.
  2
 
 **GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Condensed
        Consolidated Statement of Stockholders' Equity**
 **For
        the Three Months Ended March 31, 2008**
 **(Unaudited)**
 **(dollars
        in thousands)**
 **Series D****Convertible**
                
                **Additional****Common Stock**
                
                **Treasury Shares**
                
                **Preferred Stock**
                
                **Paid-in**
                
                **Accumulated****Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**
                
                **Shares**
                
                **Amount**
                
                **Capital**
                
                **Deficit**
                
                **Total**Balance,
                    January 1, 2008
                
                
                9,660,269
                
                $
                10
                
                
                -
                
                $
                -
                
                
                55,989.52
                
                $
                -
                
                $
                102,537
                
                $
                (52,590
                )
                $
                49,957Stock
                    issued to consultants for services
                
                
                26,984
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                168
                
                
                -
                
                
                168Purchase
                    of treasury shares
                
                
                -
                
                
                -
                
                
                3,863
                
                
                (17
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (17
                )Issuance
                    of common stock to sellers of JLWA in satisfaction of obligation
                    to issue
                    common stock
                
                
                225,000
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                2,160
                
                
                -
                
                
                2,160Issuance
                    of common stock to sellers of JLWA subject to clawback
                
                
                75,000
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Stock
                    based compensation - restricted stock vested
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                169
                
                
                -
                
                
                169Amortization
                    of consultant stock option costs
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                28
                
                
                -
                
                
                28Amortization
                    of employee stock options costs
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                727
                
                
                -
                
                
                727Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (4,373
                )
                
                (4,373
                )Balance,
                    March 31, 2008
                
                
                9,987,253
                
                $
                10
                
                
                3,863
                
                
                (17
                )
                
                55,989.52
                
                $
                -
                
                $
                105,789
                
                $
                (56,963
                )
                $
                48,819
 See
        notes
        to these condensed consolidated financial statements.
  3
 **GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Condensed
        Consolidated Statements of Cash Flows**
 **(Unaudited)**
 **(dollars
        in thousands)**
 
 **For the Three Months Ended March 31,****2008**
              
              **2007**Cash
                  flows from operating activities:Net
                  loss
              
              $
              (4,373
              )
              $
              (2,504
              )Adjustments
                  to reconcile net loss to net cash provided by (used in) operating
                  activities:Provision
                  for (recovery of) bad debts
              
              
              (115
              )
              
              480Depreciation
                  and amortization
              
              
              1,014
              
              
              873Deferred
                  rent
              
              
              81
              
              
              (3
              )Stock-based
                  compensation
              
              
              1,092
              
              
              953Loss
                  on disposition of equipment
              
              
              21
              
              
              -Changes
                  in operating assets:Accounts
                  receivable
              
              
              3,928
              
              
              (7,025
              )Inventories
              
              
              (105
              )
              
              8Prepaid
                  expenses and other current assets
              
              
              167
              
              
              219Security
                  deposits and other assets
              
              
              19
              
              
              (47
              )Changes
                  in operating liabilities:Accounts
                  payable
              
              
              (1,133
              )
              
              1,996Deferred
                  revenues
              
              
              (24
              )
              
              198Accrued
                  compensation and related benefits
              
              
              (589
              )
              
              (83
              )Due
                  to former members of JLWA for earnout
              
              
              -
              
              
              1,220Other
                  current liabilities
              
              
              173
              
              
              496Other
                  long-term obligations
              
              
              (14
              )
              
              -Total
                  adjustments
              
              
              4,515
              
              
              (715
              )Net
                  cash provided by (used in) operating activities
              
              
              142
              
              
              (3,219
              )Cash
                  flows from investing activities:Purchases
                  of property and equipment
              
              
              (453
              )
              
              (266
              )Purchase
                  of intangible assets
              
              
              (4
              )
              
              -Acquisition
                  of On Line Consulting
              
              
              -
              
              
              (750
              )Acquisition
                  of Facticon
              
              
              -
              
              
              (1,300
              )Acquisition
                  of Bode, less cash acquired of $284
              
              
              -
              
              
              (12,216
              )Net
                  cash used in investing activities
              
              
              (457
              )
              
              (14,532
              )
  See
          notes
          to these condensed consolidated financial statements.
  4
 **GLOBALOPTIONS
          GROUP, INC. AND SUBSIDIARIES**
 **Condensed
        Consolidated Statements of Cash Flows, continued**
 **(Unaudited)**
 **(dollars
        in thousands)**
 
 **For the Three Months Ended March 31,****2008**
              
              **2007**Cash
                  flows from financing activities:Repayment
                  of notes payable for acquisitions
              
              
              (450
              )
              
              (488
              )Proceeds
                  from exercise of stock options
              
              
              -
              
              
              48Repurchase
                  of common stock
              
              
              (17
              )
              
              -Collection
                  of accounts receivable due to seller
              
              
              -
              
              
              286Net
                  cash used in financing activities
              
              
              (467
              )
              
              (154
              )Net
                  decrease in cash and cash equivalents
              
              
              (782
              )
              
              (17,905
              )Cash
                  and cash equivalents - beginning of year
              
              
              4,426
              
              
              21,533Cash
                  and cash equivalents - end of period
              
              $
              3,644
              
              $
              3,628Supplemental
                  disclosure of cash flow information:Cash
                  paid during the period for interest
              
              $
              50
              
              $
              19Supplemental
                  disclosures of non-cash investing and financing
                  activities:Common
                  stock issued in exhange for obligation to issue common
                  stock
              
              $
              2,160
              
              
              -
  See
          notes
          to these condensed consolidated financial statements.
  5
 **GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Condensed
        Consolidated Statements of Cash Flows, continued**
 **(Unaudited)**
 **(dollars
        in thousands)**
 
 **For the Three Months Ended March 31,****2008**
              
              **2007**Supplemental
                  non-cash investing and financing activity - acquisition of On Line
                  Consulting:Assets
                  acquired and liabilities assumed:Accounts
                  receivable
              
              $
              -
              
              $
              264Property
                  and equipment
              
              
              -
              
              
              96Intangible
                  assets
              
              
              -
              
              
              1,200Goodwill
                  recognized on purchase business combination
              
              
              -
              
              
              1,320Accounts
                  payable, accrued expenses and deferred revenues
              
              
              -
              
              
              (176
              )Other
                  current liabilities
              
              
              -
              
              
              (46
              )Total
                  purchase price
              
              
              -
              
              
              2,658Less:
                  Cash paid to acquire On Line Consulting
              
              
              -
              
              
              (750
              )Non-cash
                  consideration to seller
              
              $
              -
              
              $
              1,908Non-cash
                  consideration consisted of:Common
                  stock issued to acquire On Line Consulting
              
              $
              -
              
              $
              1,350Notes
                  payable issued to seller
              
              
              -
              
              
              558Total
                  non-cash consideration
              
              $
              -
              
              $
              1,908Supplemental
                  non-cash investing and financing activity - acquisition of
                  Bode:Assets
                  acquired and liabilities assumed:Accounts
                  receivable
              
              $
              -
              
              $
              5,511Inventories
              
              
              -
              
              
              2,629Other
                  current assets (including cash of $284)
              
              
              -
              
              
              561Property
                  and equipment
              
              
              -
              
              
              4,133Intangible
                  assets
              
              
              -
              
              
              310Goodwill
                  recognized on purchase business combination
              
              
              -
              
              
              575Accounts
                  payable, accrued expenses and deferred rent obligations
              
              
              -
              
              
              (1,219
              )Total
                  purchase price
              
              
              -
              
              
              12,500Less:
                  Cash acquired
              
              
              -
              
              
              (284
              )Less:
                  Cash paid to acquire Bode
              
              
              -
              
              
              (12,216
              )Non-cash
                  consideration to seller
              
              $
              -
              
              $
              -Supplemental
                  non-cash investing and financing activity - acquisition of
                  Facticon:Assets
                  acquired and liabilities assumed:Accounts
                  receivable
              
              $
              -
              
              $
              759Property
                  and equipment
              
              
              -
              
              
              34Intangible
                  assets
              
              
              -
              
              
              120Goodwill
                  recognized on purchase business combination
              
              
              -
              
              
              2,420Accounts
                  payable, accrued expenses and deferred revenues
              
              
              -
              
              
              (533
              )Total
                  purchase price
              
              
              -
              
              
              2,800Less:
                  Cash paid to acquire Facticon
              
              
              -
              
              
              (1,300
              )Non-cash
                  consideration to seller
              
              $
              -
              
              $
              1,500Non-cash
                  consideration consisted of :Note
                  payable issued to seller
              
              $
              -
              
              $
              100Common
                  stock issued to acquire Facticon
              
              
              -
              
              
              1,400Total
                  non-cash consideration
              
              $
              -
              
              $
              1,500
  See
          notes
          to these condensed consolidated financial statements.
  6
 GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Condensed Consolidated Financial Statements
 (In
        thousands except share and per share amounts)
 
 **1. 
        Nature of Operations**
 
 GlobalOptions
        Group, Inc. and Subsidiaries (collectively the “Company” or “GlobalOptions
        Group”) is an integrated provider of risk mitigation and management services to
        government entities, Fortune 1,000 corporations and high net-worth and
        high-profile individuals. The Company delivers these services through four
        business units: Preparedness Services; Fraud and Special Investigative Unit
        (“SIU”) Services; Security Consulting and Investigations; and International
        Strategies. The Preparedness Services, Fraud and SIU Services, and Security
        Consulting and Investigations units represent the Company’s three financial
        reporting segments. The results of the International Strategies business
        unit,
        on the basis of its relative materiality, are included in the Fraud and SIU
        Services segment.
  References
        herein to “GlobalOptions” refer to GlobalOptions, Inc., an operating subsidiary
        of the Company.
 
 On
        August
        14, 2005, the Company acquired Confidential Business Resources,
        Inc. (“CBR”), a privately-held nationwide investigations firm based in
        Nashville, Tennessee.
  On
        March
        10, 2006, the Company acquired James Lee Witt Associates, LLC (“JLWA”), a
        nationwide crisis and emergency management consulting firm headquartered
        in
        Washington, D.C. with three additional offices nationwide.
  On
        May
        12, 2006 the Company acquired Safir Rosetti, LLC (“Safir”). Safir is a security
        consulting, investigative and intelligence firm headquartered in New York
        City.
 
 On
        May
        12, 2006, the Company acquired substantially all of the business and certain
        assets of Secure Source, Inc. (“Secure Source”), a Delaware corporation. Secure
        Source is an international risk consulting firm with offices in Washington,
        D.C.
        and Dallas, Texas .
 
