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UNITEDSTATESSECURITIES AND EXCHANGECOMMISSIONWASHINGTON, D.C.20549

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FORM10-K

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

FOR THEFISCAL YEAR ENDED DECEMBER 31,2005OR

    TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF1934COMMISSION FILE NUMBER:333-119127

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ALLIEDSECURITY HOLDINGS LLC(Exact name of registrant asspecified in itscharter)

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|                                                              |  |                                     |  |  |  |  |
|--------------------------------------------------------------|--|-------------------------------------|--|--|--|--|
| Delaware                                                     |  | 20-1379003                          |
| (State orother jurisdiction ofincorporation or organization) |  | (I.R.S.Employer Identification No.) |
|                                                              |

3606Horizon DriveKing of Prussia, PA 19406(Addressof principal executiveoffices)

Registrant’s telephone number,including area code: (610)239-1100

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Securitiesregistered pursuant to Section 12(b) of the Act: NoneSecuritiesregistered pursuant to Section 12(g) of the Act: None

Indicateby check mark whether the registrant is a well-known seasoned issuer asdefined by Rule 405 of the Securities Act of 1933. Yes     No 

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) of theAct. Yes      No 

Indicate by check markwhether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes      No

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained, to the best of the registrant’sknowledge, in definitive proxy or information statements incorporatedby reference in Part III of this Form 10-K or any amendment to thisForm 10-K.

Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of ‘‘acceleratedfiler and large accelerated filer’’ in Rule 12b-2 of theExchange Act.

Large accelerated filer     Accelerated filer     Non-accelerated filer 

Indicate bycheck mark whether the registrant is a shell company (as defined inRule 12b-2). Yes      No 

The aggregate marketvalue of the registrant’s common equity held by non-affiliatesis not applicable as there is no public market therefore.

As ofDecember  31,  2005, there were 1,092,686 Class A, Class Band Class C units issued and outstanding.

DOCUMENTSINCORPORATED BYREFERENCE

None.

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ALLIED SECURITYHOLDINGS LLC2005 ANNUAL REPORT ON FORM 10-K

TABLE OFCONTENTS

|            |  |                                                                                                                      |  |               |  |  |  |  |  |  |
|------------|--|----------------------------------------------------------------------------------------------------------------------|--|---------------|--|--|--|--|--|--|
|       |  |                                                                                                                 |  | PAGE          |
|       |  | PARTI                                                                                                                |  |          |
| Item1.     |  | Business                                                                                                             |  |   1 |
| Item1A.    |  | Risk Factors                                                                                                         |  |   4 |
| Item1B.    |  | Unresolved StaffComments                                                                                             |  | 10            |
| Item2.     |  | Properties                                                                                                           |  | 11            |
| Item3.     |  | Legal Proceedings                                                                                                    |  | 11            |
| Item4.     |  | Submission of Matters to a Vote of SecurityHolders                                                                   |  | 11            |
|       |  | PARTII                                                                                                               |  |          |
| Item 5.    |  | Market for theCompany’s Common Equity, Related Security Holder Matters andIssuer Purchases of EquitySecurities |  | 12            |
| Item 6.    |  | SelectedFinancial Data                                                                                               |  | 12            |
| Item7.     |  | Management’s Discussion and Analysis of FinancialCondition and Results of Operations                           |  | 16            |
| Item7A.    |  | Quantitative and Qualitative Disclosures about MarketRisk                                                            |  | 27            |
| Item 8.    |  | Financial Statementsand Supplementary Data                                                                           |  | 27            |
| Item9.     |  | Changes in and Disagreements with Independent RegisteredPublic Accounting Firm on Accounting and FinancialDisclosure |  | 27            |
| Item 9A.   |  | Controls andProcedures                                                                                               |  | 27            |
| Item 9B.   |  | OtherInformation                                                                                                     |  | 27            |
|       |  | PARTIII                                                                                                              |  |          |
| Item 10.   |  | Managers andExecutive Officers of the Company                                                                        |  | 28            |
| Item11.    |  | Executive Compensation                                                                                               |  | 31            |
| Item12.    |  | Security Ownership of Certain Beneficial Owners andManagement and Related Unit HolderMatters                         |  | 35            |
| Item 13.   |  | CertainRelationships and RelatedTransactions                                                                         |  | 37            |
| Item 14.   |  | PrincipalAccountant Fees andServices                                                                                 |  | 40            |
|       |  | PARTIV                                                                                                               |  |          |
| Item 15.   |  | Exhibits andFinancial StatementSchedules                                                                             |  | 41            |
| SIGNATURES |  |                                                                                                                 |
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PARTI

Item 1. Business.

