UNITED
          STATES
 SECURITIES
          AND EXCHANGE COMMISSION
 WASHINGTON,
          D.C. 20549
  FORM
          10-QSB
  (Mark
          One)
 ý
                QUARTERLY
                    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE OF
                    1934
  For
          the
          quarterly period ended March 31, 2006
   ̈
                TRANSITION
                    REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                    ACT
  For
          the
          transition period from __________________ to __________________
  Commission
          file number: 333-117495
  **GLOBALOPTIONS
                    GROUP, INC**(Name
                    of Small Business Issuer in Its Charter)Nevada
                
                73-1703260(State
                    or Other Jurisdiction of Incorporation or Organization)
                
                (I.R.S.
                    Employer Identification No.)75
                    Rockefeller Plaza, 27thFloor
                  New
                    York, New York
                
                10019(Address
                    of Principal Executive Offices)
                
                (Zip
                    Code)
 
 Issuer’s
          telephone number, including area code: (212) 445-6262
  Creative
          Solutions with Art, Inc., 32C Hadley Village Road, South Hadley, MA
          01075
 (Former
          name and former address, if changed since last report)
  Check
          whether the issuer (1) filed all reports required to be filed by Section
          13 or
          15(d) of the Exchange Act during the past 12 months (or for such shorter
          period
          that the registrant was required to file such reports), and (2) has been
          subject
          to such filing requirements for the past 90
          days.             Yes
ý
          No  ̈
  Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of the Exchange Act (Check one):     Yes  ̈ No
          ý
 
 As
          of May
          19, 2006, there were 15,310,254 shares of the issuer’s common equity
          outstanding.
 
 Transitional
          Small Business Disclosure Format (Check one):      Yes
 ̈ No
          ý









**GLOBALOPTIONS
        GROUP, Inc. AND SUBSIDIARIES**
 **Form
        10-QSB**
 **March
        31, 2006**
 **Index
        to Unaudited Condensed Consolidated Financial Statements**
 
 **PART
                    I - FINANCIAL INFORMATION****Page(s)**ITEM
                    1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited)Condensed
                    Consolidated Balance Sheet as of March 31, 2006
                P.
                    1Condensed
                    Consolidated Statements of Operations for the Three Months Ended
                    March 31,
                    2006 and 2005
                P.
                    2Condensed
                    Consolidated Statements of Stockholders' Equity
                P.
                    3Condensed
                    Consolidated Statements of Cash Flows for the Three Months Ended
                    March 31,
                    2006 and 2005
                P.
                    4Notes
                    to Condensed Consolidated Financial Statements
                P.
                    6ITEM
                    2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                    OPERATION
                P.
                    25ITEM
                    3. CONTROLS AND PROCEDURES
                P.
                    36**PART
                    II - OTHER INFORMATION**ITEM
                    1. LEGAL PROCEEDINGS
                P.
                    37ITEM
                    2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                    PROCEEDS
                P.
                    37ITEM
                    3. DEFAULTS UPON SENIOR SECURITIES
                P.
                    37ITEM
                    4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                P.
                    37ITEM
                    5. OTHER INFORMATION
                P.
                    37ITEM
                    6. EXHIBITS
                P.
                    37SIGNATURES
                P.
                    38EXHIBITS
                    31.1 and 31.2EXHIBITS
                    32.1 and 32.2




Part
      I
      Financial Information


Item
      1.
      FINANCIAL STATEMENTS




GLOBALOPTIONS
        GROUP, INC. AND
        SUBSIDIARIES  **Condensed
          Consolidated Balance Sheet**
 **March
          31, 2006**
 **(Unaudited)**
  **ASSETS**
 Current
                  assets:Cash
              
              $
              3,236,920Accounts
                  receivable, net of allowance for doubtfulaccounts
                  of $341,000
              
              
              11,346,775Prepaid
                  expenses and other current assets
              
              
              96,509Total
                  current assets
              
              
              14,680,204Property
                  and equipment, net
              
              
              383,787Intangible
                  assets, net
              
              
              6,054,787Deferred
                  financing costs, net
              
              
              334,961Restricted
                  cash escrow for the purchase of Safir
              
              
              2,000,000Goodwill
              
              
              5,207,804Security
                  deposits and other assets
              
              
              232,380Total
                  assets
              
              $
              28,893,923**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:Line
                  of credit
              
              $
              822,087Notes
                  payable
              
              
              12,610,000Amounts
                  due to seller for JLWA acquisition
              
              
              2,725,124Due
                  to former stockholders of CBR
              
              
              477,851Due
                  to former members of JLWA for earnout
              
              
              496,040Note
                  payable for CBR acquistion
              
              
              904,229Accounts
                  payable
              
              
              3,619,333Deferred
                  revenues
              
              
              115,424Accrued
                  compensation and related benefits
              
              
              830,265Other
                  current liabilities
              
              
              389,357Total
                  liabilities
              
              
              22,989,710CommitmentsStockholders'
                  equity:Preferred
                  stock, $0.001 par value,14,984,000
                  shares authorized, no sharesissued
                  or outstanding
              
              
              -Series
                  A convertible preferred stock, voting, $0.001 parvalue,
                  16,000 shares authorized, 7,750 sharesissued
                  and outstanding, liquidation preference $7,750,000
              
              
              8Common
                  stock, $.001 par value; 85,000,000 shares
                  authroized;15,310,254
                  shares issued and outstanding
              
              
              15,310Deferred
                  consulting fees
              
              
              (776,097
              )Additional
                  paid-in capital
              
              
              14,712,736Accumulated
                  deficit
              
              
              (8,047,744
              )Total
                  stockholders' equity
              
              
              5,904,213Total
                  liabilities and stockholders' equity
              
              $
              28,893,923








See notes to these condensed consolidated financial statements.


1


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(Unaudited)**


For
                  the Three Months EndedMarch 31,2006
              
              2005Revenues
              
              $
              6,234,825
              
              $
              1,056,009Cost
                  of revenues
              
              
              3,344,155
              
              
              493,656Gross
                  profit
              
              
              2,890,670
              
              
              562,353Operating
                  expenses:Selling
                  and marketing, includingcompensatory
                  element of stockissuances
                  of $ - and $23,000, in2006
                  and 2005, respectively
              
              
              814,431
              
              
              141,500General
                  and administrative, includingcompensatory
                  element of stockissuances
                  of $350,319 and $ - in 2006and
                  2005, respectively
              
              
              3,127,034
              
              
              804,370Total
                  operating expenses
              
              
              3,941,465
              
              
              945,870Loss
                  from operations
              
              
              (1,050,795
              )
              
              (383,517
              )Other
                  income (expense):Interest
                  income
              
              
              -
              
              
              875Interest
                  expense
              
              
              (181,749
              )
              
              (38,711
              )Other
                  expense, net
              
              
              (181,749
              )
              
              (37,836
              )Net
                  loss
              
              $
              (1,232,544
              )
              $
              (421,353
              )Basic
                    and diluted net loss per share
              
              $
              (0.08
              )
              $
              (0.05
              )Weighted
                  average number of common shares outstanding -basic
                  and diluted
              
              
              14,681,839
              
              
              9,331,326






See
        notes
        to these condensed consolidated financial statements.


2




**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Condensed
        Consolidated Statements of Stockholders' Equity**
 **(Unaudited)**
    **Common
                  Stock**
              
              
              **Series
                  A convertible**
                  **Preferred
                    Stock**
              
              
              **Additional
                  Paid-in**
              
              
              **DeferredConsulting**
              
              
              **Accumulated**
              
              
              **Total
                  Stockholders'****Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              ******Capital**
              
              
              **Fees**
              
              
              **Deficit**
              
              
              **Equity**Balance,
                  January 1, 2006
              
              
              14,490,582
              
              $
              14,490
              
              
              7,750
              
              $
              8
              
              $
              12,435,321
              
              $
              (848,181
              )
              $
              (6,815,200
              )
              $
              4,786,438Amortization
                  of deferredconsulting
                  fees
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              72,084
              
              
              -
              
              
              72,084Issuance
                  of common stock inconnection
                  with the purchaseof
                  JLWA
              
              
              819,672
              
              
              820
              
              
              -
              
              
              -
              
              
              1,999,180
              
              
              -
              
              
              -
              
              
              2,000,000Amortization
                  of stock
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              .options
                  costs
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              278,235
              
              
              -
              
              
              -
              
              
              278,235Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,232,544
              )
              
              (1,232,544
              )Balance,
                  March 31, 2006
              
              
              15,310,254
              
              $
              15,310
              
              
              7,750
              
              $
              8
              
              $
              14,712,736
              
              $
              (776,097
              )
              $
              (8,047,744
              )
              $
              5,904,213




See
      notes
      to these condensed consolidated financial statements.


3


**GLOBALOPTIONS
          GROUP, INC. AND SUBSIDIARIES**
 **Condensed
          Consolidated Statements of Cash Flows**
 **(Unaudited)**
  For
                  the Three Months EndedMarch
                  312006
              
              2005Cash
                  flows from operating activities:Net
                  loss
              
              $
              (1,232,544
              )
              $
              (421,353
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Provision
                  for bad debts
              
              
              20,795
              
              
              112,192Depreciation
                  and amortization
              
              
              261,439
              
              
              10,583Stock
                  based compensation
              
              
              350,319
              
              
              23,000Changes
                  in operating assets:Accounts
                  receivable
              
              
              (2,527,258
              )
              
              (319,384
              )Prepaid
                  expenses and other current assets
              
              
              (23,893
              )
              
              -Security
                  deposits and other assets
              
              
              (187,932
              )
              
              -Changes
                  in operating liabilites:Accounts
                  payable
              
              
              350,435
              
              
              (17,976
              )Accrued
                  compensation and related benefits
              
              
              193,028
              
              
              2,502Due
                  to former stockholder of CBR
              
              
              (117,469
              )Due
                  to former members of JLWA for earnout
              
              
              496,040Other
                  current liabilites
              
              
              159,959
              
              
              (47,419
              )Total
                  adjustments
              
              
              (1,024,537
              )
              
              (236,502
              )Net
                  cash used in operating activities
              
              
              (2,257,081
              )
              
              (657,855
              )Cash
                  flows from investing activities:Purchases
                  of property and equipment
              
              
              (9,999
              )
              
              -Purchase
                  of client list
              
              
              (40,000
              )
              
              -Restricted
                  cash escrow for the purchase of Safir
              
              
              (2,000,000
              )
              
              -Acquisition
                  of JLWA
              
              
              (5,457,296
              )
              
              -Net
                  cash used in investing activities
              
              
              (7,507,295
              )
              
              -
    See
          notes
          to these condensed consolidated financial statements.