 On
        August
        10, 2006, the Company acquired substantially all of the business and assets
        of
        Hyperion Risk, Inc. (“Hyperion Risk”). Hyperion Risk is a security consulting,
        investigative and intelligence firm with its central corporate office located
        in
        Orlando, Florida .
  On
        January 9, 2007, GlobalOptions Group purchased substantially all of the business
        and assets of SPZ Oakland Corporation, dba On Line Consulting Service, Inc.
        (“On
        Line Consulting”), a full service security and fire alarm consulting and design
        firm based in Oakland, California .
 
 On
        February 28, 2007, GlobalOptions Group acquired substantially all of the
        business and assets of Facticon, Inc. (“Facticon”), a Pennsylvania
        corporation. Facticon is a surveillance, investigative and intelligence firm
        based in Chadds Ford, Pennsylvania .
 
 On
        February 28, 2007, GlobalOptions Group purchased the common stock of The
        Bode
        Technology Group, Inc. ("Bode"), a Virginia corporation. Bode is a leading
        provider of forensic DNA analysis and proprietary DNA collection tools. Bode
        is
        based in Lorton, Virginia .
 
 On
        April
        21, 2008, GlobalOptions Group acquired substantially all of the business
        and net
        assets of Omega Insurance Services, Inc. (d/b/a First Advantage Investigative
        Services) (“FAIS”), a Florida corporation, related to its investigation and
        surveillance businesses (also see Note 16). FAIS is located in St. Petersberg,
        Florida.
  7
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES
 Notes
        to
        Condensed Consolidated Financial Statements
 (In
        thousands except share and per share amounts)
 
 **2.
        Basis of Presentation**
  The
        accompanying unaudited condensed consolidated financial statements have been
        prepared in accordance with United States generally accepted accounting
        principles for interim financial information and with the instructions to
        Form
        10-Q. Accordingly, they do not include all of the information and footnotes
        required by United States generally accepted accounting principles. In the
        opinion of management, all adjustments (consisting of normal accruals)
        considered for a fair presentation have been included. Operating results
        for the
        three months ended March 31, 2008 are not necessarily indicative of the results
        that may be expected for the year ending December 31, 2008.  For further
        information, refer to the consolidated financial statements and footnotes
        thereto included in the Company’s Form 10-K filed on March 28, 2008 for the year
        ended December 31, 2007.
 
 **3. 
        Summary of Significant Accounting Policies**
  ***Income
        Taxes***
 
 The
        Company accounts for income taxes using the liability method as required
        by SFAS
        No. 109, “Accounting for Income Taxes” (“SFAS 109”). Under this method, deferred
        tax assets and liabilities are determined based on differences between their
        financial reporting and tax basis of assets and liabilities. The Company
        establishes a valuation allowance for deferred tax assets. The Company was
        not
        required to provide for a provision for income taxes for the three months
        ended
        March 31, 2008 and 2007, respectively, as a result of losses incurred during
        these periods.
 
 Deferred
        tax assets pertaining to windfall tax benefits on exercise of non-qualified
        stock options and the corresponding credit to additional paid-in capital
        are
        recorded if the related tax amount either reduces income taxes payable or
        results in an income tax refund. The Company has elected the “with and without
        approach” regarding ordering of windfall tax benefits to determine whether the
        windfall tax benefit did reduce income taxes payable or resulted in an income
        tax refund in the current year. Under this approach, the windfall tax benefits
        would be recognized in additional paid-in capital only if an incremental
        income
        tax benefit is realized after considering all other income tax benefits
        presently available to the Company.
 
 ***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, as adjusted, during the years presented. Common
        stock equivalents, consisting of stock options, warrants and Series A, B
        and D
        convertible preferred stock were not included in the calculation of the diluted
        loss per share because their inclusion would have been anti-dilutive.  The
        basic weighted average number of shares was reduced for non-vested restricted
        stock awards and contingently returnable escrowed shares issued in connection
        with acquisitions, and was increased for non-contingent shares to be issued
        in
        connection with the JLWA modification agreement. Potentially dilutive securities
        of 1,709,353 and 939,804 realizable from the exercise of options as well
        as
        3,732,808 and 6,594,311 securities issuable upon the conversion of Series
        A, B
        and D convertible preferred stock and warrants at March 31, 2008 and 2007,
        respectively, as well as shares of restricted stock of 164,063 and 175,000
        at
        March 31, 2008 and 2007, respectively. Contingently returnable shares in
        the
        aggregate, from the Facticon, Hyperion and Witt acquisitions of 167,865 and
        35,843 at March 31, 2008 and 2007 respectively, have been excluded from the
        computation of diluted net loss per share, because the effect of their inclusion
        would have been anti-dilutive.
  8
 Notes
        to
        Condensed Consolidated Financial Statements
 (In
        thousands except share and per share amounts)
 
 
 **3. 
        Summary of Significant Accounting Policies, continued**
 
 ***Reclassifications***
 
 Certain
        prior period statements of operations amounts have been reclassified in order
        to
        conform to the current period presentations.
 
 ***Recently
        Implemented Accounting Pronouncements***
 
 Effective January
        1, 2008, the Company adopted the provisions of Statement of Financial Accounting
        Standards No. 157 ("SFAS 157"), “Fair Value Measurements” for financial assets
        and liabilities, as well as any other assets and liabilities that are carried
        at
        fair value on a recurring basis in financial statements. SFAS 157 defines
        fair
        value, establishes a framework for measuring fair value and expands disclosures
        about fair value measurements. SFAS 157 applies under other accounting
        pronouncements that require or permit fair value measurements, the Financial
        Accounting Standards Board ("FASB") having previously concluded in those
        accounting pronouncements that fair value is the relevant measurement attribute.
        Accordingly, SFAS 157 does not require any new fair value measurements. The
        Company applied the provisions of FSP FAS 157-2, "Effective Date of FASB
        Statement 157," which defers the provisions of SFAS 157 for nonfinancial
        assets
        and liabilities  to the first fiscal period beginning after November 15,
        2008.  The deferred nonfinancial assets and liabilities include items such
        as goodwill. The Company is required to adopt SFAS 157 for nonfinancial assets
        and liabilities in the first quarter of fiscal 2009 and is still
        evaluating the impact on the condensed consolidated financial statements.
 
 Effective
        January 1, 2008, the Company adopted Statement of Financial Accounting Standards
        No. 159 ("SFAS 159"), “The Fair Value Option for Financial Assets and Financial
        Liabilities.” SFAS 159 permits entities to choose to measure many financial
        instruments and certain other items at fair value. The Company did not elect
        the
        fair value reporting option for any assets and liabilities not previously
        recorded at fair value.
 
 ***Recent
        Accounting Pronouncements***
 
 In
        December 2007, the FASB issued SFAS No. 141R (“SFAS 141R”),
        “Business Combinations”, which establishes principles and requirements for how
        the acquirer recognizes and measures in its financial statements the
        identifiable assets acquired, the liabilities assumed, and any noncontrolling
        interest in the acquiree, goodwill acquired in the business combination or
        a
        gain from a bargain purchase. SFAS 141R
        is
        effective for business combinations with an acquisition date on or after
        the
        beginning of the first annual reporting period beginning on or after December
        15, 2008. The Company expects SFAS 141R
        to
        have an impact on the accounting for any future business acquisitions as
        of the
        effective date.
  9
 Notes
        to
        Condensed Consolidated Financial Statements
 (In
        thousands except share and per share amounts)
  **3.
        Summary of Significant Accounting Policies, continued**
 
 ***Recent
        Accounting Pronouncements, continued***
 
 In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
        Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”).
        SFAS 160 establishes accounting and reporting standards for the noncontrolling
        interest (minority interest) in a subsidiary and for the deconsolidation
        of a
        subsidiary. SFAS 160 requires a) the ownership interest in the subsidiary
        held
        by parties other than the parent to be clearly identified and presented in
        the
        consolidated balance sheet within equity, but separate from the parent’s equity,
        b) the amount of consolidated net income attributable to the parent and to
        the
        noncontrolling interest to be clearly identified and presented on the face
        of
        the consolidated statement of operations and c) changes in a parent’s ownership
        interest while the parent retains its controlling financial interest in its
        subsidiary to be accounted for consistently. Entities must provide sufficient
        disclosures that clearly identify and distinguish between the interests of
        the
        parent and the interests of the noncontrolling owners. SFAS 160 is effective
        for
        financial statements issued for fiscal years beginning on or after December
        15,
        2008, and interim periods within those fiscal years. The Company does not
        expect
        SFAS 160 to have a material impact on its consolidated financial statements.
 
 In
        March
        2008, the FASB issued Statement of Financial Accounting Standards No. 161,
        “Disclosures about Derivative Instruments and Hedging Activities – an
        amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 changes the
        disclosure requirements for derivative instruments and hedging activities.
        Entities are required to provide enhanced disclosures about (a) how and why
        an
        entity uses derivative instruments, (b) how derivative instruments and related
        hedged items are accounted for under SFAS No. 133 and its related
        interpretations, and (c) how derivative instruments and related hedged items
        affect an entity’s financial position, financial performance and cash flow. The
        guidance in SFAS 161 is effective for financial statements issued for fiscal
        years and interim periods beginning after November 15, 2008, with early
        application encouraged. This Statement encourages, but does not require,
        comparative disclosures for earlier periods at initial adoption. At this
        time
        management is evaluating the implications of SFAS 161 and its impact on the
        financial statements has not yet been determined.
 
 **4.****Acquisitions**
 
 ***Unaudited
        Pro-Forma Financial Information***
 
 The
        following presents the unaudited pro-forma combined results of operations
        for
        the three months ended March 31, 2007 of the Company with On Line Consulting,
        Bode and Facticon, for the periods preceding the acquisition of their respective
        net assets or common stock. The respective acquisition dates are January
        9, 2007
        for On Line Consulting and February 28, 2007 for Bode and Facticon. The
        unaudited pro-forma results are not disclosed for the three months ended
        March
        31, 2008, as all prior acquisitions are fully reflected in results for the
        period.
 
 For the Three Months
                Ended March 31, 2007Revenues
              
              $
              24,580Net
                  loss available tocommon
                  stockholders
              
              $
              (4,298
              )Pro-forma
                basic and diluted net
                loss per common share(not
                rounded)
              
              $
              (1.63
              )Pro-forma
                weighted average common
                shares outstanding-basic
                and
                diluted
              
              
              2,640,686
  10
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES Notes
          to
          Condensed Consolidated Financial Statements
 (In
          thousands except share and per share amounts)
  **4.**  **Acquisitions,
        continued**
 
 ***Unaudited
        Pro-Forma Financial Information, continued***
 
 The
        pro
        forma combined results of operations are not necessarily indicative of the
        results of operations that actually would have occurred if the acquisitions
        of On Line Consulting, Bode and Facticon had been completed as of the beginning
        of 2007, nor are they necessarily indicative of future consolidated
        results.
 