Overview

Weoffer premium contract security officer services to quality-consciouscustomers in nine vertical markets throughout the United States:commercial real estate management companies, corporate complexes,shopping centers, financial institutions, healthcare facilities,colleges and universities, manufacturing and distribution facilities,residential communities and government service sites. We areresponsible for recruiting, screening, hiring, training, uniformoutfitting, scheduling and supervising our security officers. Oursecurity officers work on-location at our customers' sites andtheir responsibilities include deterring, observing, detecting andreporting perceived, potential or actual security threats. In addition,we provide contract employees for toll collection services to the Stateof Florida Department of Transportation, or FDOT. As of March1,  2006 we employed approximately 38,500 security officers andtoll collectors.

William C. Whitmore, Jr., our currentPresident, CEO and Chairman, and President and COO since 1990, joinedSpectaGuard, Inc. in 1981. In 1998, Albert J. Berger, our formerChairman and CEO, teamed with Gryphon Partners to form SpectaGuardAcquisition LLC (‘‘SpectaGuard’’) toacquire SpectaGuard, Inc., which had served the contract securityofficer needs of corporate customers primarily in the Philadelphia andBoston metropolitan markets. Gryphon Partners, along with Messrs.Berger and Whitmore, set out to consolidate the highly fragmented andlargely under-managed U.S. contract security officer industry andacquired Effective Security, Inc., a provider of contract securityofficer services to the New York metropolitan market, in 1998. We thenacquired AS Acquisition Corp. in 2000. AS Acquisition Corp., which hadbeen operating under the brand name Allied Security since its foundingin 1957, was a premier national provider of contract security officerservices to customers in more than 38 states. Our combined businessbegan operating under the name Allied Security and was reorganizedaround seven vertical market segments: high-rise office buildings,corporate complexes, shopping centers, financial institutions,universities, hospitals and industrial complexes. In February2003, SpectaGuard was acquired by MacAndrews & Forbes Holdings Inc.(together with certain of its affiliates,‘‘Mafco’’), for approximately $263.6million. We subsequently acquired Professional Security Bureau, Ltd.(‘‘PSB’’) in December  2003 forapproximately $45.8  million and, in March  2004, acquiredcertain assets and liabilities of Security Systems, Inc.(‘‘SSI’’) for approximately $10.6million, subject to certain adjustments. In August  2004, weacquired Barton Protective Services Incorporated(‘‘Barton’’) for approximately$181.0  million, subject to certain adjustments (the‘‘Barton Acquisition’’). Simultaneouslywith the closing of the Barton Acquisition, we consummated transactionswhereby Allied Security Holdings LLC (‘‘AlliedHoldings’’ and, together with its subsidiaries,‘‘Allied’’), which was formed in connectionwith the Barton Acquisition and related financings, became the solemember of SpectaGuard (and the members of SpectaGuard became themembers of Allied Holdings). We operate under the name‘‘Allied Security’’ and‘‘Barton Protective Services’’ nationally,as well as under the name ‘‘AlliedBarton SecurityServices,’’ ‘‘AlliedBarton,’’and also as ‘‘SpectaGuard’’ and‘‘Professional Security Bureau’’ in thenortheast region of the United States.

We strive to ensurecustomer satisfaction by placing several levels of customerrelationship managers in direct, ongoing contact with our customers sothey can promptly and effectively anticipate and respond to the needsof customers and security officers. Our sales and marketing efforts aredesigned to focus on quality-conscious customers located primarily inurban centers and other concentrated business districts in majormetropolitan areas and select suburban areas with a high density ofbusinesses. Our experience is that many businesses in these marketsdesire high-quality security officer services and choose servicequality over price.