4


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Consolidated
        Statements of Cash Flows, continued**
 **(Unaudited)**
  For
                  the Three Months EndedMarch
                  31,2006
              
              2005Cash
                  flows from financing activities:Net
                  proceeds from line of credit
              
              $
              278,634
              
              $
              127,416Proceeds
                  from notes payable
              
              
              12,500,000
              
              
              -Deferred
                  financing costs
              
              
              (305,940
              )
              
              -Net
                  cash provided by financing activities
              
              
              12,472,694
              
              
              127,416Net
                  increase (decrease) in cash
              
              
              2,708,318
              
              
              (530,439
              )Cash
                  - beginning
              
              
              528,602
              
              
              533,018Cash
                  - ending
              
              $
              3,236,920
              
              $
              2,579Supplemental
                  disclosure of cash flow information:Cash
                  paid during the period for interest
              
              $
              56,299
              
              $
              17,186Supplemental
                  discolsures of non-cash investing and financing
                  activities:Deferred
                  financing costs incurred through the issuance of notes
                  payable
              
              $
              110,000
              
              $
              -Supplemental
                  non-cash investing and financial activity - acquisition of
                  JLWA:Assets
                  acquired and liabilities assumed:Current
                  assets
              
              $
              6,607,538Property
                  and equipment
              
              
              185,234Intangible
                  assets
              
              
              4,930,000Goodwill
                  recognized on purchase business combination
              
              
              883,183Security
                  deposits and prepaid expenses
              
              
              60,385Accounts
                  payable, accrued expenses and deferred revenues
              
              
              (2,483,920
              )Total
                  purchase price
              
              
              10,182,420Less:
                  Cash paid to acquire JLWA
              
              
              (5,457,296
              )Non-cash
                  consideration to seller
              
              $
              4,725,124Non-cash
                  consideration, consisting of:Common
                  stock issued to acquire JLWA
              
              $
              2,000,000Note
                  payable issued to seller
              
              
              400,000Obligation
                  to seller in connection with working capital purchase price
                  adjustment
              
              
              2,325,124Total
                  non-cash consideration
              
              $
              4,725,124




See
        notes
        to these condensed consolidated financial statements.


5


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Notes
      To Condensed Consolidated Financial Statements**


**(Unaudited)**




**1. 
      Nature of Operations**




GlobalOptions,
      LLC was formed in November 1998 as a limited liability company (“LLC”) in the
      state of Delaware.  On January 24, 2002, with the approval of the members
      of the LLC, the LLC converted to a corporation under Delaware law with the
      name
      GlobalOptions, Inc. (“GlobalOptions”)




On
      June
      24, 2005, GlobalOptions consummated a “reverse merger” transaction, with
      Creative Solutions with Art, Inc., (“Creative Solutions”) a Nevada corporation,
      and the newly formed GlobalOptions Acquisition Corp., (“GlobalOptions
      Acquisition”) a Delaware corporation, a wholly-owned subsidiary of Creative
      Solutions.  GlobalOptions Acquisition merged with and into GlobalOptions
      with the result that on June 24, 2005, GlobalOptions became the subsidiary
      of a
      public company.




Following
      the merger, Creative Solutions changed its name to GlobalOptions Group, Inc.
      (“GlobalOptions Group” or the “Company”) and began trading on the OTC (over the
      counter) Bulletin Board under the new symbol “GLOI.OB.”  As a result of the
      reverse merger, GlobalOptions became the wholly-owned subsidiary of the newly
      renamed GlobalOptions Group, with GlobalOptions’ former stockholders acquiring a
      majority of the outstanding shares of the Company’s common stock, par value
      $.001 per share, and GlobalOption’s officers and directors replaced the officers
      and directors of Creative Solutions.  The reverse merger was consummated
      under Delaware law and pursuant to an Agreement and Plan of Merger, dated
      June 24, 2005 (the “Merger Agreement”).  For accounting purposes, the
      reverse merger has been treated as an acquisition of Creative Solutions by
      GlobalOptions and a recapitalization of GlobalOptions.  The historical
      condensed consolidated financial statements prior to June 24, 2005 are those
      of
      GlobalOptions.  Pursuant to the reverse merger, GlobalOptions has restated
      its statements of stockholders’ equity on a recapitalization basis, so that all
      accounts are now presented as if the reverse merger had occurred at the
      beginning of the earliest period presented.




The
      Company is a provider of risk mitigation services to Fortune 500 corporations,
      governmental organizations and high-profile individuals throughout the
      world.  The Company’s risk mitigation services currently include (1) risk
      management and security, (2) investigations and litigation support, and (3)
      crisis management and corporate governance.




On August 14, 2005, the Company acquired Confidential Business Resources
      (“CBR”), a privately-held nationwide investigations firm based in Nashville,
      Tennessee.




On
      March
      10, 2006, the Company acquired James Lee Witt Associates, LLC (“JLWA”), a
      nationwide crisis and emergency management consulting firm headquartered in
      Washington, D.C. (See Note 4).




See
      Note
      14 for a discussion of acquisitions completed subsequent to March 31,
      2006.




6


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
        To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**2** **.
      Basis of Presentation**





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with United States generally accepted accounting
      principles for interim financial information and with the instructions to Form
      10-QSB. Accordingly, they do not include all of the information and footnotes
      required by accounting United States generally accepted accounting principles.
      In the opinion of management, all adjustments (consisting of normal accruals)
      considered for a fair presentation have been included. Operating results for
      the
      three months ended March 31, 2006 are not necessarily indicative of the results
      that may be expected for the year ending December 31, 2006.  For further
      information, refer to the financial statements and footnotes thereto for
      GlobalOptions Group, Inc., included in the Company’s Form 10-KSB filed on April
      17, 2006 for the year ended December 31, 2005.




**3. 
      Summary of Significant Accounting Policies**





***Net
      Loss Per Common Share***




Basic
      net
      loss per common share is computed based on the weighted average number of shares
      of common stock outstanding during the periods presented on a recapitalization
      basis in accordance with the reverse merger.  Common stock equivalents,
      consisting of stock options, Series A convertible preferred stock and warrants,
      as further discussed in the notes to the condensed consolidated financial
      statements, were not included in the calculation of the diluted loss per share
      because their inclusion would have been anti-dilutive.  The total common
      shares issuable upon the exercise of stock options, warrants, and the Series
      A
      convertible preferred stock as of March 31, 2006 and 2005 was 12,893,444 and
      2,608,659, respectively.




***Stock
      Based Compensation/Stock Options***




For
      the
      three months ended March 31, 2006, the Company incurred employee stock-based
      compensation expense of $278,235. Prior to January 1, 2006, the Company
      accounted for the stock option plans under the recognition and measurement
      provisions of Accounting Principles Board Opinion No. 25 ("APB 25").
      Accordingly, the Company would recognize employee stock based compensation
      expense only if it granted options at a price lower than the closing price
      on
      the date of grant. Any resulting compensation expense would then have been
      recognized ratably over the associated service period.  No stock-based
      employee compensation expense relating to the Company’s stock option plan was
      reflected in net loss for the three months ended March 31, 2005, as all options
      granted under its plans had an exercise price equal to or greater than the
      market value of the underlying common stock on the date of grant. Prior to
      January 1, 2006, the Company provided pro-forma disclosure amounts in accordance
      with SFAS No. 148, "Accounting for Stock-Based Compensation--Transition and
      Disclosure" ("SFAS 148"), as if the fair value method defined by SFAS 123 had
      been applied to its stock-based compensation.




7


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
        To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**3** . **Summary
      of Significant Accounting Policies, continued**




***Stock
      Based Compensation/Stock Options - continued***




Effective January 1, 2006, the Company adopted the fair value recognition
      provisions of SFAS 123R, using the modified prospective transition method and
      therefore has not restated prior periods' results. Under this transition method,
      employee stock-based compensation expense for the three months ended March
      31,
      2006 included compensation expense for all stock-based compensation awards
      granted, but not yet fully vested, prior to January 1, 2006.  The fair
      value of the options granted was determined at the original grant date in
      accordance with the provisions of SFAS 123.  Stock-based compensation
      expense for all share-based payment awards granted after December 31, 2005
      is
      based on the grant-date fair value estimated in accordance with the provisions
      of SFAS 123R. The Company recognizes these compensation costs over the requisite
      service period of the award, which is generally the vesting term of the options
      associated with the underlying employment agreement, where
      applicable.




As a result of adopting SFAS 123R, the impact to the consolidated condensed
      financial statements for the three months ended March 31, 2006 was $278,235
      greater than if the Company had continued to account for stock-based
      compensation under APB 25. The impact of the adoption of FAS123R on both basic
      and diluted earnings per share for the three months ended March 31, 2006 was
      $0.02 per share. At March 31, 2006, the unamortized value of employee stock
      options under SFAS 123R was approximately $3,107,000.




The
      Company accounts for equity instruments issued to non-employees in accordance
      with the provisions of SFAS 123 and the Emerging Issues Task Force (“EITF”)
      Issue No.  96-18,  “Accounting  for  Equity 
Instruments  That Are Issued to Other Than  Employees  for 
Acquiring,  or In  Conjunction  with Selling,  Goods or
      Services” (EITF 96-18) which require that such equity instruments are recorded
      at their fair value on the measurement  date, which is typically the date
      the services are performed.  Stock based compensation for non-employees
      accounted for under EITF 96-18 was $72,084 for the three months ended March
      31,
      2006.




Option
      valuation models require the input of highly subjective assumptions including
      the expected life of the option. Because the Company's employee stock options
      have characteristics significantly different from those of traded options,
      and
      because changes in the subjective input assumptions can materially affect the
      fair value estimate, in management's opinion, the existing models do not
      necessarily provide a reliable single measure of the fair value of its employee
      stock options.




8


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
        To Condensed Consolidated Financial Statements**
 **(Unaudited)**


**3.**  **Summary
      of Significant Accounting Policies, continued**




***Stock Based Compensation/Stock Options,
      continued***




The
      fair
      value of each option grant during the three months ended March 31, 2006 was
      estimated on the date of grant using the Black-Scholes option pricing model
      with
      the following assumptions used:





For
                the Three Months EndedMarch
                31, 2006Dividend
                yield
            
            0%Expected
                volatility
            
            87%Risk-free
                interest rate
            
            4.1%Expected
                lives
            
            5
                years





For
      the
      three months ended March 31, 2005, under APB 25, no stock-based employee
      compensation expense relating to the Company’s stock option plans was reflected
      in net loss, as all options granted under its plan had an exercise price equal
      to or greater than the market value of the underlying common stock on the date
      of grant.