 **5.
        Inventories**
 
 Inventories
        are comprised of the following:
  As
                  ofMarch 31, 2008
              
              December 31, 2007Raw
                  materials
              
              $
              965
              
              $
              900Work
                  in progress – DNA Analysis
              
              
              454
              
              
              480Finished
                  goods
              
              
              1,012
              
              
              946Total
              
              $
              2,431
              
              $
              2,326
 
 **6. 
        Intangible Assets and Goodwill**
 
 ***Intangible
        Assets***
  Intangible
        assets consist of amounts related to the 2005 acquisition of CBR, the 2006
        acquisitions, consisting of JLWA, Safir, Secure Source and Hyperion Risk
        and the
        2007 acquisitions, consisting of On Line Consulting, Bode and Facticon.
 
 Intangible
        assets are comprised of the following :
  Trade
                Names
              
              Developed
                Technology
              
              Non-
                Compete
                Agreements
              
              Client
                  Relationships
              
              Patents
              
              Accumulated
                Amortization
              
              TotalBalance
                  as of January 1, 2008
              
              $
              2,560
              
              $
              440
              
              $
              1,499
              
              $
              7,360
              
              $
              70
              
              $
              (4,659
              )
              $
              7,270Additions
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              4
              
              
              (681
              )
              
              (677
              )Balance
                  as of March 31, 2008
              
              $
              2,560
              
              $
              440
              
              $
              1,499
              
              $
              7,360
              
              $
              74
              
              $
              (5,340
              )
              $
              6,593Weighted
                  average amortization period at March 31, 2008(in
                  years)
              
              
              7.6
              
              
              2.8
              
              
              1.1
              
              
              3.4
              
              
              -(1)
 
 (1)
        Patents not yet approved and as such, amortization period has not yet begun
        as
        of March 31, 2008.
  11
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES Notes
          to
          Condensed Consolidated Financial Statements
 (In
          thousands except share and per share amounts)
 
 **6. 
        Intangible Assets and Goodwill, continued**
 
 ***Intangible
        Assets, continued***
 
 The
        estimated amortization of amortizable intangible assets are comprised of
        the
        following for the five years ending March 31, 2013:
  For
                  the Years Ending
                March
                  31,
              
              Total
              
              Trade
                Names
              
              Developed
                Technology
              
              Non-Compete
                Agreements
              
              Client
                Relationships2009
              
              $
              2,547
              
              $
              305
              
              $
              117
              
              $
              402
              
              $
              1,7232010
              
              
              1,151
              
              
              305
              
              
              22
              
              
              61
              
              
              7632011
              
              
              958
              
              
              305
              
              
              22
              
              
              —
              
              
              6312012
              
              
              619
              
              
              230
              
              
              20
              
              
              —
              
              
              3692013
              
              
              477
              
              
              204
              
              
              —
              
              
              —
              
              
              273Totals
              
              $
              5,752
              
              $
              1,349
              
              $
              181
              
              $
              463
              
              $
              3,759
 
 During
        the three months ended March 31, 2008 and 2007, the Company recorded
        amortization expense related to the acquired amortizable intangibles of $681
        and
        $706, respectively.
 
 ***Goodwill***
 
 A
        summary
        of Goodwill is comprised of the following as of March 31, 2008 and December
        31,
        2007:
  Preparedness
                Services
              
              
              Fraud and
                SIU Services
              
              
              Security
                Consulting and
                Investigations
              
              
              TotalBalance
                  as of March 31, 2008 andDecember
                  31, 2007
              
              $
              883
              
              $
              6,022
              
              $
              12,863
              
              $
              19,768
 
 **7.**  **Property
        and Equipment**
  A
        summary
        of property and equipment is comprised of the following:
  As
                    ofMarch 31, 2008
                
                December 31, 2007Computer
                    and equipment and software
                
                $
                2,617
                
                $
                2,359Laboratory
                    equipment
                
                
                1,524
                
                
                1,505Furniture
                    and fixtures
                
                
                858
                
                
                753Vehicles
                
                
                134
                
                
                162Leasehold
                    improvements
                
                
                2,445
                
                
                2,3767,578
                
                
                7,155Less:
                    accumulated depreciation and amortization
                
                
                (1,908
                )
                
                (1,585
                )))Property
                    and equipment, net
                
                $
                5,670
                
                $
                5,570
  Depreciation
        and amortization of property and equipment for the three months ended March
        31,
        2008 and 2007 was $333 and $167, respectively.
  12
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES Notes
          to
          Condensed Consolidated Financial Statements
 (In
          thousands except share and per share amounts)
 
 **8.**  **Accrued
        Compensation and Related Benefits**
 
 A
        summary
        of accrued compensation and related benefits is comprised of the
        following:
 As
                    ofMarch 31, 2008
                
                December 31,2007Accrued
                    bonuses
                
                $
                917
                
                $
                1,942Accrued
                    payroll and commissions
                
                
                1,477
                
                
                801Accrued
                    employee benefits
                
                
                757
                
                
                997Total
                
                $
                3,151
                
                $
                3,740
  **9. 
        Line of Credit**
 
 On
        April
        16, 2008, effective as of March 31, 2008, GlobalOptions and Bode entered
        into an
        amendment to the agreement with the financial institution that provides the
        line
        of credit, for which the Company has provided an unconditional guarantee
        (“Loan
        Agreement”).
 
 The
        Loan
        Agreement provides a working capital line of credit (the “Facility”) in an
        amount up to a maximum of $20,000, based upon eligible
        receivables.  The applicable interest rate with respect to the amount
        outstanding under the Facility consists of a base rate of the greater of
        6.25%
        per annum or the Bank’s most recently announced “prime rate,” plus a range from
        0.75% to 1.50% per annum, which is based upon the Company’s liquidity (as
        defined in the Loan Agreement).  The Loan Agreement also contains certain
        affirmative and negative covenants and grants to the financial institution
        a
        security interest in all of the Company’s property and security interest in all
        of the Company’s rights, titles and interests in, to and under the Company’s
        intellectual property.
 
 The
        interest rate on the line of credit at March 31, 2008 was 6.75%. There was
        no
        balance under the line of credit at March 31, 2008. Based upon the amount
        of
        eligible accounts receivable balances and the authorized line, the Company
        had
        the availability to draw $12,514 and $8,782 against the line of credit at
        March
        31, 2008 and December 31, 2007, respectively.
 
 **10. 
        Notes Payable**
 
 Notes
        payable consisted of the following:
 As
                    ofMarch 31, 2008
                
                December 31, 2007Note
                    payable to seller for Secure Source Acquisition
                
                $
                500
                
                $
                500Note
                    payable to seller for Facticon Acquisition
                
                
                100
                
                
                100Notes
                    payable to seller for On Line Consulting Acquisition
                
                
                147
                
                
                596Total
                
                
                747
                
                
                1,196Less –
                    current portion
                
                
                497
                
                
                800Long-term
                    portion
                
                $
                250
                
                $
                396
  13
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES Notes
          to
          Condensed Consolidated Financial Statements
 (In
          thousands except share and per share amounts)
 
 **10. 
        Notes Payable, continued**
 
 The
        scheduled maturities of notes payable are shown in the following
        table:
 
 For the Year Ending March 31,
              
              Amount2009
              
              $
              4972010
              
              
              250Total
              
              $
              747
 
 On
        January 7, 2008, the Company repaid $450, consisting of $447 and $3 of principal
        and interest, respectively in satisfaction of a note payable issued in
        connection with the purchase of On Line Consulting.
 
 **11.
        Commitments****and
        Contingencies**
 
 ***Operating
        Leases***
 
 In
        connection with the acquisitions of CBR, JLWA, Safir, Secure Source, Hyperion
        Risk, On Line Consulting, Bode and Facticon, GlobalOptions assumed the
        obligations for various office leases. Such lease obligations expire at various
        dates through June 2015.
 
 On
        July
        19, 2007, the Company entered into an agreement to lease 15,294 rentable
        square
        feet of office space in Washington, D.C, to replace the Company’s expiring
        Washington D.C. office lease. The lease commenced on February 27, 2008 and
        expires on November 30, 2015. The Company has the option to extend the lease
        for
        an additional five years. Rent payments have been abated during the first
        six
        months of the lease.
 
 Future
        minimum lease payments under these operating leases are as follows:
 
 For the Year EndingMarch 31,
              
              Amount2009
              
              $
              2,4542010
              
              
              2,7722011
              
              
              2,7152012
              
              
              2,3972013
              
              
              1,924Thereafter
              
              
              5,788Total
              
              $
              18,050
  Rent
        expense charged to operations amounted to $930 and $548, for the three months
        ended March 31, 2008 and 2007, respectively.
 
 The
        terms
        of certain of the Company’s lease obligations provide for scheduled escalations
        in the monthly rent. In accordance with SFAS No. 13, “Accounting for Leases,”
the non-contingent rent increases are being amortized over the life of the
        leases on a straight line basis. Deferred rent of $427 and $346 represents
        the
        long-term unamortized rent adjustment amount at March 31, 2008 and at December
        31, 2007 and was reflected as deferred rent obligations in the condensed
        consolidated balance sheet. In addition, the current portion of deferred
        rent
        was $30 and $30 as of March 31, 2008 and December 31, 2007, respectively,
        and is
        reflected within other current liabilities in the condensed consolidated
        balance
        sheets.
  14
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES Notes
          to
          Condensed Consolidated Financial Statements
 (In
          thousands except share and per share amounts)
 
 **11.
        Commitments**  **and
        Contingencies, continued**
 
 ***Litigation,
        Claims and Assessments***
 
 From
        time
        to time in the normal course of business the Company will be involved in litigation.  Except
        for certain claims against Facticon, the Company’s management has determined any
        asserted or unasserted claims to be immaterialto the
        condensed consolidated financial statements.
  The
        litigation against Facticon was originally filed by the Plaintiff against
        Facticon prior to the Company’s acquisition of assets of Facticon (February 28,
        2007) in the U.S. District Court for the Central District of California,
        wherein
        the Plaintiff, in a class action, is alleging that Facticon failed to pay
        overtime wages. Subsequent to the acquisition, the Company was added as a
        defendant in said case, under the successor liability theory.  Under the
        terms of an escrow agreement, as amended, entered into by and between
        GlobalOptions and Facticon,  the escrow agreement provides that 85,700
        shares of the Company’s common stock and $100 in cash funds shall be held to
        satisfy this and other pre-acquisition obligations of Facticon. The Company
        has
        put Facticon on notice, and the stockholders of Facticon agree, that
        GlobalOptions will not distribute any funds or stock as provided under the
        asset
        purchase agreement until this matter is resolved, and if necessary shall
        use
        such stock and cash to resolve such matter. A Motion for Summary
        Judgment was filed for the Court to contest the the Company’s liability as
        a successor liable company. On March 7, 2008, the Court issued a ruling denying
        the Company’s Motion for Summary Judgment and issued a ruling granting a Summary
        Judgment in favor for the Plaintiffs ruling that the Company was in fact
        a
        successor party to the Plaintiffs actions, and this ruling by the Court is
        in
        opposition of the Court’s original ruling dated March 3, 2008 (the “Preliminary
        Ruling”), wherein it granted the Company’s Motion for Summary Judgment. The
        Company intends to file a Motion for Reconsideration. No assurance can be
        given
        that the Court will reverse its final ruling. The Company has established
        a
        reserve for such case net of amounts expected to be received through the
        liquidation of Facticon assets held in escrow, in the amount of $676 to offset
        the risk of damages for this matter. Notwithstanding the legal reserve, the
        Company will vigorously defend this matter.
 