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We aim to provide high-quality andcost-effective contract security officer services to our customers. Weencourage the retention of our security officers and seek to controlour operating expenses through effective management of the hiringprocess, including extensive candidate screening, training anddevelopment. We believe that we offer one of the most comprehensivetraining programs in the contract security officer industry, whichincludes multiple levels focused on both mandatory and voluntaryprograms. In March  2006, Training Magazine named AlliedBarton toits 2006 list of the top 100 United States companies in employeetraining. We believe these processes offer us a competitive advantageby fostering an employee culture that emphasizes personal careerdevelopment and provides rewards for long-term, quality service.Additionally, we offer a competitive compensation package to oursecurity officers, including paid holidays and vacations, a 401(k) planand medical, dental and life insurance benefits. We believe that ourpremium wage and benefits package contributes to a favorable turnoverrate for our security officers as compared to industryaverages.

We believe that our low security officer turnover ratedecreases personnel-related costs, including recruiting, screening,training and uniform outfitting costs, and allows us to provide ahigher overall level of service to our customers by providing aconsistent security officer staff. The annual turnover rate for oursecurity officers and toll collectors is approximately 54%against an industry average of approximately 75% for companiesof comparable size.

Our Operations

We recruit, screen,hire, train, schedule and supervise security officers who are deployedat customer locations. We use market specific services for each of thevertical markets we target, such as bike patrols in shopping centers,colleges and universities, vehicle patrols of ATMs for financialinstitutions, escorts in shopping centers and vehicle patrols incorporate complexes. In addition, we provide personnel for tollcollection services to the FDOT.

We provide our security officerswith badges and uniforms and are responsible for their compensation,including benefits, and for personnel administration. We also provideany required bonding or workers compensation insurance. We customarilycharge a customer for our services based on an hourly billing rate foreach of our employees who provide services to the customer, includingsecurity officers, site supervisors, on-site account managers and, insome cases, other management personnel.

Our typical customercontract may provide for an hourly billing rate used for all officersat a site or variable hourly billing rates for different officers. Ourstandard customer contract is a one-year contract that can beterminated by either our customer or us on 30 days' notice at anytime. Many of our larger contracts are multi-year, and we have foundthat we are generally successful in extending these contracts andnegotiating increases to billing rates under our multi-year contractson an annual basis.

    RegionalManagement

Our operations are divided into 13 geographicregions, each of which is managed by a vice president/general managerresponsible for developing and executing our regional business planbased on the demand, needs and competition in our regional markets.While each regional business plan is based on our overall corporatestrategy, our regional general managers evaluate and recommend programsand initiatives designed to build success in their particular regionalmarkets. The primary mission of the general manager, in all respects,is to follow through on our focus on customer service to ensure thatclient expectations are being met.

    DistrictOffice Management

We employ approximately 84 districtmanagers in over 70 nationwide offices (excluding the FDOT), each ofwhom is responsible for the day-to-day management of the accountmanagers, site supervisors and security officers in a particulardistrict. Typically reporting to the vice president/general manager forthe region, each district manager supervises account managers, payrolland billing, customer relations and the recruiting and training ofsecurity officers for the district.

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    Sales andMarketing

Our sales and marketing efforts are designed tofocus on quality-conscious customers throughout the United Stateslocated primarily in city centers and other concentrated businessdistricts in major metropolitan areas and select suburban areas with ahigh density of business. Within these areas, we concentrate our salesand marketing efforts on customers in our target vertical marketsegments. We focus on these vertical markets principally based on ourexperience that many businesses in these markets desire high-qualitysecurity officer services, are conscious of the quality of servicesdelivered and are less motivated by price than by servicequality.

Our marketing and sales force consists of one seniorvice president, regional vice presidents, vice presidents for selectedvertical markets and a number of business development managers andsupport staff. Our marketing and sales force is organized at theregional level and at the district office level. Our key marketingvehicles are trade shows, security conferences, advertising, mediapublicity, our website, direct mail, direct solicitation and customerreferrals.

Customers

As of December  31,2005, we provided security services to over 2,100 clients in 42 statesand the District of Columbia. We provide security services atcommercial real estate management companies, corporate complexes,shopping centers, financial institutions, healthcare facilities,colleges and universities, manufacturing and distribution facilities,residential communities and government service sites located in theUnited States, including approximately 130 of the Fortune 500companies. In addition, we provide contract employees for tollcollection services in the State of Florida.