For
      the
      Company’s pro forma information for the three months ended March 31, 2005, the
      fair value of each option grant was estimated on the date of grant using the
      Black-Scholes option pricing model with the following assumptions
      used:





For
                the Three Months EndedMarch
                31, 2005Dividend
                yield
            
            0%Expected
                volatility
            
            55%Risk-free
                interest rate
            
            3.0%Expected
                lives
            
            5
                years




The
      weighted average fair value of the options on the date of grant, using the
      fair
      value based method, for the three months ended March 31, 2005 was $0.68.




9


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
        To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**3.**  **Summary
      of Significant Accounting Policies, continued**




***Stock Based Compensation/Stock Options,
      continued***





The
      following table illustrates the effect on net loss and net loss per
      share if the Company had applied the fair value recognition method under the
      provisions of SFAS 123.




(All
                  numbers in 000’s except per share data.)
              
              
              Three
                  Months Ended
                March
                  31, 2005Net
                  loss
              
              $
              (421
              )Deduct:
                  total stock-based employee compensation expense determined under
                  fair
                  value based method for all awards, lated tax effects
              
              
              89Pro-forma
                  net loss
              
              $
              (510
              )Net
                  loss per share - basic and diluted:As
                  reported
              
              $
              (0.05
              )Pro
                  forma
              
              $
              (0.06
              )




***Revenue
      Recognition***




Revenue
      is recognized as the services are performed pursuant to the applicable
      contractual arrangements. Revenue related to time and materials arrangements
      is
      recognized in the period in which the services are performed. Revenue related
      to
      fixed price arrangements are recognized based upon the achievement of certain
      milestones or progress points within the project plan. The impact of any
      revisions in estimated total revenue and direct contract costs is recognized
      in
      the period in which they become known. Expenses incurred by professional staff
      in the generation of revenue are billed to the client and recorded as revenue
      when incurred. For certain foreign accounts, revenues are recognized and the
      related expenses are recorded only after the receipt in cash of the revenue
      amounts. The Company incurs no obligations to third parties for expenses related
      to these certain foreign accounts until such time that invoiced revenues are
      received in cash. Revenues received in advance of when earned are credited
      to
      the deferred revenues account.




10


**GLOBALOPTIONS
          GROUP, INC. AND SUBSIDIARIES**
 **Notes
          To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**3.     Summary
      of Significant Accounting Policies, continued**




***Intangible
      Assets***




In
      accordance with the requirements of Statement of Financial Accounting Standards
      No. 141 (“SFAS No. 141”), “Business Combinations”, the Company
      recognizes certain
      intangible assets acquired in acquisition s ,
      primarily goodwill, trade names, covenants not to compete, and
      customer relationships.  In accordance with the provisions of SFAS No.
      142, “Goodwill and Other Intangible Assets”, on a regular basis, the Company
      performs impairment analysis of the carrying value of goodwill and certain
      other
      intangible assets by assessing the recoverability when there are indications
      of
      potential impairment based on estimates of undiscounted future cash flows.
      The
      amount of impairment is calculated by comparing anticipated discounted future
      cash flows with the carrying value of the related asset. In performing this
      analysis, management considers such factors as current results, trends, and
      future prospects, in addition to other economic factors.




***Deferred
      Financing Costs***




The
      costs
      incurred in connection with issuance of certain notes payable  (See
      Note
      8) wa s
      capitalized to deferred financing costs and is amortized over the term of the
      related debt.





***Recent
      Accounting Pronouncements***




In
      February 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standard No. 155 - Accounting for Certain
      Hybrid Financial Instruments (“SFAS 155”), which eliminates the exemption from
      applying SFAS 133 to interests in securitized financial assets so that similar
      instruments are accounted for similarly regardless of the form of the
      instruments. SFAS 155 also allows the election of fair value measurement at
      acquisition, at issuance, or when a previously recognized financial instrument
      is subject to a remeasurement event. Adoption is effective for all financial
      instruments acquired or issued after the beginning of the first fiscal year
      that
      begins after September 15, 2006. Early adoption is permitted. The adoption
      of SFAS 155 is not expected to have a material effect on the Company’s
      consolidated financial position, results of operations or cash
      flows. ****




In
      March 2006, the FASB issued Statement of Financial Accounting Standard No.
      156 - Accounting for Servicing of Financial Assets (“SFAS 156”), which requires
      all separately recognized servicing assets and servicing liabilities be
      initially measured at fair value. SFAS 156 permits, but does not require, the
      subsequent measurement of servicing assets and servicing liabilities at fair
      value. Adoption is required as of the beginning of the first fiscal year that
      begins after September 15, 2006. Early adoption is permitted. The adoption
      of SFAS 156 is not expected to have a material effect on the Company’s
      consolidated financial position, results of operations or cash
      flows.




11


**GLOBALOPTIONS
          GROUP, INC. AND SUBSIDIARIES**
 **Notes
          To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**4.  
       Acquisition of JLWA**




The
      acquisition of JLWA was made pursuant to a certain Asset Purchase Agreement
      (the
“Agreement”) dated January 13, 2006, as amended, between GlobalOptions Group and
      JLWA. The aggregate purchase price paid for JLWA’s assets and business was
      $10,182,420 subject to certain future working capital purchase price adjustments
      as defined in the agreement. The aggregate purchase price consisted of a
      cash payment at closing of $3,600,000, a cash payment of $1,857,296 to pay
      off
      JLWA’s line of credit balance and related accrued interest, the issuance of
      819,672 shares of common stock of GlobalOptions Group, valued at $2,000,000,
      a
      4.6% note payable to JLWA of $400,000 due March 9, 2007, and a non-interest
      bearing working capital purchase price adjustment obligation of $2,325,124,
      due
      June 8, 2006.  The purchase is subject to change based upon future
      adjustments to working capital, as defined, for working capital acquired from
      JLWA as of the acquisition date.




The
      assets and liabilities of JLWA have been recorded in the Company’s condensed
      consolidated balance sheet at their fair values at the date of
      acquisition.  As part of the purchase of JLWA on March 10, 2006, the
      Company acquired identifiable intangible assets of approximately
      $4,930,000.  Of the identifiable intangibles acquired, $1,870,000 has been
      assigned to trade names and $3,060,000 to client relationships.   The
      amounts of these intangibles have been estimated based upon information
      available to management and is subject to change based upon an outside appraisal
      being performed. The acquired intangibles have been assigned definite lives
      and
      are subject to amortization, as described in the table below.




The
      following table details amortization periods for the identifiable, amortizable
      intangibles:




Intangible
                Asset Category
            
            Amortization
                period
              in
                yearsTrade
                names
            
            10
                yearsClient
                relationships
            
            3 years




12


**GLOBALOPTIONS
          GROUP, INC. AND SUBSIDIARIES**
 **Notes
          To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**4. 
      Acquisition of JLWA, continued**





The
      following table details the allocation of the purchase price for the acquisition
      of JLWA:






Fair
                ValueAccounts
                receivable
            
            $
            6,607,563Prepaid
                expenses
            
            
            35,129Property
                and equipment
            
            
            185,234Security
                deposits
            
            
            25,231Intangible
                asset - trade names
            
            
            1,870,000Intangible
                asset - client relationships
            
            
            3,060,000Accounts
                payable
            
            
            (2,268,388
            )Deferred
                revenues
            
            
            (115,424
            )Accrued
                expenses
            
            
            (100,108
            )Net
                  fair values assigned to assets acquired andliabilities assumed
            
            
            9,299,237Goodwill
            
            
            883,183Total
            
            $
            10,182,420






The
      following presents a summary of the purchase price consideration for the
      purchase of JLWA.





Cash
            
            $
            5,457,296Note
                payable
            
            
            400,000Obligation
                for working capital purchase price adjustment
            
            
            2,325,124Value
                of common stock issued
            
            
            2,000,000Total
                Purchase Price Consideration
            
            $
            10,182,420




The
      note
      payable of $400,000 is due March 9, 2007 and bears interest at a rate of 4.6%
      per annum and is subordinated to the Company’s line of credit (See Note
      7).   The obligation for the working capital purchase price adjustment
      is due June 9, 2006 and represents an initial estimate of the working capital
      purchase price adjustment.  The working capital purchase price adjustment
      will be adjusted for the actual amount of purchased receivables collected
      through June 9, 2006 and for various other working capital adjustments, as
      outlined in the agreement.  In addition, the agreement provides for JLWA to
      obtain up to an additional $15,400,000 in earnout payments upon the attainment
      of certain revenue goals subsequent to the closing of the transaction and the
      continued employment of James Lee Witt, the former president and chief executive
      officer or JLWA (See Note 9).




The
      results of operations for JLWA for the period from March 10, 2006 to March
      31,
      2006, are reflected in the Company’s results for the three month period ended
      March 31, 2006 in the accompanying condensed consolidated statement of
      operations.




13


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
        To Condensed Consolidated Financial Statements**
 **(Unaudited)**


**4. 
      Acquisition of JLWA, continued**




The
      following table presents the unaudited pro-forma combined results of operations
      of the Company with JLWA for the three months ended March 31, 2006 and the
      Company with CBR and JLWA for the three months ended March 31, 2005,
      respectively, as if CBR and JLWA had been acquired at the beginning of each
      of
      the periods.




For
                the Three Months Ended
              March
                31,2006
            
            
            2005Revenues
            
            $
            13,426,993
            
            $
            6,205,907Net
                income (loss)
            
            $
            1,083,806
            
            $
            (980,181
            )Pro-forma
                basic and diluted net income (loss) per common share
            
            $
            0.07
            
            $
            (0.10
            )Pro-forma
                weighted average common shares outstanding -basic and
                diluted
            
            
            15,310,254
            
            
            10,150,998




The
      pro
      forma combined results are not necessarily indicative of the results that
      actually would have occurred if the CBR and JLWA acquisitions had been completed
      as of the beginning of 2005, nor are they necessarily indicative of future
      consolidated results.




**5. 
      Intangible Assets**




Intangible
      assets consist of amounts related to the acquisitions of CBR and JLWA, as well
      as an additional $40,000 for a client list purchased on February 28, 2006. 
 Intangible assets are comprised of the following:




Developed
                technology
            
            $
            52,000Non-compete
                agreements
            
            
            510,000Client
                relationships
            
            
            3,829,000Trade
                names
            
            
            1,950,0006,341,000Less: accumulated amortization
            
            
            (286,213
            )Intangible
                assets, net
            
            $
            6,054,787






14


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Notes
      To Condensed Consolidated Financial Statements**


**(Unaudited)**




**5. 
      Intangible Assets, continued**





The
      estimated amortization of amortizable intangible assets for the five years
      ending March 31, 2011 is as follows:




For
                the Years
              Ending
              March
                31,
            
            
            Total
            
            
            Trade
                Names
            
            
            Developed
              Technology
            
            
            Non-CompeteAgreements
            
            
            Client
              Relationships2007
            
            $
            1,584,000
            
            $
            203,000
            
            $
            21,000
            
            $
            170,000
            
            $
            1,190,0002008
            
            
            1,581,000
            
            
            203,000
            
            
            18,000
            
            
            170,000
            
            
            1,190,0002009
            
            
            1,388,000
            
            
            203,000
            
            
            -
            
            
            62,000
            
            
            1,123,0002010
            
            
            357,000
            
            
            203,000
            
            
            -
            
            
            -
            
            
            154,0002011
            
            
            210,000
            
            
            193,000
            
            
            -
            
            
            -
            
            
            17,000Totals
            
            $
            5,120,000
            
            $
            1,005,000
            
            $
            39,000
            
            $
            402,000
            
            $
            3,674,000




During
      the three months ended March 31, 2006, the Company recorded amortization expense
      related to the acquired amortizable intangibles of $148,700.  There was no
      amortization of intangibles during the three months ended March 31,
      2005.