 **12.**  ******  **Stockholders’
        Equity**
 
 ***Common
        Stock***
 
 On
        December 19, 2006, the Company awarded 100,000 and 75,000 shares of restricted
        stock valued at $12.40 per share to Dr. Harvey Schiller and Mr. Jeffrey Nyweide,
        respectively, in connection with the extension of their respective employment
        and consulting agreements. On December 12, 2007, the Compensation Committee
        determined that, effective January 1, 2008, 6,250 shares and 4,687 shares
        of
        restricted stock held by Dr. Schiller and Mr. Nyweide, respectively, valued
        in
        the aggregate at $169, were no longer subject to forfeiture. Dr. Schiller
        and
        Mr. Nyweide elected to have the Company withhold 2,278 and 1,585 shares,
        respectively, in satisfaction of their tax obligations in connection with
        the
        vesting of their restricted stock. Such withheld shares valued at $10 and
        $7,
        respectively, are reflected as treasury shares in the Company’s books and
        records. As a result of the withholding of shares, Dr. Schiller and Mr. Nyweide
        received 3,972 and 3,102 shares, respectively.
  On
        January 30, 2008, the Company issued 300,000 shares of common stock to the
        former owners of JLWA (WSFM, LLC f/k/a James Lee Witt Associates, LLC), (“JLWA
        Sellers”) including 225,000 shares of common stock, in full satisfaction of the
        $2,160 obligation to issue common stock. The cost of the remaining 75,000
        shares
        shall be recorded as earn-out expense upon the expiration of the 12 month
        period
        for which the shares are subject to forfeiture.
  On
        February 14, 2008, the Company registered for resale a total of 1,223,565
        shares
        of its common stock, consisting of the 300,000 shares of common stock issued
        to
        the JLWA Sellers on January 30, 2008 and the remainder of which were held
        by the
        Company’s employees, directors, or their affiliates.
  On
        February 15, 2008, the Company issued 21,843 shares of common stock, valued
        at
        $153 for services rendered during the year ended December 31, 2007, and 5,141
        shares of common stock valued at $15 for services rendered during January
        and
        February 2008, to a group of the Company’s service providers including 1,567
        shares of common stock valued at $15 to Verus International Group, of which
        John
        Oswald, Director, is Chief Executive Officer.
  15
 Notes
        to
        Condensed Consolidated Financial Statements
 (In
        thousands except share and per share amounts)
 
 **13.
        Stock Based Compensation**
 
 Stock
        based compensation for non-employees accounted for under Emerging Issues
        Task
        Force (EITF) Issue No. 96-18 “Accounting
        for
        Equity Instruments That Are Issued to Other Than Employees for Acquiring,
        or in Conjunction with Selling, Goods or Services” (EITF
        96-18) was approximately $28 and $60 for the three months ended March 31,
        2008 and 2007 and is reflected within general and administrative
        expenses.
 
 The
        fair
        value of each option grant during the three months ended March 31, 2008 and
        2007
        was estimated on the date of grant using the Black-Scholes option pricing
        model
        with the following assumptions used:
  For the three Months
                Ended March 31,2008
              
              2007Dividend
                  yield
              
              
              0
                  %
              
              
              0
                  %Expected
                  volatility
              
              
              87
                  %
              
              
              87
                  %Risk-free
                  interest rate
              
              
              2.95
                  %
              
              
              4.54
                  %Expected
                  lives
              
              
              5
                  years
              
              
              5
                  years
 
 The
        Company has determined that the expected life of options granted is the same
        as
        the contractual term.
 
 The
        weighted average fair value of the options on the date of grant, using the
        fair
        value based methodology for the three months ended March 31, 2008 and 2007
        was
        $1.85 and $7.86.
 
 Effective
        on January 1, 2008, the Company granted, in the aggregate, options for the
        purchase of 75,000 shares of its common stock at an exercise price of $4.50
        per
        share, under the 2006 Long-Term Incentive Plan, to three members of the Board
        of
        Directors. The options have a five year term, vest ratably at the end of
        each of
        the four quarterly periods following the date of grant and have a value of
        $235
        utilizing the Black Scholes option pricing model with the following assumptions
        used: expected life of five years, volatility of 87%, dividends of 0% and
        a risk
        free interest rate of 3.45%.
 
 Effective
        on January 1, 2008, the Company issued stock options for the purchase of
        100,000
        shares of its common stock at an exercise price of $4.50 per share, under
        the
        2006 Long-Term Incentive Plan to certain members of its advisory boards for
        their advisory services to the Company.   The options have a five
        year term, vest ratably at the end of each of the four quarterly periods
        following the date of grant and have a value of $314 utilizing the Black
        Scholes
        option pricing model with the following assumptions used: expected life of
        five
        years, volatility of 87%, dividends of 0% and a risk free interest rate of
        3.45%.
 
 On
        February 13, 2008, the Company granted, in the aggregate, options for the
        purchase of 295,000 shares of its common stock at an exercise price of $1.70
        per
        share under the 2006 Long-Term Incentive Plan to certain of its officers
        and
        employees.   The options have a five year term, vest ratably upon
        the first, second and third anniversaries of the date of grant and have a
        value
        of $347 utilizing the Black Scholes option pricing model with the following
        assumptions used: expected life of five years, volatility of 87%, dividends
        of
        0% and a risk free interest rate of 2.71%.
 
 On
        March
        5, 2008, the Company granted an option for the purchase of 50,000 shares
        of its
        common stock at an exercise price of $1.86 under the 2006 Long-Term Incentive
        Plan to an officer of Bode.   The option has a five year term,
        vests ratably upon the first, second, third, and fourth anniversaries of
        the
        date of grant, certain vesting is accelerated upon the achievement of certain
        performance based criteria and upon a change in control all such options
        vest
        immediately. The options have a value of $64 utilizing the Black Scholes
        option
        pricing model with the following assumptions used: expected life of five
        years,
        volatility of 87%, dividends of 0% and a risk free interest rate of
        2.59%.
  16
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES Notes
          to
          Condensed Consolidated Financial Statements
 (In
          thousands except share and per share amounts)
 
 **13.
        Stock Based Compensation, continued**
 
 At
        March
        31, 2008, the unamortized value of employee stock options under SFAS 123R
        was
        approximately $3,876. The unamortized portion will be expensed over a weighted
        average period of 1.24 years. For the three months ended March 31, 2008 and
        2007, costs of $727 and $714, respectively, were recognized in connection
        with
        the vesting of these employee stock options.
 
 A
        summary
        of the status of the Company’s stock option plans and the changes during the
        three months ended March 31, 2008, is presented in the table below:
 
 Number of
                Options
              
              Weighted
                Average
                Exercise Price
              
              Weighted
                Average
                Remaining
                Contractual
                Life(per
                  share)
              
              (in
                  years)Options
                  outstanding at December 31, 2007
              
              
              1,191,665
              
              $
              13.72
              
              
              3.6Granted
              
              
              520,000
              
              
              2.66
              
              
              -Forfeited
              
              
              (2,312
              )
              
              17.06
              
              
              -Options
                  outstanding at March 31, 2008
              
              
              1,709,353
              
              $
              10.35
              
              
              3.8Exercisable
                  at March 31, 2008
              
              
              553,007
              
              $
              14.65
              
              
              2.9
 
 A
        summary
        of the Company’s stock options outstanding and exercisable by range of exercise
        price at March 31, 2008 is presented in the table below:
  Options
                  Outstanding
              
              Options
                  ExercisableRange of
                Exercise Price
                (per share)
              
              Number of
                Options
              
              Weighted
                Average
                Remaining
                Life
                (in years)
              
              Number of
                Options
              
              Weighted
                Average
                Remaining
                Life
                (in years)$1.70
                  - $1.86
              
              
              345,000
              
              
              4.9
              
              
              -$4.50
                  - $4.80
              
              
              193,423
              
              
              4.4
              
              
              62,173
              
              
              3.6$5.44
              
              
              57,507
              
              
              2.0
              
              
              57,507
              
              
              2.0$6.80
                  - $7.24
              
              
              307,353
              
              
              4.4
              
              
              7,353
              
              
              0.3$10.80
                  - $12.00
              
              
              145,484
              
              
              3.9
              
              
              67,661
              
              
              3.8$16.08
                  - $20.00
              
              
              660,586
              
              
              2.9
              
              
              358,313
              
              
              2.91,709,353
              
              
              
              
              
              553,007
 
 17
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES Notes
          to
          Condensed Consolidated Financial Statements
 (In
          thousands except share and per share amounts)
 **14.   Client
        and Segment Data**
 
 The
        Company’s reportable operating segments consist of the following three
        business segments: Preparedness Services, Fraud and SIU Services, and Security
        Consulting and Investigations. The Company’s reportable segments are
        organized, managed and operated along key product and service lines. These
        product and service lines provided to similar clients are offered together
        as
        packaged offerings, generally produce similar margins and are managed under
        a
        consolidated operations management.
 
 The
        Preparedness Services segment develops and implements crisis management and
        emergency response plans for disaster mitigation, continuity of operations
        and
        other emergency management issues for governments, corporations and individuals.
 
 The
        Fraud
        and SIU Services segment provides investigative surveillance, anti-fraud
        solutions and business intelligence services to the insurance industry, law
        firms and multinational organizations. The results of the Company’s
        International Strategies business unit, on the basis of its relative
        materiality, are included in the Fraud and SIU Services segment.
 
 The
        Security Consulting and Investigations segment delivers specialized security
        and
        investigative services to governments, corporations and individuals.
 
 The
        names
        of the Company’s reportable segments have changed from the prior year. See the
        Company’s Form 10-K for the year ended December 31, 2007, filed on March 28,
        2008, for additional information.
 
 Total
        revenues by segment include revenues to unaffiliated clients. 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 months ended March 31, 2008 and 2007.
 