In 2005, no singlecustomer represented more than 5% of our revenues, and therevenues from our ten largest customers represented approximately18.9% of our 2005 revenues.

Employees

As ofMarch  1,  2005, we employed approximately 39,200individuals, consisting of approximately 36,700 security officers,1,800 contract toll collection employees, and approximately 700 branchand corporate managerial and administrative staff in over 70 officesnationwide.

As of December  31,  2005, collectivebargaining agreements cover approximately 4% of our employees.We believe that our relationships with our employees are good, and wehave not experienced any work stoppages as a result of labordisputes.

Insurance

We believe that we maintain allappropriate forms of insurance, including comprehensive generalliability, performance and crime bonding, professional liability,automobile coverage and $100  million of excess and umbrellacoverage. Special coverage is sometimes added in response to uniquecustomer requirements. We also maintain compliance with all stateworkers compensation laws. A certificate of insurance, which meetsindividual contract specifications, is made available to everycustomer.

Competition

The United States contract securityofficer industry is highly competitive but fragmented. According to apublished report, there are over 5,000 contract security officerservice providers nationwide, a large majority of which are relativelysmall, independent providers. Participants in the industry range fromsmall local businesses generating less than $1.0  million inannual revenues to large nationwide companies with annual revenues inexcess of $1.0  billion.

We believe there are approximatelyten security officer service companies that operate in multiple regionswithin the United States and have revenues in excess of $100.0million per year. Our largest competitors include national contractsecurity service providers such as Securitas, Wackenhut and Guardsmark.We also compete with numerous smaller regional and local securityservice providers in the United States.

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We believe that the principal competitivefactors in the security service marketare:

|  |              |                                                                         |
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|  | •  | the quality of security officers,including length of service andtenure; |

|  |              |                                                                     |
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|  | •  | supervision, recruiting,selection and training of securityofficers; |

|  |              |                                       |
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|  | •  | management quality andresponsiveness; |

|  |              |                                                 |
|--|--------------|-------------------------------------------------|
|  | •  | ability to handlemultiple sites nationwide; and |

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|  | •  | price inrelation to the quality of service. |

GovernmentRegulation

We are subject to a large number of city, county andstate occupational licensing laws and regulations governing theprovision of private security services. Most states require businesslicensing, as well as licensing or registration of individual securityofficers, imposing minimum qualification standards and regulationsgoverning training, identification, uniforms, badges, bonding andinsurance. As required, we are licensed to provide private securityservices in each of the states in which we do business. We believe weare in substantial compliance with all relevant regulations and havenot received notice of noncompliance which could have a materialadverse affect upon the business. However, substantial noncompliance ina jurisdiction in which we operate could jeopardize our license tooperate in that jurisdiction and/or subject us to fines.

WebsiteAccess to Reports

Our internet website ishttp://www.alliedbarton.com. Our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q, Current Reports on Form 8-K andamendments to those reports are made available on our website free ofcharge as soon as reasonably practicable after we file such materialwith, or furnish it to, the Securities and Exchange Commission(‘‘SEC’’ or the‘‘Commission’’).

Additionalinformation required by Item 1 of Part I is incorporated by referenceto the Consolidated Financial Statements filed with this Annual Reporton Form 10-K and the notes thereto.

Item 1A.    RiskFactors.

Our business, operations and financialcondition are subject to various risks. The most significant risks aredescribed below. You should take these risks into account in evaluatingus or any investment decision involving us. This section does notdescribe all the risks applicable to us, our industry or our business,and it is intended only as a summary of the most significant risks.Moreover, there may be additional risks and uncertainties not presentlyknown to us or that we currently consider immaterial. These riskfactors should be read in conjunction with the other information inthis Annual Report on Form 10-K and in the other documents that we filefrom time to time with the SEC.

We have substantialdebt.