The
      weighted average amortization period for amortizable intangibles is 5.3 years
      and has no residual value.




**6. 
      Property and Equipment**




At
      March
      31, 2006, property and equipment is comprised of the following:




Computer
                and equipment
            
            $
            344,792Furniture
                and fixtures
            
            
            147,196Automobiles
            
            
            110,989Leasehold
                improvements
            
            
            155,640$
            758,617Less:
                accumulated depreciation and   amortization
            
            
            374,830Property
                and equipment, net
            
            $
            383,787




Depreciation
      and amortization for the three months ended March 31, 2006 and 2005 was $31,760,
      and $10,583, respectively.




15


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
        To Condensed Consolidated Financial Statements**
 **(Unaudited)**


**7** **. 
      Line of Credit**




During
      November 2003, GlobalOptions signed a $1,000,000 line of credit with a financial
      institution with an interest rate of prime plus 1.25% (9.75% at March 31, 2006)
      secured by accounts receivable and subject to monthly covenants.




In
      conjunction with the establishment of this line of credit, the financial
      institution was granted warrants to purchase 29,411 shares of the Company’s
      common stock at $0.60 per share.  The value of these warrants, computed
      using the Black-Scholes option pricing model was de-minimus.  These
      warrants were exercised on June 24, 2005 on a cashless basis, and were exchanged
      for 20,579 shares of the Company’s common stock.




On
      May 4,
      2005, this line of credit agreement was amended to increase the facility amount
      to $1,875,000.  This line of credit was renewed on February 3, 2006 and
      expires on February 3, 2007.   During March 2006, the Company entered
      into an agreement to guarantee the obligations of GlobalOptions under this
      line
      of credit.  The balance outstanding under the line of credit at March 31,
      2006 was $822,087.




The
      Company was in violation of certain working capital covenants at February 28,
      2006 with respect to its line of credit.  The financial institution has
      waived this violation and at March 31, 2006, the Company was in compliance
      within the covenant requirements of the agreement.




**8. 
      Notes Payable**


****


On
      March
      10, 2006, the Company closed the private placement of an aggregate of
      $12,500,000 in principal amount of 8% promissory notes due on June 30,
      2006.  Upon the consummation of a qualified follow-on financing, the
      Company may exchange these promissory notes through the issuance of shares
      of
      the Company’s capital stock equal to 115% of the principal amount of the notes
      being exchanged, plus accrued and unpaid principal, subject to the terms of
      the
      agreement.  Under the promissory note agreements, the Company may extend
      the maturity for two successive 30 day periods. In connection with raising
      these
      funds, the Company incurred a total fee of approximately $416,000 to Burnham
      Hill Partners (See Note 10) and others, for which $306,000 was paid in cash
      and
      $110,000 of which the Company issued additional 8% promissory notes. The holders
      of these promissory notes subordinated their interest to the Company’s
      obligations to the bank under the line of credit facility.




16


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
        To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**9. 
      Due to Former Member of JLWA for Earnout**




In
      connection with the purchase of JLWA the Agreement provides for JLWA to obtain
      up to an additional $15,400,000 in earnout payments upon the attainment of
      certain revenue goals subsequent to the closing of the transaction and the
      continued employment of James Lee Witt.  JLWA was a crisis and emergency
      management consulting firm headquartered in Washington, D.C. with three
      additional offices nationwide.




As
      set
      forth in the Agreement with JLWA, the Company has agreed to pay the former
      members of JLWA (the “Sellers”) an earnout (the “Earnout”), based upon the
      achievement of certain revenue goals subsequent to March 10, 2006 (the “Closing
      Date”).




For
      the
      twelve (12) month periods ending on the first, second, third and fourth
      anniversaries of the Closing Date, the Sellers shall be paid such Earnout based
      upon the achievement of certain revenues, as set forth below.  The total
      amount of the Earnout shall be limited to a cumulative amount of $15,400,000.




The
      Earnout shall be paid to Seller within sixty (60) days of the dates of the
      respective anniversaries of the Closing Date as described below:




• 
      the first $4,000,000 of the Earnout shall be paid in cash; and




• 
      the remainder of the Earnout shall be paid 50% in cash and 50% in shares of
      common stock of the Company (which number of shares shall be calculated by
      dividing the total amount of the Earnout payable in shares of common stock
      by
      the closing price of the Company’s common stock on the last day of each of the
      respective Earnout periods).




The
      Earnout is payable based upon revenue generated by the JLWA division of the
      Company, so long as such revenue generates a gross margin of at least 50%,
      and
      may include revenues generated by certain acquisitions of the JLWA division
      of
      the Company, as provided in the agreement.  Revenues of the JLWA division
      whereupon the gross margin falls below 50% are not eligible for the Earnout.




17
 
 **GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
          To Condensed Consolidated Financial Statements**
 **(Unaudited)**


**9.** **Due
      to Former Member of JLWA for Earnout, continued**




The
      Earnout is computed by the application of the percentages to JLWA earned
      revenues according to the table, below:




Related
                  Revenue Earnout
                  Periods
              
              Percentage
                  Applied
                to
                  JLWA earned RevenuesMarch
                  10, 2006 - March 9, 2007Up
                  to
                  $6,000,000
              
              0%Between
                  $6,000,000 and
                  $16,000,000
              
              40%Between
                  $16,000,000 and $36,000,000
              
              10%March
                  10, 2007 - March 9, 2008Up
                  to
                  $7,000,000
              
              0%Between
                  $7,000,000 and
                  $38,000,000
              
              10%March
                  10, 2008 - March 9, 2009Up
                  to $8,000,000
              
              0%Between
                  $8,000,000 and
                  $40,000,000
              
              10%March
                  10, 2009 - March 9, 2010Up
                  to $9,000,000
              
              0%Between
                  $9,000,000 and
                  $40,000,000
              
              10%




At
      March
      31, 2006, the amount due to the former member of JLWA for the Earnout liability
      due under the Agreement was $496,040.




18


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
          To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**10. 
      Commitments**




***Employment
      Agreements***




Concurrently
      with the acquisition of JLWA ,
      in
      March 2006, GlobalOptions entered into a four year employment agreement with
      James Lee Witt . Pursuant
      to the agreement, Mr. Witt became the Chief Executive Officer of the James
      Lee
      Witt Division of
      GlobalOptions and
      agreed to perform such other duties and responsibilities as the Board of
      Directors may assign, and has agreed to devote his full time to GlobalOptions
      at
      a salary of $300,000 per year plus a
      discretionary annual bonus. The employment agreement may be terminated for
      cause
      by GlobalOptions, upon the death or disability of the executive, or upon
      30-days’ notice by either party. In the event GlobalOptions terminates the
      employment agreement without cause, GlobalOptions is
      required to pay Mr. Witt his base salary and certain benefits for twelve months
      following termination. The employment agreement also contains non-compete and
      non-solicitation provisions for 12 months following termination, as well as
      confidentiality provisions . 
      In addition, in connection with the acquisition of JLWA, GlobalOptions has
      assumed the obligations for three additional employment agreements representing
      a future commitment of approximately $4,200,000.




***Consulting
      Agreements***




On
      March
      9, 2006, the Company entered into an agreement with Burnham Hill Partners
      (“BHP”) , a division of Pali Capital, Inc. to act as its placement agent in
      connection the private placement of certain promissory notes payable (See Note
      8).   In connection with this agreement, the Company has agreed to pay
      BHP a fee of 7% of certain of the gross proceeds received in connection with
      the
      issuance of the promissory notes payable.   In addition, on March 14,
      2006, the Company entered into a financial advisory agreement with BHP, with
      a
      term of nine months.   Under this agreement, BHP has agreed to advise
      the Company in regard to potential strategic transactions.   Under
      this agreement, the Company has agreed to issue to BHP a common stock warrant
      to
      purchase 250,000 shares, exercisable at $2.50 per share to compensate BHP. 
These warrants shall have a term of five years, a cashless exercise provision
      and standard weighted average anti-dilution protection and piggyback
      registration rights.  The value of these warrants was approximately
      $388,000 utilizing the Black Scholes option pricing model with the following
      assumptions: 0% dividend yield, 87% expected volatility,  4.77%
      risk-free rate and a five year expected life.  For a period of twelve
      months from the date of this agreement, should the Company request the
      assistance of BHP, then in connection with certain transactions, the Company
      will pay to BHP a fee of 3% of the aggregate transaction value.




19


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
          To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**10. 
      Commitments, continued**




***Operating Leases***




In
      connection with the purchase of JLWA, GlobalOptions assumed the obligations
      for
      four JLWA office lease s.
      Such
      lease obligations expire
      at
      various dated through March 2011.




Future
      minimum lease payments under these leases are as follows:




For
                the Year Ending March 31,2007
            
            $
            335,6932008
            
            
            236,6532009
            
            
            286,9392010
            
            
            271,9682011
            
            
            242,574Total
            
            $
            1,373,827






**11.** ****** **Stockholders’
      Equity**




***Common Stock and Stock Options***




On
      March
      10, 2006, in connection with the Company’s purchase of JLWA, the Company issued
      819,672 shares of common stock, valued at $2,000,000 (See Note 4) and granted
      222,222 options for the purchase of common stock at an exercise price
      of $2.25 per share to the employees of JLWA.  The options have a five year
      term, vest ratably upon the first, second and third anniversary of the date
      of
      grant and have a value of approximately $351,000 utilizing the Black Scholes
      option pricing model (also see Note 3).








**12.
      Major Clients**




The
      Company’s top three clients represented 38%, 26%, and 3%; and 23%, 23%, and 14%,
      respectively, of revenues for the three months ended March 31, 2006 and 2005,
      respectively.




The
      Company has foreign clients representing 2% and 1% of revenues for the 3 months
       ended March 31, 2006, and foreign clients representing 23%, 3%, 1%,
      respectively, of revenues for the months ended March 31, 2005.  These
      foreign clients operate primarily in Russia and the Caribbean.  For each of
      these foreign clients, the Company is paid in U.S. dollars.