 For
        the Three Months Ended March 31, 2008
 
 Preparedness
                Services
              
              Fraud & SIU
                Services-
              
              Security
                Consulting &
                Investigations
              
              Corporate
              
              ConsolidatedRevenues
              
              $
              7,142
              
              $
              6,240
              
              $
              8,117
              
              $
              -
              
              $
              21,499Income
                  (loss) from Operations
              
              $
              (443
              )
              $
              (1,443
              )
              $
              (2,479
              )
              $
              -
              
              $
              (4,365
              )Depreciation
                  and Amortization
              
              $
              312
              
              $
              283
              
              $
              419
              
              $
              -
              
              $
              1,014Interest
                  Expense
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              24
              
              $
              24
 
 18
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES Notes
          to
          Condensed Consolidated Financial Statements
 (In
          thousands except share and per share amounts)
 
 **14.  Client
        and Segment Data, continued**
 
 For
        the Three Months Ended March 31, 2007
 
 Preparedness
                Services
              
              Fraud & SIU
                Services-
              
              Security
                Consulting &
                Investigations
              
              Corporate
              
              ConsolidatedRevenues
              
              $
              10,315
              
              $
              5,291
              
              $
              5,782
              
              $
              -
              
              $
              21,388Income
                  (loss) from Operations
              
              $
              492
              
              $
              (2,878
              )
              $
              (430
              )
              $
              -
              
              $
              (2,816
              )Depreciation
                  and Amortization
              
              $
              305
              
              $
              314
              
              $
              254
              
              $
              -
              
              $
              873Interest
                  Expense
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              26
              
              $
              26Other
                  Income
              
              $
              100
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              100
 
 **15.
        Major Clients/Customers**
  Revenues
        from the Company’s services to a limited number of clients have accounted for a
        substantial percentage of the Company’s total revenues. The Company’s largest
        client, which is within the Preparedness Services segment and was work performed
        under government contracts, accounted for approximately 25% and 42% of the
        Company’s revenues for the three months ended March 31, 2008 and 2007,
        respectively.
 
 For
        the
        three months ended March 31, 2008 and 2007, work performed under government
        contracts represented 46% and 48% of the Company’s revenues, respectively, the
        most significant of which, in 2008 and 2007, represented 82% and 92%,
        respectively, of the Company’s revenues within the Preparedness Services
        segment.
  **16.
        Subsequent Events**
 
 ***Acquisition***
 
 On
        April
        21, 2008, the Company acquired substantially all of the business and net
        assets
        of Omega Insurance Services, Inc. (d/b/a First Advantage Investigative
        Services), a Florida corporation (“FAIS”), related to its investigation and
        surveillance businesses.
 
 The
        acquisition was made pursuant to an Asset Purchase Agreement (the “Purchase
        Agreement”), dated April 21, 2008 by and among the Company, FAIS, and First
        Advantage Corporation (“FAC”), a Delaware corporation and parent Company of
        FAIS.  The aggregate purchase price under the Purchase Agreement was
        (i) $2,163 in cash, (ii) an earnout payment (the “Earnout”) to be paid on the
        twelve-month anniversary of the transaction, (iii) the assumption of
        certain liabilities, and (iv) a $350,000 finder's fee paid to a third party
        in
        connection with this transaction.  In addition, in the Purchase
        Agreement, FAC and FAIS have agreed that they will not compete with or solicit
        the employees or customers of the Company for a period of two years from
        the
        date of the transaction.  In a separate license agreement dated April
        21, 2008 by and between FAIS and the Company, the Company also obtained the
        non-exclusive perpetual right to use FAIS’s RiskminderTM software.
  The
        amount of the Earnout will be based on the revenues during the twelve months
        following the transaction that are generated by the assets purchased under
        the
        Purchase Agreement and the revenues generated under an alliance agreement
        that
        are directly related to FAIS's previous investigation and surveillance business,
        and will range from $0 to $2,000.  The Company and FAC entered into
        this business alliance agreement dated April 21, 2008, wherein the Company
        and
        FAC agreed to further develop the alliance relationship between the two
        companies in the future.
 
 19
  GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES Notes
          to
          Condensed Consolidated Financial Statements
 (In
          thousands except share and per share amounts)
 
 **16.
        Subsequent Events, continued**
 
 ***Authorization
        of the Grant of Restricted Stock to Replace Certain Outstanding Stock
        Options***
 
 On
        April
        18, 2008, the Board for Directors approved the implementation of the Stock
        Option to Restricted Stock Conversion Plan, which provides for the conversion
        of
        the all stock options outstanding which had been granted prior to December
        31,
        2007, into restricted stock, on a 3 for 1 basis. Restricted stock granted
        to
        employees and executives under the conversion plan will vest ratably upon
        the
        first and second anniversaries of the restricted stock grant date for employees
        and upon the first, second and third anniversaries for executives. The Board
        of
        Directors has directed the management of the Company to execute upon this
        plan
        prior to the close of the third quarter of 2008.
 
 ***Grant
        of Stock Options***
 
 On
        May 7,
        2008, the Company granted stock options for the purchase of an aggregate
        of
        7,000 shares of its common stock at an exercise price of
        $2.23 employees of Safir. The options have a five year term, vest
        ratably on the first, second and third anniversaries of the date of grant
        and
        have a value of $11 utilizing the Black Scholes option pricing model with
        the
        following assumptions used; expected life of five years, volatility of 87%,
        dividends of 0% and a risk free interest rate of 3.18%.
  On
        May 7, 2008 the Company granted, in the aggregate,
        options for the purchase of 90,000 shares of common stock at an expense price
        of
        $2.23 to employees of FAIS. The options have a five year term, vest ratably
        on
        the first , second and third anniversaries of the date of grant and have
        a value
        of $139 utilizing the Black Sholes option pricing model with the following
        assumptions used; expected life of five years, volatility of 87%, dividends
        of
        0% and a risk free interest rate of 3.18%
  20




**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**


**(Amounts
      contained in this Item 2 are in thousands, except, except share and per share
      amounts).**





*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**





Information
      included or incorporated by reference in this Quarterly Report on Form 10-Q
      may
      contain forward-looking statements. This information may involve known and
      unknown risks, uncertainties and other factors which may cause our actual
      results, performance or achievements to be materially different from the future
      results, performance or achievements expressed or implied by any forward-looking
      statements. Forward-looking statements, which involve assumptions and describe
      our future plans, strategies and expectations, are generally identifiable by
      use
      of the words "may," "should," "expect," "anticipate," "estimate," "believe,"
      "intend" or "project" or the negative of these words or other variations on
      these words or comparable terminology.




**Overview**




GlobalOptions
      is an integrated provider of risk mitigation and management services to
      government entities, Fortune 1,000 corporations and high net-worth and
      high-profile individuals. We enable clients to identify, assess and prevent
      natural and man-made threats to the well-being of individuals and the operations
      of governments and corporations. In addition, we assist our clients in
      recovering from the damages or losses resulting from the occurrence of acts
      of
      terror, natural disasters, fraud and other risks. Our vision is to continue
      to build a comprehensive risk mitigation solutions company through both organic
      growth and acquisitions. In pursuit of our strategy, we have acquired and
      integrated eight complementary risk mitigation businesses from August 2005
      through March 2008 that contributed an aggregate of approximately $21.1 and
      $20.6 million in revenues to our business during the three months ended March
      31, 2008 and 2007, respectively.




We
      believe our reputation, credentials and personal relationships provide us with
      a
      competitive advantage in securing new business. Our senior management team
      and
      advisory boards have extensive industry backgrounds and include former generals
      in the military, top government officials and corporate officers, intelligence
      and law enforcement officers, professional investigators and legal and crisis
      communications specialists.




We
      deliver risk mitigation and management services through the following four
      business units:




·
            *Preparedness
                Services*develops and implements crisis management and emergency response
                plans for
                disaster mitigation, continuity of operations and other emergency
                management issues for governments, corporations and individuals.
                Services
                we provide include preparedness, response and recovery services,
                threat
                and impact assessments, business continuity plans and emergency exercises
                and training programs. The Preparedness Services unit is led by former
                Federal Emergency Management Agency (FEMA) Director James Lee Witt,
                General Wesley Clark (ret.) and Rodney Slater, former U.S. Secretary
                of
                Transportation.




·
            *Fraud
                and Special Investigative Unit (SIU) Services*provides investigative surveillance, anti-fraud solutions and business
                intelligence services to the insurance industry, law firms and
                multinational organizations. Services we provide include fraud reporting,
                anti-fraud training, insurance claims investigations, surveillance,
                background investigations, corporate investigations for liability,
                on-scene accident investigations and regulatory compliance. The Fraud
                and
                SIU Services unit is led by Halsey Fischer, an 18-year industry veteran
                and former President and Chief Executive Officer of Confidential
                Business
                Resources (CBR).




·
            *Security**Consulting
                and Investigations*delivers specialized security and investigative services to governments,
                corporations and individuals. Services we provide include forensic
                DNA
                analysis, facilities and IT security, litigation support, business
                intelligence, IT and accounting forensics, executive protection,
                independent monitoring and regulatory compliance. The Security Consulting
                and Investigations unit is led by Howard Safir, former New York City
                Police Commissioner.




·
            *International
                Strategies*provides multidisciplinary, international risk management and business
                solutions to foreign and domestic governments, corporations and
                individuals. Services we provide include crisis management, facilities
                security, investigations and litigation support, global business
                intelligence, corporate governance compliance, personal protection
                and
                emerging market services. The International Strategies unit is led
                by
                Thomas Ondeck, a founder of
                GlobalOptions.




21




Our
      Preparedness Services, Fraud and SIU Services, and Security Consulting and
      Investigations units represent our three financial reporting segments. Our
      International Strategies business unit, on the basis of its relative
      materiality, is included in our Fraud and SIU Services segment.





The
      following table represents the revenue contribution by each of these three
      reporting segments as a percentage of our total revenues:


For
                  the Three Months Ended
                March
                  31,Segment
              
              2008
              
              2007Preparedness
                  Services
              
              
              33.2
              %
              
              48.2
              %Fraud
                  and SIU Services
              
              
              29.0
              
              
              24.7Security
                  Consulting and Investigations
              
              
              37.8
              
              
              27.1Total
              
              
              100.0
              %
              
              100.0
              %




**Growth
      Strategy**




Our
      goal
      is to build a company with the risk mitigation industry’s most comprehensive
      solutions offering through a balance of organic growth and acquisitions. We
      intend to grow our business in the following manner:




*Leverage
      Our Relationships and Expertise* .
      Our
      highly trained professionals have deep domain expertise and exceptional
      credentials. Further, our advisory boards are comprised of thought leaders
      in
      their respective fields. Since our industry relies heavily on reputation and
      trust, we believe our senior management team’s and advisory boards’ experience
      and relationships will help us gain access to an increasing number of
      opportunities.