As of December  31,  2005, we and ourconsolidated subsidiaries had approximately $377.3  million ofoutstanding debt (excluding obligations to trade creditors). We mayincur substantial additional debt in the future, including additionaldebt under our Credit Facility (as defined below). As ofDecember  31,  2005 we had $25.3  million of unusedborrowing capacity under our Credit Facility, net of the issuance of$24.7  million of outstanding letters of credit. Our substantiallevel of indebtedness could have important consequences, including thefollowing:

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|  | •  | our ability to obtainadditional financing for working capital, capital expenditures,acquisitions or general corporate purposes may beimpaired; |

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|  | •  | we must use a substantialportion of our cash flow from operations to make debt service paymentson the Notes (as defined below) and our Credit Facility, which willreduce the funds available to us for other purposes such as potentialacquisitions and capital expenditures; |

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|  |              |                                                                                                              |
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|  | •  | we are exposed tofluctuations in interest rates, because our Credit Facility has avariable rate of interest; |

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|  | •  | we may have ahigher level of indebtedness than some of our competitors, which mayput us at a competitive disadvantage and reduce our flexibility inplanning for, or responding to, changing conditions in our industry,including increased competition; and |

|  |              |                                                                                              |
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|  | •  | weare more vulnerable to general economic downturns and adversedevelopments in our business. |

The indenture governing theNotes and our Credit Facility impose significant restrictions on us,which may prevent us from capitalizing on business opportunities andtaking some corporate actions.

The indenture governing theNotes and our Credit Facility impose, and the terms of any future debtmay impose, significant operating and financial restrictions on us.These restrictions, among other things, limit our ability and theability of our restricted subsidiariesto:

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|  | •  | incur or guarantee additionalindebtedness; |

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|  | •  | pay dividends and makedistributions; |

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|  | •  | make certaininvestments; |

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|  | •  | repurchasestock; |

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|  | •  | incurliens; |

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|  | •  | enter into certain transactionswith affiliates; |

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|  | •  | enter into sale andleaseback transactions; |

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|  | •  | merge orconsolidate; |

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|  | •  | transfer or sell assets;and |

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|  | •  | limit dividends and other paymentsby our restricted subsidiaries to us. |

We cannot assure you thatthese covenants will not adversely affect our ability to finance ourfuture operations or capital needs, pursue available businessopportunities or take certain corporate actions.

Wemay not be able to generate sufficient cash to service all of ourindebtedness, and may be forced to take other actions to satisfy ourpayment obligations under our indebtedness, which may not besuccessful.

Our ability to make scheduled payments or torefinance our debt obligations depends on our financial and operatingperformance, which is subject to prevailing economic and competitiveindustry conditions and to certain financial, business and otherfactors beyond our control. These factorsinclude:

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|  | •  | interest rates and generaleconomic conditions; |

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|  | •  | competitiveconditions in our industry; |

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|  | •  | operatingdifficulties, operating costs or pricing pressures that we mayexperience; |

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|  | •  | passage of legislation orother regulatory developments that affect us adversely;and |

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|  | •  | delays or difficulties inimplementing our business strategies. |

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There can be no assurance that we willmaintain a level of cash flows from operating activities sufficient topermit us to satisfy our payment obligations under our indebtedness. Ifour cash flows and capital resources are insufficient to fund our debtservice obligations, we may be forced to reduce or delay capitalexpenditures, seek additional capital, sell assets or restructure orrefinance our indebtedness. These alternative measures may not besuccessful and may not permit us to meet our scheduled debt serviceobligations. In the absence of such operating results and resources, wecould face substantial liquidity problems and might be required toscale back our operations or dispose of material assets to meet ourdebt service and other obligations. Our Credit Facility and theindenture governing the Notes restrict our ability to dispose of assetsand use the proceeds from the disposition. We may not be able toconsummate those dispositions or dispose of our assets at prices thatwe believe are fair, and the proceeds from such sales may not beadequate to meet our obligations. In addition, the terms of ourindebtedness may restrict the use of proceeds from such assetsales.

Our standard customer contracts for securityofficer services are short-term, and if we are unabletoretain our existing security officer service contractsor obtain new security service contracts, our results of operations andfinancial condition will be adversely affected. In addition, we derivea portion of our revenues from contracts with the State of FloridaDepartment of Transportation, the loss of which could have an adverseeffect on our business and operations.