During
      the three months ended March 31, 2006, a client that represented approximately
      19% of revenues for the year ended December 31, 2005 has elected not to renew
      its relationship with the Company.




20


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
          To Condensed Consolidated Financial Statements**
 **(Unaudited)**


**13. 
      Client and Segment Data**




The
      Company’s reportable operating segments services consisted of the following
      three business segments: Investigations/Litigation Support, Crisis Management
      Services and Security.  The Company’s reportable segments are organized,
      managed and operated along product lines. These product lines are provided
      to
      similar clients, are offered together as packaged offerings, generally produce
      similar margins and are managed under a consolidated operations management
      .  JWLA is reflected within the Crisis Management Segment.




The
      Investigations/Litigation Support Services segment includes activities from
      litigation support, due diligence, inventory control, asset recovery, and
      business intelligence.




The
      Crisis Management Services segment includes activities related to risk planning
      and response to natural disasters, kidnappings, labor disputes, bombings,
      product tampering and industrial espionage.




The
      Security Services segment includes activities from threat and vulnerability
      assessments; fraud prevention; IT security, and technical
      systems/counter-measures both nationally and internationally.




21


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
          To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**13** **. 
      Client and Segment Data, continued**




Total
      revenues by segment include revenues to unaffiliated customers. The Company
      evaluates performance based on income (loss) from operations.  Operating
      income (loss) is gross profit less operating expenses.




The
      following tables summarize financial information about the Company’s business
      segments for the three months ended March 31, 2006 and 2005 (in
      thousands):




**For
                the Three Months Ended March 31, 2006**




**Investigations**
              **Litigation**
              **Support**
            
            
            **Crisis**
              **Management**
            
            
            **Security**
            
            
            **Corporate**
            
            
            **Consolidated**Revenues
            
            $
            3,165
            
            $
            2,919
            
            $
            151
            
            $
            -
            
            $
            6,235Income
                (Loss) fromOperations
            
            $
            (634
            )
            $
            (423
            )
            $
            6
            
            $
            -
            
            $
            (1,051
            )Depreciation
                andAmortization
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            261
            
            $
            261Interest
                Expense
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            182
            
            $
            182Identifiable
                Assets
            
            $
            1,809
            
            $
            9,519
            
            $
            19
            
            $
            17,547
            
            $
            28,894Capital
                Expenditures
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            50
            
            $
            50








**For
                the Three Months Ended March 31, 2005**




**Investigations/**
              **Litigation**
              **Support**
            
            **Crisis**
              **Management**
            
            **Security**
            
            **Corporate**
            
            **Consolidated**Revenues
            
            $
            705
            
            $
            253
            
            $
            98
            
            $
            -
            
            $
            1,056Loss
                fromOperations
            
            $
            (188
            )
            $
            (196
            )
            $
            -
            
            $
            -
            
            $
            (384
            )


Depreciation
                andAmortization
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            11
            
            $
            11Interest
                Expense
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            39
            
            $
            39






22


**GLOBALOPTIONS
        GROUP, INC. AND SUBSIDIARIES**
 **Notes
          To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**14.
      Subsequent Events**





***Stock
      Options***




On
      April
      27, 2006, GlobalOptions Group granted, in the aggregate, options for the
      purchase of 123,000 shares of GlobalOptions Group common stock at an exercise
      price of $2.20 per share, consisting of options for the purchase of 17,000
      shares granted to certain employees of GlobalOptions and options for the
      purchase of 106,000 shares granted to certain members of the Company’s advisory
      boards in exchange for services. The options granted to employees have a five
      year term and vest ratably upon the first, second and third anniversary of
      the
      date of grant. The options granted to the members of the advisory boards have
      a
      five year term and vest ratably at the end of each of the four quarterly periods
      following the date of grant. In the aggregate, these options have a value of
      approximately $192,000 utilizing the Black-Scholes option pricing
      model with the following assumptions used: expected life five years,
      volatility 87%, 0% dividends and a risk-free interest rate 4.95%.




***Notes
      Payable***





On
      May
      12, 2006, t he
      Company closed on an additional $2 ,000,000 in
      principal amount of their 8% p romissory n otes
      due
      on June 30, 2006, the initial closing of which took place on March 10, 2006
      (See
      Note 8).  The terms of these notes have an additional feature
      which permit the holder to make the election to exchange the notes for the
      Company’s capital stock, subject to the terms of the agreement. In
      connection herewith, the Company incurred an obligation to BHP for financing
      costs aggregating $140,000, of which $100,000 is payable in cash.  The
      remaining $40,000 is payable in additional promissory notes.





***Asset
      Purchase Agreements***




On
      May
      12, 2006, the Company acquired substantially all of the business and assets
      of
      Safir Rosetti, LLC (“Safir Rosetti”), a Delaware limited liability
      company.  Safir Rosetti is a security consulting, investigative and
      intelligence firm headquartered in New York City with seven additional offices
      nationwide.  The acquisition was made pursuant to a certain Asset Purchase
      Agreement dated January 27, 2006, as amended (the “Agreement”), between the
      Company and Safir Rosetti.  The purchase price of $13 million included $7
      million in promissory notes issued by the Company and $6 million in common
      stock
      of the Company, plus the assumption of certain liabilities.  The purchase
      price is subject to a post-closing adjustment for working capital.  On
      April 3, 2006 and April 28, 2006, the Company advanced from the restricted
      cash
      escrow $553,250 and $1,387,399, respectively, to Safir Rosetti in anticipation
      of the closing.




23


**GLOBALOPTIONS
      GROUP, INC. AND SUBSIDIARIES**


**Notes
          To Condensed Consolidated Financial Statements**
 **(Unaudited)**




**14.
      Subsequent Events, continued**




***Asset
      Purchase Agreements, continued***




On
      May
      12, 2006, the Company acquired substantially all of the business and assets
      of
      Secure Source, Inc. (“Secure Source”), a Delaware Corporation.  Secure
      Source is an international risk consulting firm with offices in Washington
      D.C.
      and Dallas, Texas.  The acquisition was made pursuant to a certain Asset
      Purchase Agreement dated May 12, 2006, (the “Agreement”), between the Company,
      Secure Source, Marian E. Nicastro and David W. Nicastro.  The purchase
      price of $3.25 million included $2,750,000 in cash and $500,000 in common stock
      of the Company.




24




**ITEM
        2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION**
  *The
        following discussion of results of operations and financial condition is
        based
        upon, and should be read in conjunction with, our condensed consolidated
        financial statements and accompanying notes thereto included elsewhere herein.*
  **Forward-Looking
        Statements**
 
 This
        Quarterly Report on Form 10-QSB contains “forward-looking statements” within the
        meaning of the Private Securities Litigation Reform Act of 1995. These
        statements can sometimes be identified by the use of forward-looking words
        such
        as “anticipate,”  “believe,”  “estimate,”  “expect,” 
“intend,”  “may,”  “will” and similar expressions. These statements
        are based on management’s current expectations and are subject to risks,
        uncertainties and assumptions. Should one or more of these risks or
        uncertainties materialize or should underlying assumptions prove incorrect,
        actual results may vary materially from those anticipated, estimated, expected,
        intended or projected.
 
 The
        following factors, among others, could cause actual results to differ materially
        from those described in the forward-looking statements: changes in the demand
        for, or in the mix of, our services; project delays or cancellations; cost
        overruns with regard to fixed price projects; competitive pricing and other
        competitive pressures; changes in United States and foreign governmental
        regulation and licensing requirements; general economic conditions; political
        instability in foreign countries in which we operate; our ability to integrate
        and manage successfully any business we acquire; and other factors that are
        set
        forth in our Form 10-KSB dated December 31, 2005.
 
 **General**
  We
        are a
        provider of risk mitigation services to Fortune 500 corporations, governmental
        organizations and high-profile individuals throughout the world. Our risk
        mitigation services currently include investigations and litigation support,
        risk management, security, crisis management and corporate governance. Our
        investigations and litigation segment operates primarily domestically. We
        have
        many engagements in the remainder of our business that may take our staff
        around
        the world and are typically highly sensitive engagements where we are
        interacting with senior leaders in both corporations and governments. Our
        overall mission is to identify, evaluate, assess and prevent issues that
        may
        threaten people, organizations or strategic initiatives for companies and
        governments around the globe.
 
 Founded
        in 1998, the management, staff and advisory boards include security and
        terrorism experts from America’s elite military units, former intelligence and
        law enforcement officers, professional investigators, and legal and crisis
        communications specialists. We provide services to governments, law firms,
        private clients and corporations, including two of the ten largest corporations
        in the world.
 
 We
        have
        been awarded “approved” status as a vendor of consulting and related services to
        United States government agencies by the U.S. General Services Administration
        (GSA). We are a MOBIS (management, organizational and business improvement
        services) contractor and members of our staff have high-level security
        clearances.
 
 On
        June 24, 2005, we completed a reverse merger transaction, in which
        GlobalOptions Acquisition Corp., a Delaware corporation and our newly-created,
        wholly-owned subsidiary (“GlobalOptions Acquisition”), merged with and into our
        operating company, GlobalOptions, Inc., a Delaware corporation
        (“GlobalOptions”). At the time of the reverse merger, our corporate name was
        Creative Solutions with Art, Inc. (“Creative Solutions”). Following the reverse
        merger we changed our name to GlobalOptions Group, Inc. (“GlobalOptions Group”)
        and our trading symbol to “GLOI.OB.” As a result of the reverse merger,
        GlobalOptions became our wholly-owned operating subsidiary, with GlobalOptions’
former security holders acquiring a majority of the outstanding shares of
        our
        common stock, par value $.001 per share. The reverse merger was consummated
        under Delaware law and pursuant to an Agreement and Plan of Merger, dated
        June 24, 2005. Concurrent with the closing of the reverse merger, and on
        September 22, 2005, we also completed a private offering to accredited investors
        of units consisting of one share of our series A convertible preferred
        stock and detachable, transferable warrants to purchase 125 shares of our
        common stock, and received proceeds of approximately $7,219,200 at the closing
        of the private placement, net of offering costs of approximately $530,800.
        On
        March 10, 2006 and May 12, 2006, we issued notes payable of $12,500,000 and
        $2,000,000, respectively.
  25
 Our
        principal corporate offices are located at 75 Rockefeller Plaza, 27 th Floor,
        New York, New York 10019. Our telephone number is (212) 445-6262.
 
 On
        June 24, 2005, Harvey W. Schiller, Ph.D. was named Chairman and Chief
        Executive Officer, Per-Olof Lööf was named Vice Chairman of the Board of
        Directors, and Jeffrey O. Nyweide was named Chief Financial Officer, Executive
        Vice President-Corporate Development and Secretary.
 