*Cross-sell
      and Integrate Businesses* .
      We
      intend to continue our aggressive efforts to integrate the operations of
      companies we have acquired and will acquire, providing the framework necessary
      for our senior managers to focus on identifying, prospecting and winning new
      opportunities across all business units. We believe our operational expertise
      and comprehensive service offerings enable us to cross-sell over industry
      verticals as well as leverage our existing client base, thereby enhancing our
      ability to execute on our organic growth initiatives.




*Selectively
      Acquire Companies* .
      We will
      continue to pursue complementary acquisitions of companies that enable us to
      increase our share of those markets in which we already operate and to enter
      new
      markets and service segments. We believe there are numerous opportunities to
      acquire quality companies because of the fragmented nature of our industry
      and
      that our past acquisitions track record will assist us in executing this
      strategy. We expect these acquisitions to be geographically diverse, provide
      synergies within units and allow for cross-selling opportunities across all
      of
      our business units. We structure our acquisitions to ensure that key selected
      individuals from the acquired company are retained and integrated after the
      transaction is consummated.




*Develop
      New Solutions* .
      We will
      continue to develop and seek solutions to meet unique client and dynamic market
      segment needs by expanding and bundling our product and service offerings.
      As we
      continue to grow both organically and through acquisitions, we expect to meet
      additional needs of our clients. Evidence of this strategy is our recently
      developed enterprise-oriented solution, GlobalTrak, and the DNA technology
      service we offer as a result of our acquisition of Bode.




*Expand
      Internationally* .
      We
      intend to pursue additional opportunities to offer our services outside the
      United States. We believe international markets provide a substantial
      opportunity for growth given the increasing risks that businesses and
      governments face around the world. We expect that by expanding our offerings
      to
      other countries we will also enhance our ability to compete in the United States
      for the business of global organizations.




22


**Corporate
      Developments**




***Amendment
      to the Line of Credit Agreement***





On
      April
      16, 2008, effective as of March 31, 2008, GlobalOptions, Inc. and The Bode
      Technology Group (“Bode”) entered into an amendment to the agreement with the
      financial institution that provides the line of credit, for which we provided
      an
      unconditional guarantee (“Loan Agreement”).





The
      Loan
      Agreement provides a working capital line of credit (the “Facility”) in an
      amount up to a maximum of $20,000, based upon eligible
      receivables.  The applicable interest rate with respect to the amount
      outstanding under the Facility consists of a base rate of the greater of 6.25%
      per annum or the Bank’s most recently announced “prime rate,” plus a range from
      0.75% to 1.50% per annum, which is based upon our liquidity (as defined in
      the
      Loan Agreement).  The Loan Agreement also contains certain affirmative and
      negative covenants and grants to the financial institution a security interest
      in all of our property and security interest in all of our rights, titles and
      interests in, to and under our intellectual property.





***Acquisition***





On
      April
      21, 2008, we acquired substantially all of the business and net assets of Omega
      Insurance Services, Inc. (d/b/a First Advantage Investigative Services), a
      Florida corporation (“FAIS”), related to its investigation and surveillance
      businesses.





The
      acquisition was made pursuant to an Asset Purchase Agreement (the “Purchase
      Agreement”), dated April 21, 2008 by and among FAIS, and First Advantage
      Corporation (“FAC”), a Delaware corporation and parent Company of FAIS and
      us.  The aggregate purchase price under the Purchase Agreement was (i)
      $2,163 in cash, (ii) an earnout payment (the “Earnout”) to be paid on the
      twelve-month anniversary of the transaction, (iii) the assumption of
      certain liabilities, and (iv) a $350,000 finder's fee paid to a third party
      in
      connection with this transaction.  In addition, in the Purchase
      Agreement, FAC and FAIS covenanted that they will not compete with or solicit
      the employees or customers of ours for a period of two years from the date
      of
      the transaction.  In a separate license agreement dated April 21, 2008
      by and between FAIS and us, we also obtained the non-exclusive perpetual right
      to use FAIS’s RiskminderTM software.




The
      amount of the Earnout will be based on the revenues during the twelve months
      following the transaction that are generated by the assets purchased under
      the
      Purchase Agreement and the revenues generated under an alliance agreement that
      are directly related to FAIS's previous investigation and surveillance business,
      and will range from $0 to $2,000.  FAC and us entered into this
      business alliance agreement dated April 21, 2008, wherein FAC and us agreed
      to
      further develop the alliance relationship between the two companies in the
      future.




***Registration
      of Additional Shares for Resale***




On
      February 14, 2008, we registered for resale a total of 1,223,565 shares of
      our
      common stock, 300,000 shares of which were required to be registered pursuant
      to
      the second amendment, dated May 11, 2007, to our asset purchase agreement with
      WSFM, LLC (f/k/a James Lee Witt Associates, LLC) and the remainder of which
      were
      held by our employees, directors, or their affiliates, including certain shares
      purchased in our Underwritten Public Offering.




23


**Results
      of Operations**




***Revenues***




Principally,
      we generate our revenues through providing risk mitigation solutions to our
      clients. For our Preparedness Services and Security Consulting and
      Investigations engagements, we typically invoice on a time and materials basis.
      For most of our Fraud and SIU Services engagements, we invoice on a fixed fee
      basis. We enter into contractual arrangements with most of our clients, on
      both
      an exclusive and non-exclusive basis. The duration of our engagements ranges
      from one week to two or more years. Over half of our revenues are generated
      from
      repeat client relationships that we have had for more than one year. In addition
      to our services, we also generate revenues from the sale of kits and supplies
      principally used by law enforcement to collect DNA materials. Generally, we
      must
      compete in the market for our clients based upon our reputation, service history
      and relationships. There are limited cases within all of our business segments
      that we are considered by our clients to be the sole source provider, based
      principally upon the experience of our personnel or, in the case of Bode and
      certain DNA investigations, our technical expertise. Our clients consist of
      government entities, corporations and high net-worth and high-profile
      individuals. We provide our services domestically through our own employees
      and
      through a network of approved subcontractors to achieve scale, geographic
      coverage or a specialized expertise. Currently, a small portion of our revenues
      is generated by services provided outside the United States.




***Gross
      Profit*** ****




Our
      gross
      profit represents our revenues less the costs of revenues incurred to provide
      services to our clients. The most significant components of our costs of
      revenues are the costs of our direct labor, our third-party consultants and
      our
      reimbursable costs, which principally consist of travel expenses. For the most
      part, our costs of revenues are variable and based upon the type of services
      performed or the amount of revenues generated. Where possible, we structure
      our
      personnel arrangements to compensate our employees and our consultants on the
      basis of work performed. This enables us to maintain a variable cost structure
      and relatively consistent gross margins in our business segments from year
      to
      year. The variability in our gross margins results primarily from changes in
      our
      client mix. For our DNA analysis business, we incur fixed costs for our
      equipment and dedicated personnel.




***Operating
      Expense*** **s**




Our
      selling and marketing expenses primarily include salaries and commissions,
      as
      well as travel and other expenses, incurred by our employees who are involved
      in
      selling and promoting our services. The accrued earnout expenses related to
      the
      acquisition of JLWA were also reflected in our selling and marketing expenses
      for the three months ended March 31, 2007. Our general and administrative
      expenses consist primarily of salaries, bonuses and stock-based compensation
      for
      our employees not performing work directly for our clients. Also included in
      general and administrative expenses are corporate support expenses such as
      legal
      and professional fees, investor relations, human resources, facilities,
      telecommunication support services, information technology, stock option
      expenses and salaries for members of our senior management
      team.




24


**Results
      of Operations**




The
      following is a summary of our operating results as a percentage of our total
      consolidated revenues for the periods indicated:


For the Three
                Months Ended
                March 31,2008
              
              2007Revenues
              
              
              100
              %
              
              100
              %Cost
                  of revenues
              
              
              58
              
              
              54Gross
                  profit
              
              
              42
              
              
              46Operating
                  expenses:Selling
                  and marketing
              
              
              11
              
              
              11General
                  and administrative
              
              
              51
              
              
              48Total
                  operating expenses
              
              
              62
              
              
              59Loss
                  from operations
              
              
              (20
              )
              
              (13
              )Other
                  income (expense), net
              
              
              -
              
              
              (1
              )Net
                  loss
              
              
              (20
              )%
              
              (12
              )%





**GlobalOptions
      Group Three Months Ended March 31, 2008 Compared to the Three Months Ended
      March
      31, 2007**




**Revenues**




We
      had
      overall revenues of $21,499 for the three months ended March 31, 2008, as
      compared to revenues of $21,388 for the three months ended March 31, 2007,
      for
      an overall increase of $111 or 1%.





Preparedness
      Services revenues were $7,142 for the three months ended March 31, 2008, as
      compared to $10,315 for the three months ended March 31, 2007. The decrease
      of
      $3,173 or 31% was primarily attributable to a decrease in revenue from the
      State
      of Louisiana. In the aftermath of Hurricane Katrina, JLWA was retained by the
      State of Louisiana to provide advice on the state’s overall response and
      recovery efforts. Subsequently, JLWA was retained to establish and manage the
      State’s relief program related to Hurricanes Katrina and Rita. The State of
      Louisiana represented $5,330 for the three months ended March 31, 2008, as
      compared to $9,061 of revenues for the three months ended March 31, 2007. The
      reduction in revenue in 2008 of $3,731 or 41% for the State of Louisiana was
      due
      to the scope of our work being narrowed and a price reduction that we provided
      to Louisiana in order to competitively position ourselves for the 2007 contract
      renewal.




25




Fraud
      and
      SIU Services revenues were $6,240 for the three months ended March 31, 2008,
      as
      compared to $5,291 for the three months ended March 31, 2007. The increase
      of
      $949 or 18% was primarily attributable to the expansion of our client base
      through the acquisition of Facticon on February 28, 2007, revenues from our
      purchased customer list and newly acquired customer contracts.




Security
      Consulting and Investigations revenues were $8,117 for the three months ended
      March 31, 2008, as compared to $5,782 to the three months ended March 31, 2007.
      The increase of $2,335 or 40% was primarily attributable to the client base
      that
      we acquired in connection with the acquisition of Bode at the end of February
      2007 for data banking and DNA investigations.




**Gross
      Profit**




Our
      consolidated gross profit for the three months ended March 31, 2008 and 2007
      was
      $9,133 and $9,612, reflecting gross profit margins of 42% and 45%, respectively.
      The 3% decrease in profit margin was primarily attributable to the effect of
      the
      acquisition of Bode, whose operations carry a lower gross profit
      percentage.