Our business isdependent on our security officer service contracts. Our standardcustomer contract is a one-year contract that can be terminated byeither us or our customer on 30 days' written notice at any time.We serve certain of our customers under month-to-month extensions ofthese written contracts. If we are not able to maintain our existingsecurity service contracts or obtain additional security servicecontracts, our business, financial condition and results of operationswill be adversely affected.

In addition, we provide contractemployees for toll operator services to the FDOT pursuant to contractswhich expire on May  31,  2006. For 2005, these contractsgenerated an aggregate of approximately $50.1  million, or4.5%, of our revenues. The FDOT has the right to terminate thecontracts at any time for any reason in accordance with the interestsof the FDOT. In addition, the FDOT has initiated a competitive biddingprocess for the award of a new contract following the scheduledexpiration of the existing contract. In the event that these contractsare terminated or materially modified, or if we are not successful inacquiring the new contract, our revenues may be reduced substantially,which could have an adverse effect on our business, financial conditionand results of operations.

The security services we providemay subject us to liability for substantial damages not coveredbyinsurance.

We provide security services atvarious customer locations. We may be held liable for the negligentacts or misconduct of our agents or employees performed while on dutyand in the course and scope of their employment. We experience asignificant volume of claims and litigation asserting that we areliable for damages as a result of the conduct of our employees orothers. We may from time to time be subject to claims that our officershave physically or emotionally harmed individuals in the course ofproviding these services, or members of the public may be otherwiseinjured by events occurring on client premises, including events thatare not under the immediate control of our security officers.Individuals may bring personal injury lawsuits against us seekingsubstantial damages based on alleged negligence or other theories ofliability in our provision of security services, including with respectto injuries not directly caused by, or within the control of, oursecurity officers. Under principles of common law, we can generally beheld liable for wrongful acts or omissions to act of our agents oremployees during the course, and within the scope, of their agency oremployment with us.

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In many cases, our security servicecontracts also require us to indemnify our clients or may otherwisesubject us to additional liability for events occurring on clientpremises. In addition, some states have adopted statutes that make usresponsible for the conduct of our agents and employees. While wemaintain insurance programs that provide coverage for certain liabilityrisks, including personal injury, death and property damage, the lawsof many states limit or prohibit insurance coverage for punitivedamages arising from willful or grossly negligent conduct.Consequently, insurance may not be adequate to cover all potentialclaims or damages. If a plaintiff brings a successful claim against usfor punitive damages or in excess of our insurance coverage, we couldincur substantial liabilities and our financial condition could bematerially and adversely affected.

Since we positionourselves as a premium, high-quality provider of contract securityservices in anindustry that is traditionallyprice-sensitive, damage to our professional reputation, including as aresult of a well-publicized incident or breach of security, could havea material adverse effect on our business.

We depend to alarge extent on our relationships with our customers and our reputationfor high-quality contract security services, particularly since weposition ourselves as a premium, high-quality provider of contractsecurity services in an industry that is price-sensitive. Ourcustomers' expectations and perception of the quality of ourservices are in large part determined by their regular contact with ourmanagers. If a customer is not satisfied with our services, it may bemore damaging in our business than in non-service related businesses.Moreover, a well-publicized incident or breach of security at one ormore of our customers' locations could result in a negativeperception of our services, damage to our reputation and the loss ofexisting or potential customers, which could have a material adverseeffect on our business, financial condition and results ofoperations.

Our growth strategy includes theevaluation of selective acquisition opportunities which mayplacesignificant demands on our resources. We may not besuccessful in identifying suitable acquisition opportunities, and, ifwe do identify such opportunities, we may not be able to obtainacceptable financing for the acquisition or reach agreeable terms withacquisition candidates or successfully integrate acquiredbusinesses.

An element of our growth strategy is theacquisition and integration of complementary businesses in order toincrease our density within certain geographic areas, capture marketshare in the markets in which we operate and improve profitability. Wewill not be able to acquire other businesses if we cannot identifysuitable acquisition opportunities, obtain financing on acceptableterms or reach mutually agreeable terms with acquisition candidates. Inaddition, to the extent that consolidation becomes more prevalent inour industry, the prices for suitable acquisition candidates mayincrease to unacceptable levels thereby limiting our ability togrow.