 On
        May
        19, 2005, GlobalOptions and Confidential Business Resources (“CBR”), a
        privately-held nationwide investigations firm based in Nashville, Tennessee,
        entered into an asset purchase agreement with respect to the proposed
        acquisition by GlobalOptions of all of the assets and business activities
        of
        CBR. The acquisition of CBR was completed August 14, 2005.
 
 On
        January 13, 2006, GlobalOptions and James Lee Witt Associates (“JLWA”), a
        privately-held emergency management firm based in Washington, DC, entered
        into
        an asset purchase agreement with respect to the proposed acquisition by
        GlobalOptions of all of the assets and business activities of JLWA. The
        acquisition of JLWA was completed March 10, 2006.
 
 On
        May
        12, 2006, GlobalOptions completed the acquisitions of Safir Rosetti, LLC
        and
        Secure Source, LLC.
 
 The
        following discussion and financial information is presented to aid in
        understanding our financial position and results of operations. For the
        three-month period ended March 31, 2006, as compared to the three-month period
        ended March 31, 2005.
 
 26
 We
        experienced a 490% increase in revenues and an increase in our net loss for
        the
        three months ended March 31, 2006 when compared to the same period in 2005.
        We
        had revenues of approximately $6,235,000 for the three months ended March
        31,
        2006, as compared to revenues of approximately $1,056,000 for the three months
        ended March 31, 2005, for an increase of $5,179,000 or approximately 490%.
        Of the revenues reported in the three months ended March 31, 2006, approximately
        98% were domestic and 2% related to international clients. The increase in
        revenues for the three months ended March 31, 2006 is primarily attributable
        to
        the acquisitions of CBR and JLWA which provided revenues of $2,633,000 and
        $2,833,000, respectively.
 
 Although
        we have some long-term relationships with our clients, our ability to
        generate revenue is generally dependent upon obtaining many new projects
        each
        year, most of which are relatively short-term. Accordingly, period-to-period
        comparisons within a given year or between years will need to take this normal
        fluctuation into consideration.
 
 Our
        gross
        profit for the three months ended March 31, 2006 was 46% as compared to 53%
        for
        the three months ended March 31, 2005. The decrease for the three month period
        ended March 31, 2006 was primarily due to the newly acquired CBR and JLWA
        operations.
 
 Net
        loss
        for the three months ended March 31, 2006 and 2005 was $1,232,544 and $421,353,
        respectively, for an increase of $811,191 or approximately 193%. The increased
        net loss for the three month period ended March 31, 2006 was primarily
        attributable to additional losses from the GlobalOptions division and increase
        in professional fees and other expenses related to operating as a public
        company.
 
 While
        current financial results for GlobalOptions Group shows an increase in net
        loss,
        we believe the Company represents a unique opportunity to build a profitable
        global leader in the highly fragmented risk mitigation industry. GlobalOptions
        Group is an established company that will serve as our nexus for a series
        of
        acquisitions that we believe will deliver capabilities, products and services
        designed to meet the ever increasing demand for the assessment and management
        of
        risk. We see no indication that the drivers of increased risk mitigation
        spending are likely to dissipate any time in the near future. Risk mitigation
        providers on both the product and services side are still fragmented and
        ripe
        for consolidation with no clear market leader or dominant brand. We believe
        there is an opportunity to provide comprehensive solutions which can drive
        increased revenues for a company that can build a comprehensive platform.
        We
        expect GlobalOptions Group to be that company.
  Our
        strategic vision is to build the first truly integrated enterprise risk
        mitigation company by selectively acquiring the best companies in the industry
        with proven management teams and a strategic long-term vision. Platform
        acquisitions will be geographically diverse and offer solutions in different
        risk mitigation segments to gain scope and synergies. Targets will have a
        combination of existing clients, revenue, significant channel presence and/or
        a
        high margin core business. Five initial acquisitions have been identified,
        including the acquisitions of CBR and JLWA, as described below.
  27
 On
        August
        14, 2005, GlobalOptions acquired CBR, a privately-held nationwide investigations
        firm based in Nashville, Tennessee. CBR’s revenues and net losses for the year
        ended December 31, 2004 were approximately $8.8 million and $990,000,
        respectively. The aggregate purchase price paid for CBR’s assets and business
        was approximately $5,293,000 subject to certain adjustments through August
        13,
        2006 to the opening balance working capital, as such purchase price adjustments
        are defined in the agreement. The aggregate purchase price of approximately
        $5,293,000 consisted of cash in the amount of $4,363,000 (net of cash acquired
        of $26,000) and inclusive of a broker fee of $143,000, and a note payable
        to the
        seller of $904,000 due August 14, 2006.
  On
        March
        10, 2006, GlobalOptions purchased substantially all of the assets and
        liabilities of JLWA, a privately held crisis and emergency consulting management
        firm based in Washington, D.C. The acquisition was made pursuant to a certain
        Asset Purchase Agreement (the “Agreement”) dated January 13, 2006, as amended,
        between GlobalOptions Group and JLWA. The aggregate purchase price paid for
        JLWA’s assets and business was approximately $10,182,000, subject to certain
        future working capital purchase price adjustments as defined in the agreement.
        The aggregate purchase price of approximately $10,182,000, consisted of a
        cash
        payment at closing of $3,600,000, a cash payment of $1,857,000 to pay off
        JLWA’s
        line of credit balance, the issuance of 819,672 shares of common stock of
        GlobalOptions Group valued at $2,000,000, a 4.6% note payable to the seller
        of
        $400,000 due March 9, 2007, and a non-interest bearing working capital purchase
        price adjustment obligation estimated at $2,325,000, due June 8, 2006. The
        purchase price is subject to change based upon future adjustments to working
        capital, as defined in the Agreement, for working capital acquired from JLWA
        as
        of the acquisition date. In addition, the Agreement provides for the sellers
        to
        obtain up to an additional $15,400,000 upon the attainment of certain revenue
        goals subsequent to the closing of the transaction and the continued employment
        of James Lee Witt, the former president and chief executive officer of JLWA.
 
 Because
        of the personal and sensitive nature of risk mitigation and investigative
        engagements, the ability to provide services and retain clients is driven
        largely by reputation and personal relationships. Under the leadership of
        Harvey
        W. Schiller, Ph.D., executive Chairman of the Board of Directors and Chief
        Executive Officer of GlobalOptions Group, Neil C. Livingstone, Ph.D., Chief
        Executive Officer of GlobalOptions, Halsey R. Fischer, President of
        Investigations of GlobalOptions, and James Lee Witt, Chief Executive Officer
        of
        the GlobalOptions/James Lee Witt Division, GlobalOptions Group provides not
        only
        vision, management and leadership, but strong relationships with leaders
        in both
        corporate and government markets. GlobalOptions Group has the relationships
        to
        bring in high-margin, well-known clients, while our operational experience
        allows for execution of these sensitive and critical engagements. Once these
        projects are completed, there are a variety of annuity-based, long-term products
        and services that can be combined into a comprehensive suite of solutions
        to
        evolve the business into a more profitable and recurring revenue product-based
        business.
  Acquired
        companies will give GlobalOptions Group a substantial revenue base, a wide
        array
        of products and services, geographic reach into almost every country in the
        world and experienced operators that will complement the current GlobalOptions
        Group team. Our objective is to sell bundled solutions and services through
        each
        acquired companies’ channels. To achieve revenue growth targets, GlobalOptions
        Group will use its own and acquired companies’ relationships to attain high-end,
        well-known risk mitigation engagements to accelerate our internal growth
        rate.
        The expectation is to leverage other GlobalOptions Group members, as opposed
        to
        using sub-contractors and joint ventures, to perform solutions and services,
        thereby keeping higher internal margins.
  We
        will
        also use a shared corporate services approach in administrative areas to
        keep
        indirect costs reasonable and to help us achieve profitability sooner. We
        expect
        to find savings in shared services such as global marketing, human resources,
        finance, information technology, mergers and acquisitions, business integration
        and development, compliance and legal.
  28
 **Critical
        Accounting Policies**
 
 GlobalOptions
        Group’s significant accounting policies, including the assumptions and judgments
        underlying them, are more fully described in our “Notes to Condensed
        Consolidated Financial Statements” included in this Form 10-KSB for the year
        ended December 31, 2005. Some of our accounting policies require the application
        of significant judgment by management in the preparation of the condensed
        consolidated financial statements, and as a result, they are subject to a
        greater degree of uncertainty. In applying these policies, management uses
        its
        judgment to determine the appropriate assumptions to be used in calculating
        estimates that affect the reported amounts of assets, liabilities, revenues
        and
        expenses. Management bases its estimates and assumptions on historical
        experience and on various other factors that are believed to be reasonable
        under
        the circumstances. GlobalOptions Group has identified certain of its accounting
        policies as the ones that are most important to the portrayal of our condensed
        consolidated financial condition and results of operations and which require
        management to make its most difficult and subjective judgments, often as
        a
        result of the need to make estimates of matters that are inherently uncertain.
        GlobalOptions Group’s critical accounting policies include the following:
  *Revenue
        Recognition*
 
 Revenue
        is recognized as the services are performed pursuant to the applicable
        contractual arrangements. Revenue related to time and materials arrangements
        is
        recognized in the period in which the services are performed. Revenue related
        to
        fixed price arrangements are recognized based upon the achievement of certain
        milestones or progress points within the project plan. The impact of any
        revisions in estimated total revenue and direct contract costs is recognized
        in
        the period in which they become known. Expenses incurred by professional
        staff
        in the generation of revenue are billed to the client and recorded as revenue
        when incurred. For certain foreign accounts, revenues are recognized and
        the
        related expenses are recorded only after the receipt in cash of the revenue
        amounts. We incur no obligations to third parties for expenses related to
        these
        certain foreign accounts until such time that invoiced revenues are received
        in
        cash. Revenues received in advance of when earned are credited to the deferred
        revenues account.
 
 *Stock
        Based Compensation/Stock Options*
 
 Under
        the
        2005 Stock Option Plan (“the 2005 Plan”) for the three months ended March 31,
        2006, the Company granted 222,222 options at $2.25. The options granted in
        2006
        vest over five years and expire four years from the date of grant. The options
        granted in 2005 vest and are exercisable over three years.
 
 On
        May
        12, 2006, the Company approved the 2006 Stock Options Plan (the “2006
        Plan”).
 