Preparedness
      Services gross profit was $3,251 or 46% of this segment’s revenues for the three
      months ended March 31, 2008, as compared to $4,625 or 45% of this segment’s
      revenues for the three months ended March 31, 2007. The increase in gross profit
      percentage was attributable to decreased labor costs associated with the
      Louisiana contract. Fraud and SIU Services gross profit was $2,748 or 44% of
      this segment’s revenues for the three months ended March 31, 2008, as compared
      to $2,387 or 45% of this segment’s revenues for the three months ended March 31,
      2007. Security Consulting and Investigations gross profit was $3,134 or 39%
      of
      this segment’s revenues for the three months ended March 31, 2008, as compared
      to $2,600 or 45% of this segment’s revenues for the three months ended March 31,
      2007. Of this decrease in gross profit percentage within this segment, 5% of
      the
      6% profit margin decrease was attributable to the effect of the acquisition
      of
      Bode, whose operations carry a lower gross percentage gross profit.




**Operating
      Expenses**




Selling
      and marketing expenses were $2,502 or 12% of revenues for the three months
      ended
      March 31, 2008, as compared to $2,391 or 11% of revenues for the three months
      ended March 31, 2007. The increase of $111 or 5% is primarily attributable
      to
      the acquisition of Bode and Facticon on February 28, 2007 as well as an
      increased emphasis on selling and marketing activities. General and
      administrative expenses were $10,996 or 51% of revenues for the three months
      ended March 31, 2008, as compared to $10,037 or 47% of revenues for the three
      months ended March 31, 2007. The increase of $959 or 10% is attributable to
      increased personnel and other increased expenses related to the acquisitions
      of
      Facticon and Bode, as well as an increase in professional fees incurred in
      order
      to fulfill our responsibilities as a public company.




**Liquidity
      and Capital Resources**




We
      had a
      cash and cash equivalent balance of $3,644 as of the three months ended March
      31, 2008.




Cash
      provided by (used in) operating activities was approximately $142 and ($3,219)
      for the three months ended March 31, 2008 and 2007, respectively. For the three
      months ended March 31, 2008 and 2007, our net losses were $4,373 and $2,504,
      respectively. For the three months ended March 31, 2008 and 2007, the non-cash
      charges included amounts for depreciation and amortization of $1,014 and $873,
      charges for stock-based compensation of $1,092 and $953, and bad debt (benefit)
      provision of ($115) and $480, respectively. In addition, for the three months
      ended March 31, 2008 and 2007, cash was impacted by working capital requirements
      with funds provided by (used in) operation of $3,928 and ($7,025) for accounts
      receivable, funds provided by (used in) operations of ($1,133) and $1,996 for
      accounts payable, and increases in amounts due for the JLWA earnout of $0 and
      $1,220, respectively.




Cash
      used
      in investing activities for the three months ended March 31, 2008 was $457,
      which $453 represented purchases of property and equipment. Cash used in
      investing activities for the three months ended March 31, 2007 was $14,532,
      of
      which $12,216, $1,300, and $750 related to our acquisitions of Bode, Facticon
      and On Line Consulting, respectively.




Financing
      activities used net funds of $467 and $154 for the three months ended March
      31,
      2008 and 2007, respectively. Cash used for the three months ended March 31,
      2008
      is primarily due to the repayment of notes payable for acquisitions of $450.
      The
      net cash used for the three months ended March 31, 2007 is primarily due to
      repayment of notes payable for acquisitions of $488 less collection of accounts
      receivable due to seller of $286.




26




On
      April
      16, 2008, effective as of March 31, 2008, GlobalOptions, Inc. and Bode entered
      into the Loan Agreement for which the Company provided an unconditional
      guarantee.





The
      Loan
      Agreement provides a Facility in an amount up to a maximum of $20,000, based
      upon eligible receivables.  The applicable interest rate with respect
      to the amount outstanding under the Facility consists of a base rate of the
      greater of 6.25% per annum or the Bank’s most recently announced “prime rate,”
plus a range from 0.75% to 1.50% per annum, which is based upon our liquidity
      (as defined in the Loan Agreement).  The Loan Agreement also contains
      certain affirmative and negative covenants and grants to the financial
      institution a security interest in all of our property and security interest
      in
      all of our rights, titles and interests in, to and under our intellectual
      property.




We
      have
      historically met our operating cash needs by using borrowings under our line
      of
      credit arrangement and through private placements of equity and debt securities
      and an underwritten public offering. At March 31, 2008, we had working capital
      of $16,999. We currently believe the cash on hand, operating improvements that
      we believe will result in cash flows from operations, and our available
      borrowings of $12,514 at March 31, 2008 under our line of credit facility will
      be sufficient to finance our operations through March 31, 2009.




**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.





**Critical
      Accounting Policies**




Our
      significant accounting policies, including the assumptions and judgments
      underlying them, are more fully described in our “Notes to Consolidated
      Financial Statements” included in the Annual Report on Form 10-K for the year
      ended December 31, 2007. 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. We have identified certain of our 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. Our critical accounting
      policies include the following:




***Revenue
      Recognition and Related Costs***




For
      investigation, crisis management and non-DNA related security, revenue is
      recognized on a time and materials or fixed price arrangement and 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 is 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
      DNA
      related revenues, revenue is recognized when it is realized or realizable and
      earned. The Company considers revenue realized or realizable and earned when
      it
      has persuasive evidence that an agreement exists, prices are fixed or
      determinable, services and products are provided to the client, and
      collectibility is reasonably assured. The Company reduces revenue for estimated
      discounts and other allowances.




Revenues
      earned on DNA related services are derived from the following sources:
      (1) forensic DNA analysis; (2) research and development projects; and
      (3) sales of DNA collection products. The Company recognizes revenues from
      forensic DNA analysis at the time tests are completed and the results are
      reported to the client. Revenues from research and development projects are
      recognized as the related research is completed and when the Company has
      satisfied specific obligations under the terms of the respective agreements.
      Revenues from the sales of DNA collection products are recognized upon delivery
      of the products to the client.




Forensic
      DNA analysis is billed on a per sample fixed fee arrangement. Research and
      development projects are billed on a cost plus fixed fee
      arrangement.




27




Costs
      incurred in the performance of forensic DNA analysis are recorded as inventories
      and charged to cost of revenues upon the completion of the project, which
      generally ranges from one to three months. Costs related to research and
      development projects are expensed as incurred and costs related to DNA
      collection products are maintained as inventory and charged to operations when
      the products are delivered.




***Intangible
      Assets, Goodwill and Impairment***




In
      accordance with the requirements of Statement of Financial Accounting Standards
      No. 141 (SFAS No. 141), “Business Combinations,” we recognize
      certain intangible assets acquired in acquisitions, primarily goodwill, trade
      names, covenants not to compete and client relationships. In accordance with
      the
      provisions of SFAS No. 142, “Goodwill and Other Intangible Assets, (SFAS
      142)” on a regular basis, we perform 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.




***Allowance
      for Doubtful Accounts***




The
      number of clients that comprise our client base, along with the different
      industries, governmental entities and geographic regions, including foreign
      countries, in which our clients operate, limits concentrations of credit risk
      with respect to accounts receivable. We do not generally require collateral
      or
      other security to support client receivables, although we do require retainers,
      up-front deposits or irrevocable letters of credit in certain situations. We
      have established an allowance for doubtful accounts based upon facts surrounding
      the credit risk of specific clients and past collections history. Credit losses
      have been within management’s expectations.




***Stock-Based
      Compensation***




The
      Company has adopted the fair value recognition provisions of SFAS 123R. 
Stock-based compensation expense for all share-based payment awards granted
      after December 31, 2005 is based on the grant-date fair value estimated in
      accordance with the provisions of SFAS 123R. The Company recognizes these
      compensation costs over the requisite service period of the award, which is
      generally the vesting term of the options associated with the underlying
      employment agreement, where applicable.




SFAS No. 123(R)
      also requires forfeitures to be estimated at the time of grant and revised,
      if
      necessary, in subsequent periods if actual forfeitures differ from those
      estimates. Forfeitures were estimated based on historical experience. Prior
      to
      the adoption of SFAS No. 123(R), the Company accounted for forfeitures
      as they occurred.




We
      account for equity instruments issued to non-employees in accordance with the
      provisions of Statement of Financial Accounting Standards No. 123R
“Share-Based Payment” (SFAS 123R) and the Emerging Issues Task Force (EITF)
      Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to
      Other Than Employees for Acquiring, or In Conjunction with Selling, Goods or
      Services” (EITF 96-18) which require that such equity instruments be recorded at
      their fair value on the measurement date, which is typically the date the
      services are performed. Stock-based compensation for non-employees is accounted
      for under EITF 96-18 and is reflected within general and administrative
      expenses.




**Recently
      Implemented Accounting Pronouncements**





Effective
      January 1, 2008, we adopted Statement of Financial Accounting Standards No.
      159
      ("SFAS 159"), “The Fair Value Option for Financial Assets and Financial
      Liabilities.” SFAS 159 permits entities to choose to measure many financial
      instruments and certain other items at fair value. We did not elect the fair
      value reporting option for any assets and liabilities not previously recorded
      at
      fair value.





28




Effective
      January 1, 2008, we adopted the provisions of Statement of Financial Accounting
      Standards No. 157 ("SFAS 157"), “Fair Value Measurements” for financial assets
      and liabilities, as well as any other assets and liabilities that are carried
      at
      fair value on a recurring basis in financial statements. SFAS 157 defines fair
      value, establishes a framework for measuring fair value and expands disclosures
      about fair value measurements. SFAS 157 applies under other accounting
      pronouncements that require or permit fair value measurements, the Financial
      Accounting Standards Board ("FASB") having previously concluded in those
      accounting pronouncements that fair value is the relevant measurement attribute.
      Accordingly, SFAS 157 does not require any new fair value measurements. We
      applied the provisions of FSP FAS 157-2, "Effective Date of FASB Statement
      157,"
      which defers the provisions of SFAS 157 for nonfinancial assets and
      liabilities  to the first fiscal period beginning after November 15,
      2008.  The deferred nonfinancial assets and liabilities include items such
      as goodwill. We are required to adopt SFAS 157 for nonfinancial assets and
      liabilities in the first quarter of fiscal 2009 and are still evaluating
      the impact on our condensed consolidated financial statements.





**Recent
      Accounting Pronouncements**





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements – An Amendment of ARB No. 51” (SFAS
      160). SFAS 160 establishes accounting and reporting standards for the
      noncontrolling interest in a subsidiary (previously referred to as minority
      interests). SFAS 160 also requires that a retained noncontrolling interest
      upon
      the deconsolidation of a subsidiary be initially measured at its fair value.
      Upon adoption of SFAS 160, the Company will be required to report its
      noncontrolling interests as a separate component of stockholders’ equity. The
      Company will also be required to present net income allocable to the
      noncontrolling interests and net income attributable to the stockholders of
      the
      Company separately in its statements of income. Currently, minority interests
      are reported as a liability or temporary equity in the Company’s balance sheets
      and the related income attributable to the minority interests is reflected
      as an
      expense in arriving at net income (loss). SFAS 160 is effective for fiscal
      years, and interim periods within those fiscal years, beginning on or after
      December 15, 2008. SFAS 160 requires retroactive adoption of the presentation
      and disclosure requirements for existing minority interests. All other
      requirements of SFAS 160 shall be applied prospectively. The Company does not
      expect SFAS 160 to have a material impact on its consolidated financial
      statements.