 For
        the
        three months ended March 31, 2006, the Company incurred employee stock-based
        compensation expense of $278,000. Prior to January 1, 2006, the Company
        accounted for the stock based compensation under the recognition and measurement
        provisions of Accounting Principles Board Opinion No. 25 ("APB 25").
        Accordingly, the Company would recognize compensation expense only if it
        granted
        options with a discounted exercise price. Any resulting compensation expense
        would then have been recognized ratably over the associated vesting service
        period. Prior to January 1, 2006, the Company provided pro-forma disclosure
        amounts in accordance with SFAS No. 148, "Accounting for Stock-Based
        Compensation--Transition and Disclosure" ("SFAS 148"), as if the fair value
        method defined by SFAS 123 had been applied to its stock-based
        compensation.
 
 29
 Effective
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        SFAS 123R, using the modified prospective transition method and therefore
        has
        not restated prior periods' results. Under this transition method, stock-based
        compensation expense for the three months ended March 31, 2006 included
        compensation expense for all stock-based compensation awards granted, but
        not
        yet fully amortized, prior to January 1, 2006. The fair value of the option
        granted was determined at the original grant date in accordance with the
        provisions of SFAS 123. Stock-based compensation expense for all share-based
        payment awards granted after December 31, 2005 is based on the grant-date
        fair
        value estimated in accordance with the provisions of SFAS 123R. The Company
        recognizes these compensation costs over the requisite service period of
        the
        award, which is generally the term of the associated underlying employment
        agreement, where applicable.
 
 As
        a
        result of adopting SFAS 123R, the impact to the consolidated condensed financial
        statements for the three months ended March 31, 2006 on net loss for the
        three
        months ended January 31, 2006 was $278,000 greater than if we had continued
        to
        account for stock-based compensation under APB 25. The impact on both basic
        and
        diluted earnings per share for the three months ended March 31, 2006 was
        $0.02
        per share.
 
 The
        Company accounts for equity instruments issued to non-employees in accordance
        with the provisions of SFAS 123 and the Emerging Issues Task Force (“EITF”)
        Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other
        Than Employees for Acquiring, or In Conjunction with Selling, Goods or Services”
(EITF 96-18) which require that such equity instruments are recorded at their
        fair value on the measurement date, which is typically the date the services
        are
        performed.
 
 Option
        valuation models require the input of highly subjective assumptions including
        the expected life of the option. Because the Company's employee stock options
        have characteristics significantly different from those of traded options,
        and
        because changes in the subjective input assumptions can materially affect
        the
        fair value estimate, in management's opinion, the existing models do not
        necessarily provide a reliable single measure of the fair value of its employee
        stock options.
 
 In
        December 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS
        148, “Accounting for Stock-Based Compensation -Transition and Disclosure” ("SFAS
        148"). This standard amended the disclosure requirements of SFAS 123 for
        fiscal
        years ending after December 15, 2002 to required prominent disclosure in
        both
        annual and interim financial statements about the method used and the impact
        on
        reported results. The Company followed the disclosure-only provisions of
        SFAS
        123 for the three months ended March 31, 2005 which required disclosure of
        the
        pro-forma effects on net income (loss) as if the fair value method of accounting
        prescribed by SFAS 123 had been adopted, as well as certain other
        information.
 
 Under
        APB
        25, no stock-based employee compensation expense relating to our stock option
        plans was reflected in net loss for the three months ended March 31, 2005,
        as
        all options granted under its plans had an exercise price equal to or greater
        than the market value of the underlying common stock on the date of grant.
 
 30
 *Intangible
        Assets*
 
 In
        accordance with the requirements of Statement of Financial Accounting Standards
        No. 141 (“SFAS No. 141”), “Business Combinations”, the Company recognizes
        certain intangible assets acquired in acquisitions, primarily goodwill, trade
        names, covenants not to compete, and customer relationships.  In
        accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible
        Assets”, on a regular basis, the Company performs impairment analysis of the
        carrying value of goodwill and certain other intangible assets by assessing
        the
        recoverability when there are indications of potential impairment based on
        estimates of undiscounted future cash flows. The amount of impairment is
        calculated by comparing anticipated discounted future cash flows with the
        carrying value of the related asset. In performing this analysis, management
        considers such factors as current results, trends, and future prospects,
        in
        addition to other economic factors.
  *Allowance
        for Doubtful Accounts*
 
 We
        provide services to a variety of different clients across the United States
        and
        internationally and extend credit to our clients in the normal course of
        business.  We rarely obtain collateral to enhance the collection of
        receivables.  We determine the amount of the allowance for doubtful
        accounts primarily based upon an aging of the receivables balances, as well
        as
        upon the judgment our officers and managers.
 
 31
 **GlobalOptions
        Group’s Three Months Ended March 31, 2006 Compared to Three Months Ended March
        31, 2005**
  **Revenues**
  We
        had
        overall revenues of approximately $6,235,000 for the three months ended March
        31, 2006 as compared to revenues of $1,056,000 for the three months ended
        March
        31, 2005, for an increase of $5,179,000, or approximately 490%. Of the revenues
        reported in the three months ended March 31, 2006, approximately 98% was
        domestic and 2% related to international clients. The increase in revenue
        for
        the three months ended March 31, 2006 was primarily attributable to the
        acquisitions of CBR and JLWA.
 
 **Investigations/Litigation
        Support Segment Revenues**
  In
        the
        investigations/litigation support segment, we had revenues of $3,165,000
        for the
        three months ended March 31, 2006, as compared to revenues of $705,000 for
        the
        three months ended March 31, 2005, for an increase of $2,246,000 or
        approximately 349%. All of the investigations/litigation support revenues
        reported in the three months ended March 31, 2006 were domestic. The increase
        in
        investigations/litigation support segment revenues for the three months ended
        March 31, 2006 was primarily attributable to the expansion of our client
        base
        through the acquisition of CBR for which all revenues are included in this
        segment.
  **Crisis
        Management Segment Revenues**
  In
        the
        crisis management segment, we had revenues of $2,919,000 for the three months
        ended March 31, 2006 as compared to revenues of $253,000 for the three months
        ended March 31, 2005, for an increase of $2,666,000 or approximately
        1,050%. 98% of the crisis management revenue during the three months ended
        March
        31, 2006 is attributable to revenues from the JLWA operations, which were
        acquired on March 10, 2006.
  **Security
        Segment Revenues**
  In
        the
        security segment, we had revenues of $151,000 for the three months ended
        March
        31, 2006 as compared to revenues of $98,000 for the three months ended March
        31,
        2005, for an increase of $53,000 or approximately 54%. Of the security segment
        revenues reported in the three months ended March 31, 2006, all were domestic.
        This increase was due to a significant client generating a large amount of
        revenues within the three months ended March 31, 2006.
  **Cost
        of Revenues and Gross Profit**
  Our
        consolidated cost of revenues increased $2,850,000, or approximately 577%
        from
        $494,000 in the three months ended March 31, 2005 to $3,344,000 in the three
        months ended March 31, 2006, which was primarily due to the increases in
        the
        investigations and crisis management segments revenues. The increase in these
        segments is attributable to the additional volume from the CBR and JLWA
        acquisitions. This decrease in gross profit percentage is partially attributable
        to CBR, which averaged a gross profit of 43% for the three month period ended
        March 31, 2006.
  32
 **Operating
        Expenses**
  We
        experienced a 476% increase in selling and marketing expenses for the three
        months ended March 31, 2006, when compared to the same period in 2005. Selling
        and marketing expenses for the three months ended March 31, 2006 were $814,000,
        compared to $141,000 for the three months ended March 31, 2005, for an increase
        $673,000. This increase is primarily attributable to the accrued earnout
        obligation of approximately $496,000 related to the JLWA
        acquisition.
 
 We
        experienced a 317% increase in overall operating expenses for the three months
        ended March 31, 2006, when compared to the same period in 2005. General and
        administrative expenses for the three months ended March 21, 2006 were
        $3,127,034, compared to $804,000 for the three months ended March 31, 2005.
        Of
        this increase, approximately $1,414,000 is attributable to CBR, $147,000
        to Witt
        and $1,435,000 related to legal, accounting and other professional fees incurred
        in order to fulfill our responsibilities as a public company and costs
        incurred for due diligence related to fulfillment of our growth plan.
 
 **Investigations/Litigation
        Support Segment Profitability**
  Our
        investigations segment had operating losses of $635,000 for the three months
        ended March 31, 2006 as compared to operating losses of $188,000 for the
        three
        months ended March 31, 2005, for an increase in our loss of $447,000 or
        approximately 238%. Reflected in this segment are all results of CBR. The
        overall general and administrative expenses, of which approximately 51% are
        allocated to the investigations division, have increased by 289% as compared
        to
        the three months ended March 31, 2005. This is attributable in part to the
        increased infrastructure associated with the acquisitions of CBR and in part
        to
        the increased corporate overhead costs of operating a public company.
 
 **Crisis
        Management Segment Results**
  Our
        crisis management segment had operating losses of approximately $423,000
        for the
        three months ended March 31, 2006 as compared to operating losses of $196,000
        for the three months ended March 31, 2005, for an increase of $227,000 or
        approximately 115%. The increase in operating losses for the three months
        ended
        March 31, 2006 was in part due to the increased infrastructure associated
        with
        the acquisitions of CBR and JLWA and in part to the increased corporate overhead
        costs of operating a public company.
 
 **Security
        Segment Results**
  Our
        security segment had an operating profit of $6,000 for the three months ended
        March 31, 2006 as compared to a profit of $0 for the three months ended March
        31, 2005, for an improvement of $6,000. The profit improvement is attributable
        to the expansion of work at a fairly large client, for which we were able
        to
        record an improved gross profit margin.
  **Interest
        Expense**
  Interest
        expense increased by $143,000 to $182,000 in the three months ended March
        31,
        2006 from $38,711 in the three months ended March 31, 2005. The increase
        in
        interest expense is attributable to additional debt incurred in connection
        with
        the acquisition of JLWA.
  33
 **Income
        Taxes**
  Although
        we have federal and state net operating losses available for income tax purposes
        that may be carried forward to offset future taxable income, the deferred
        tax
        assets are subject to a 100% valuation allowance because it is more likely
        than
        not that the deferred tax assets will not be realized as of March 31,
        2006. Our ability to use our net operating loss carryforwards may be
        subject to an annual limitation in future periods pursuant to Section 382
        of the
        Internal Revenue Code.
  **Net
        Loss**
  Net
        loss
        for the three months ended March 31, 2006 and 2005 were $1,233,000 and $421,000,
        respectively, an increase of $811,000 or 193%. For the three month period
        ended
        March 31, 2006, we realized an overall gross profit of 46%, down from 53%
        for
        the quarter ended March 31, 2005. This decrease in gross profit percentage
        is
        partially attributable to CBR, which averaged a gross profit of 43% for the
        period ended March 31, 2006. The decrease in CBR gross profit was partially
        offset by JLWA, which realized a gross profit of 50% during the three months
        ended March 31, 2006. The remaining increase in the net loss is attributable
        to
        the increase in general and administrative expense which was primarily
        attributable to an increase in professional fees associated with being a
        public
        company. Net losses are partially offset by JLWA which realized $1,414,000
        in
        gross profit within the crisis segment for the three month’s ended March 3,
        2006.
 