In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 141R, “Business
      Combinations” (SFAS 141R), which replaces SFAS No. 141, “Business Combinations.”
SFAS 141R establishes principles and requirements for determining how an
      enterprise recognizes and measures the fair value of certain assets and
      liabilities acquired in a business combination, including noncontrolling
      interests, contingent consideration, and certain acquired contingencies. SFAS
      141R also requires acquisition-related transaction expenses and restructuring
      costs be expensed as incurred rather than capitalized as a component of the
      business combination. SFAS 141R will be applicable prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008. SFAS
      141R
      would have an impact on accounting for any businesses acquired after the
      effective date of this pronouncement.





In
      March
      2008, the FASB issued Statement of Financial Accounting Standards No. 161,
      “Disclosures about Derivative Instruments and Hedging Activities – an
      amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 changes the
      disclosure requirements for derivative instruments and hedging activities.
      Entities are required to provide enhanced disclosures about (a) how and why
      an
      entity uses derivative instruments, (b) how derivative instruments and related
      hedged items are accounted for under SFAS No. 133 and its related
      interpretations, and (c) how derivative instruments and related hedged items
      affect an entity’s financial position, financial performance and cash flow. The
      guidance in SFAS 161 is effective for financial statements issued for fiscal
      years and interim periods beginning after November 15, 2008, with early
      application encouraged. This Statement encourages, but does not require,
      comparative disclosures for earlier periods at initial adoption. At this time
      management is evaluating the implications of SFAS 161 and its impact on the
      financial statements has not yet been determined.




**Item
      3** . **Quantitative
      and Qualitative Disclosures About Market Risk.**




Not
      applicable.




29


**Item
      4T. Controls and Procedures.**





*Disclosure
      Controls and Procedures*





Disclosure
      controls and procedures (as defined in Rule 13(a) -15(e)) are controls and
      other
      procedures that are designed to ensure that information required to be disclosed
      by a public company in the reports that it files or submits under the Exchange
      Act is recorded, processed, summarized and reported within the time periods
      specified in the SEC’s rules and forms. Disclosure controls and procedures
      include, without limitation, controls and procedures designed to ensure that
      information required to be disclosed by a public company in the reports that
      it
      files or submits under the Exchange Act is accumulated and communicated to
      the
      company’s management, including its principal executive and principal financial
      officers, or persons performing similar functions, as appropriate to allow
      timely decisions regarding required disclosure. Disclosure controls and
      procedures include many aspects of internal control over financial reporting.





In
      connection with the preparation of this Quarterly Report on Form 10-Q for the
      three months ended March 31, 2008, management, with the participation of our
      Chief Executive Officer and Chief Financial Officer, has evaluated the
      effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15
      under the Exchange Act.





In
      their
      evaluation, our Chief Executive Officer and Chief Financial Officer have
      identified the following matters that would constitute a material weakness
      (as
      that term is defined under the Public Company Accounting Oversight Board
      Auditing Standard No. 5): our financial closing process, a lack of segregation
      of financial responsibilities and the need for additional qualified financial
      accounting personnel.




To
      address these issues, we have taken the following remediation measures during
      the fiscal period ended March 31, 2008:




·
            effective
                in January 2008, we created the new position of Senior Vice President
                of
                Finance and Chief Accounting Officer, who reports to the Chief Financial
                Officer;.





·
            in
                connection with the filing of this Form 10-Q, we are utilizing a more
                formal disclosure process for the Board and management so that there
                is
                more detailed chronology and documentation of the discussions and
                analyses
                that take place along with a checklist of items we routinely consider,
                such as variances between financial results and forecasts, changes
                in
                relationships with key vendors, customers, lenders etc., company-wide
                initiatives, transactions not previously disclosed in prior filings,
                related party issues, new/emerging risks, credit agreement covenant
                adherence, tax, accounting, internal controls, governmental or other
                investigations, Management Discussion and Analysis discussion, and
                other
                matters. In addition, sub-certifications have been adopted to ensure
                accountability by the controllers and executives of each of our business
                units;





·
            management
                has continued to retain an independent third party consulting firm
                to
                assist with our preparation, documentation and testing of our compliance
                efforts with Section 404 of the Sarbanes Oxley Act.  We performed
                testing to sustain compliance that both expanded the depth of our
                coverage
                in complex areas (e.g. intangibles, equity, revenue and financial
                reporting) and breadth by incorporating acquisitions such as Bode,
                which
                were exempted from the disclosure controls and procedures analysis
                in
                2007.





As
      a
      result of the material weaknesses identified above, our Chief Executive Officer
      and Chief Financial Officer have concluded that the design and operation of
      our
      disclosure controls and procedures are not effective as of March 31, 2008.
      Management believes, however, that as a result of the remediation measures
      described above, we have made significant improvement over prior periods and
      believe we will continue to improve and refine our internal controls processes
      over the next fiscal period.




30


**PART
      II**




**Other
      Information**




**Item
      1. Legal Proceedings**




(Amounts
      contained in this Item 1 are in thousands, except for share
      amounts).




From
      time
      to time, we are involved in litigation arising in the ordinary course of
      business. We do not believe that we are involved in any litigation that is
      likely, individually or in the aggregate, to have a material adverse effect
      on
      our consolidated financial condition, results of operations or cash flows.




*Peter
      Anchondo v. Facticon Inc. and GlobalOptions Group, Inc.*




The
      litigation against Facticon was originally filed by the Plaintiff prior to
      our
      acquisition of assets of Facticon (February 28, 2007) in the U.S. District
      Court
      for the Central District of California, wherein the Plaintiff, in a class
      action, is alleging that Facticon failed to pay overtime wages. Subsequent
      to
      the acquisition, we were added as a defendant in said case, under the successor
      liability theory.  Under the terms of an escrow agreement, as amended,
      entered into by and between us and Facticon,  the escrow provides that
      85,700 shares of our common stock and $100 in cash funds shall be held to
      satisfy this and other pre-acquisition obligations of Facticon. We have put
      Facticon on notice, and the stockholders of Facticon agree, we will not
      distribute any funds or stock as provided under the asset purchase agreement
      until this matter is resolved, and if necessary shall use such stock and cash
      to
      resolve such matter. A Motion for Summary Judgment has been filed for the
      Court to determine whether we are liable under this as a successor liable
      company. On March 7, 2008, the Court issued a ruling denying our Motion for
      Summary Judgment and issued a ruling granting a Summary Judgment in favor for
      the Plaintiffs ruling that we were in fact a successor party to the Plaintiffs
      actions, and this ruling by the Court is in opposition of the Court’s original
      ruling dated March 3, 2008 (the “Preliminary Ruling”), wherein it granted our
      Motion for Summary Judgment. We intend to file a Motion for Reconsideration.
      No
      assurance can be given that the Court will reverse its final ruling. We have
      established a reserve for such case net of amounts expected to be received
      through the liquidation of Facticon assets held in escrow, in the amount of
      $675
      to offset the risk of damages for this matter. Notwithstanding the legal
      reserve, we will vigorously defend this matter.




**Item
      1A. Risk Factors.**




None.





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds.**





In
      the
      first quarter of 2008, the Company withheld shares to pay taxes due upon the
      vesting of certain employees’ restricted stock. The following table provides
      information about such withholding during the quarter ended March 31,
      2008:


Period
              
              (a) Total
                Number of
                Shares (or
                Units)
                Withheld
              
              (b)
                Average Price
                Paid per Share
                (or Unit)
              
              (c) Maximum Number (or
                Approximate Dollar Value)
                of Shares (or Units) that May
                Yet Be Withheld Under the
                Plans or Programs1/1/08-1/31/08
              
              
              3,863
              (1)
              $
              4.50
              (2)
              
              –
              (3)2/1/08-2/28/08
              
              
              -
              
              
              -
              
              
              -3/1/08-3/31/08
              
              
              -
              
              
              -
              
              
              -Total
              
              
              3,863
              (1)
              $
              4.50
              (2)
              
              –
              (3)




(1)
            The
                Compensation Committee of the Company’s Board of Directors determined
                that, as of January 1, 2008, 6,250 shares of common stock held by
                Harvey
                W. Schiller, the Company’s Chairman and Chief Executive Officer, and 4,687
                shares of common stock held by Jeffrey O. Nyweide, the Company’s Chief
                Financial Officer, were no longer subject to forfeiture under the
                Company’s 2006 Long-Term Incentive Plan and that 2,278 and 1,585 of such
                shares of common stock, should be withheld by the Company for the
                payment
                of taxes by Messrs. Schiller and Nyweide,
                respectively.




31




(2)
            The
                closing price of the Company’s common stock on the last business day prior
                to their vesting, December 31,
                2007.




(3)
            The
                Company does not have a plan or program with respect to withholding.
                With
                respect to shares of restricted common stock held by Messrs. Schiller
                and
                Nyweide, each of them may choose upon the vesting of such shares
                to have
                the Company withhold a portion of the shares for the payment of
                taxes.




**Item
      3. Default Upon Senior Securities.**




None.




**Item
      4. Submission of Matters to a Vote of Security Holders.**




None.




**Item
      5. Other Information.**




There
      are
      no items required to be disclosed on Current Report on Form 10-Q during the
      three months ended March 31, 2008 that were not so reported.




32


**Item
      6. Exhibits**




The
      exhibits listed in the following Exhibit Index are filed as part of this
      Report.




**EXHIBIT
      INDEX**





**Exhibit**
              **No.**
            
            **Description**31.1
            
            Certification
                of Principal Executive Officer pursuant to Section 302 of The
                Sarbanes-Oxley Act of200231.2
            
            Certification
                of Principal Financial Officer pursuant to Section 302 of The
                Sarbanes-Oxley Act of200232.1
            
            Certification
                of Principal Executive Officer pursuant to Section 906 of The
                Sarbanes-Oxley Act of200232.2
            
            Certification
                of Principal Financial Officer pursuant to Section 906 of The
                Sarbanes-Oxley Act of 2002




33




**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.


GLOBALOPTIONS
                  GROUP, INC.Dated:
                    May 14, 2008
              By:
              /s/
                  Harvey W. SchillerHarvey
                  W. Schiller
                Chairman,
                  Chief Executive Officer
                and
                  Director
                (Principal
                  Executive Officer)


Dated:
                    May 14, 2008
              By:
              /s/
                  Jeffrey O. NyweideJeffrey
                  O. Nyweide
                Executive
                  Vice President-Corporate Development,
                Chief
                  Financial Officer, Secretary
                (Principal
                  Financial Officer and PrincipalAccounting
                  Officer)




34