 Basic
        net
        loss per share is computed based on the weighted average number of shares
        of
        common stock outstanding during the periods presented. Common stock equivalents,
        consisting of options, warrants, Series A convertible preferred stock were
        not
        included in the calculation of the diluted net losses per share because their
        inclusion would have been anti-dilutive. Basic and diluted net losses per
        share
        applicable to common stockholders was $0.08 for the three month period
        ending March 31, 2006 as compared to $0.09 in the corresponding 2005
        period.
  **Liquidity
        and Capital Resources**
  We
        had
        cash balances on hand of $3,237,000 as of March 31, 2006, which resulted
        primarily from net proceeds aggregating $12,194,000 which we received on
        March
        10, 2006 from the issuance of our notes. During March 2006, we utilized cash
        of
        $5,457,000 for the purchase of JLWA.
  We
        historically have met our operating cash needs by using borrowings under
        our
        line of credit arrangement and through our private placement of equity and
        debt
        securities. At March 31, 2006, we had a negative working capital position
        of
        approximately $8,310,000. Most significant within our current liabilities
        is our
        $12,610,000 current liability for notes payable. Although our plans are not
        yet final, we intend to retire these notes through the issuance of a new
        class of capital stock. We currently believe that cash on hand, cash flows
        from
        operations, available borrowings under our line of credit facility and our
        intention to retire debt through the issuance of equity, will be sufficient
        to
        meet our current funding requirements and obligations over the next twelve
        months.
  Cash
        used
        in operating activities amounted to approximately $2,257,000 and $658,000
        during
        the three months ended March 31, 2006 and 2005, respectively. The $1,599,000
        increase in cash used in operations was primarily due to an increase of $811,000
        in our net loss.
 
 Cash
        used
        in investing activities, of $7,507,000 consisted primarily of $5,457,000
        for our
        purchase of JLWA; as well as the advances of $2,000,000 in order to fund
        the
        escrow account related to the Safir acquisition.
 
 34
 Financing
        activities provided approximately $12,473,000 and $127,000 during the three
        months ended March 31, 2006 and 2005, respectively. The increase was primarily
        a
        result of the net proceeds from the sale of notes of $12,194,000.
 
 On
        May
        12, 2006, the Company acquired substantially all of the business and assets
        of
        Secure Source, Inc. (“Secure Source”), a Delaware Corporation. Secure Source is
        an international risk consulting firm with offices in Washington D.C. and
        Dallas, Texas. The acquisition was made pursuant to a certain Asset Purchase
        Agreement dated May 12, 2006, (the “Agreement”), between the Company, Secure
        Source, Marian E. Nicastro and David W. Nicastro. The purchase price of $3.25
        million included $2.75 million in cash and $500,000 in common stock of the
        Company.
  On
        May
        15, 2006, the Company acquired substantially all of the business and assets
        of
        Safir Rosetti, LLC (“Safir Rosetti”), a Delaware limited liability company.
        Safir Rosetti is a security consulting, investigative and intelligence firm
        headquartered in New York City with seven additional offices nationwide.
        The
        acquisition was made pursuant to a certain Asset Purchase Agreement dated
        January 27, 2006, as amended (the “Agreement”), between the Company and Safir
        Rosetti. The purchase price of $13 million included $7 million in promissory
        notes issued by the Company and $6 million in common stock of the Company,
        plus
        the assumption of certain liabilities. The purchase price is subject to a
        post-closing adjustment for working capital. On April 3, 2006 and April 28,
        2006, the Company advanced $553,250 and $1,387,399, respectively, to Safir
        Rosetti in anticipation of the closing.
  **Off-Balance
        Sheet Arrangements**
  We
        have
        not entered into any transactions with unconsolidated entities in which we
        have
        financial guarantees, subordinated retained interests, derivative instruments
        or
        other contingent arrangements that expose us to material continuing risks,
        contingent liabilities or any other obligations under a variable interest
        in an
        unconsolidated entity that provides us with financing, liquidity, market
        risk or
        credit risk support.
  **Recent
        Accounting Pronouncements**
  In
        February 2006, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standard 155 - Accounting for Certain Hybrid
        Financial Instruments (“SFAS 155”), which eliminates the exemption from applying
        SFAS 133 to interests in securitized financial assets so that similar
        instruments are accounted for similarly regardless of the form of the
        instruments. SFAS 155 also allows the election of fair value measurement
        at
        acquisition, at issuance, or when a previously recognized financial instrument
        is subject to a remeasurement event. Adoption is effective for all financial
        instruments acquired or issued after the beginning of the first fiscal year
        that
        begins after September 15, 2006. Early adoption is permitted. The adoption
        of SFAS 155 is not expected to have a material effect on our consolidated
        financial position, results of operations or cash flows.
 
 In
        March 2006, the FASB issued Statement of Financial Accounting Standard 156
        - Accounting for Servicing of Financial Assets (“SFAS 156”), which requires all
        separately recognized servicing assets and servicing liabilities be initially
        measured at fair value. SFAS 156 permits, but does not require, the subsequent
        measurement of servicing assets and servicing liabilities at fair value.
        Adoption is required as of the beginning of the first fiscal year that begins
        after September 15, 2006. Early adoption is permitted. The adoption of SFAS
        156 is not expected to have a material effect on our consolidated financial
        position, results of operations or cash flows
 
 35
 
 **Item
        3.     CONTROLS AND PROCEDURES**
 
 *Evaluation
        of our Disclosure Controls and Internal Controls*
 
 As
        of the
        end of the period covered by this quarterly report, we carried out an evaluation
        of the effectiveness of the design and operation of our disclosure controls
        and
        procedures (as defined in Exchange Act Rule 13-d-15(e) and 15d-15(e)). Based
        upon that evaluation, our Chief Executive Officer (“CEO”) and Chief Financial
        Officer (“CFO”) concluded that as of the end of the period covered by this
        quarterly report on Form 10-QSB our disclosure controls and procedures were
        not
        effective.
 
 *Officers’
        Certifications*
 
 Appearing
        as exhibits to this quarterly report are “Certifications” of the CEO and the
        CFO. The Certifications are required pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of
        the quarterly report contains information concerning the Controls Evaluation
        referred to in the Section 302 Certifications and this information should
        be
        read in conjunction with the Section 302 Certifications for a more complete
        understanding of the topics presented.
 
 *Disclosure
        Controls and Internal Controls*
 **
 Disclosure
        controls are procedures that are designed with the objective of ensuring
        that
        information required to be disclosed in our reports filed under the Securities
        Exchange Act of 1934, as amended (the “Exchange Act”), such as this quarterly
        report, is recorded, processed, summarized and reported within the time periods
        specified in the SEC’s rules and forms. Disclosure controls are also designed
        with the objective of ensuring that such information is accumulated and
        communicated to our management, including the CEO and CFO, as appropriate
        to
        allow timely decisions regarding required disclosure. Internal controls are
        procedures which are designed with the objective of providing reasonable
        assurance that (1) our transactions are properly authorized, recorded and
        reported; and (2) our assets are safeguarded against unauthorized or improper
        use, to permit the preparation of our condensed consolidated financial
        statements in conformity with United States generally accepted accounting
        principles.
 
 We
        are
        not an accelerated filer (as defined in the Exchange Act) and are not required
        to deliver management’s report on internal controls over our financial reporting
        until our year ending December 31, 2007. We became a public company on June
        24,
        2005. In our efforts to comply with Section 404 of the Sarbanes-Oxley Act
        of
        2002, during the first half of 2005, we identified certain matters that would
        constitute material weakness (as such term is defined under the Public Company
        Accounting Oversight Board Auditing Standard No. 2) in our internal controls
        over financial reporting. The material weakness relates to the financial
        closing
        process, a lack of segregation of financial responsibilities and the need
        for
        additional qualified financial accounting personnel.
 
 During
        the three months ended March 31, 2006, we have taken specific actions to
        remediate the reportable conditions and material weakness, including the
        devotion of additional resources to the quarterly closing process, the hiring
        of
        additional qualified financial accounting personnel, and realignment of certain
        financial responsibilities to achieve stronger segregation of financial duties.
        We intend to continue to further strengthen our controls and procedures
        regarding the closing process.
 
 There
        were no significant changes in our internal controls over financial reporting
        that occurred during the current quarter that have materially affected, or
        are
        reasonably likely to materially affect, our internal controls over financial
        reporting.
 
 36
  **PART
        II**
 **OTHER
        INFORMATION**
  **Item
        1.     LegalProceedings.**
  None.
  **Item
        2.     Unregistered Sales of Equity Securities and Use of
        Proceeds.**
 
 On
        March
        10, 2006, in connection with our purchase of JLWA, we issued 819,672 shares
        of our common stock, valued at $2,000,000. We issued these shares in
        reliance on the exemption from registration afforded by Section 4(2) of the
        Securities Act of 1933 and Regulation D promulgated there under.
  **Item
        3.     Defaults Upon Senior
        Securities.**
  None.
  **Item
        4.     Submission of Matters to a Vote of Security
        Holders.**
  None.
  **Item
        5.     Other Information.**
  None.
  **Item
        6.**  **Exhibits.**
  The
        exhibits listed in the following Exhibit Index are filed as part of this
        Report.
  **Exhibit
                  No.**
              
              **Description**31.1
              
              Certification
                  of Chief Executive Officer pursuant to Section 302 of The Sarbanes-Oxley
                  Act of 2002.31.2
              
              Certification
                  of Chief Financial Officer pursuant to Section 302 of The Sarbanes-Oxley
                  Act of 2002.32.1
              
              Certification
                  of Chief Executive Officer pursuant to Section 906 of The Sarbanes-Oxley
                  Act of 2002.32.2
              
              Certification
                  of Chief Financial Officer pursuant to Section 906 of The Sarbanes-Oxley
                  Act of 2002.
  37
 **SIGNATURES**
  In
        accordance with the requirements of the Exchange Act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
  GLOBALOPTIONS
        GROUP, INC.
 Date: May
                22,
                2006
              By:
              /s/Harvey
                W. SchillerHarvey
                W. SchillerChairman
                  of the
                  Board and Chief Executive Officer
                (Principal
                  Executive Officer)
 Date: May
                22,
                2006
              By:
              /s/ Jeffrey O. NyweideJeffrey
                O. NyweideChief
                  Financial Officer, Executive Vice
                President,
                  Corporate Development
                and
                  Secretary (Principal Financial Officer and
                Principal
                  Accounting Officer)
  38