Our growth through selective acquisitions may placesignificant demands on our management and our operational and financialresources. Acquisitions involve numerous risks, including the diversionof our management's attention from other business concerns, thepossibility that current operating and financial systems and controlsmay be inadequate to deal with our growth and the potential loss of keyemployees.

We also may encounter difficulties in integrating anybusinesses we may acquire with our existing operations. The success ofthese transactions depends on our abilityto:

|  |              |                                                                            |
|--|--------------|----------------------------------------------------------------------------|
|  | •  | successfully merge corporatecultures and operational and financialsystems; |

|  |              |                                                                |
|--|--------------|----------------------------------------------------------------|
|  | •  | integrate and retain thecustomer base of the acquiredbusiness; |

|  |              |                                      |
|--|--------------|--------------------------------------|
|  | •  | realize cost reductionsynergies; and |

|  |              |                                                                                          |
|--|--------------|------------------------------------------------------------------------------------------|
|  | •  | as necessary, retain keymanagement members and technical personnel of acquiredcompanies. |

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If we fail to integrate acquired businessessuccessfully or to manage our growth, that failure could have amaterial adverse effect on our business. Further, we may be unable tomaintain or enhance the profitability of any acquired business,consolidate its operations to achieve cost savings or maintain or renewany of its contracts.

In addition, there may be liabilities thatwe fail, or are unable, to discover in the course of performing duediligence investigations on any company that we may acquire, or haverecently acquired. Also, there may be additional costs relating toacquisitions including, but not limited to, possible purchase priceadjustments. Any of our rights to indemnification from sellers to us,even if obtained, may not be enforceable, collectible or sufficient inamount, scope or duration to fully offset the possible liabilitiesassociated with the business or property acquired. Any suchliabilities, individually or in the aggregate, could have a materialadverse effect on our business.

Terrorist activity atlocations where we provide security services could have a materialadverse effect on our business by subjecting us to liability. Whetheror not terrorist activity occurs at a client location, our insurancecosts could increase and we could be required to comply with moreburdensome regulations.

If any locations where we providesecurity related services are attacked by terrorists, liabilitiesresulting from such attacks may not be covered by insurance and couldhave a material adverse effect on our business, financial condition orresults of operations. Terrorist activity could materially andadversely affect our business by requiring us to incur additionalpersonnel costs as a result of compliance with expanded security rulesand regulations.

In addition, terrorist attacks that do notdirectly involve locations serviced by us could have a material impacton us by increasing our insurance coverage costs or making insurancecoverage unavailable altogether. We have coverage for terrorist attacksunder a $100.0  million excess liability insurance policy. Thispolicy is subsidized by the government under the Terrorism ReinsuranceExtension Act, or TRIEA. TRIEA is a government-sponsored program whichallows insurance carriers to pass on liability exposure to thegovernment in the event of a terrorist act. TRIEA expires onDecember  31,  2007 and it is possible that TRIEA will notbe renewed and, as a result, insurance companies will no longer bewilling to provide terrorism coverage to us on the same terms, or atall. This could have a material impact on us by increasing ourinsurance coverage costs or rendering us unable to obtain suchinsurance which, in the event of a terrorist attack, could materiallyand adversely affect our business, financial condition or results ofoperations.

Our industry is intensely competitive. Ifwe cannot successfully compete with new or existing security serviceproviders, our results of operations and financial condition will beadversely affected.

The contract security officer servicesindustry is intensely competitive. We directly compete with companiesthat are national and international in scope and some of ourcompetitors have significantly greater personnel, financial, technicaland marketing resources than we do, generate greater revenues than wedo and have greater name recognition than we do. The recent trendtoward consolidation in our industry will likely lead to increasedcompetition from these companies. We also compete with smaller localand regional companies that may have better knowledge of the localconditions in their regions, are better known locally and are betterable to gain customers in their regions. There are relatively lowbarriers to entry into the contract security services industry, and wehave faced and expect to continue to face additional competition fromnew entrants into the contract security officer services industry. Inaddition, some of our competitors may be willing to provide services atlower prices, accept a lower profit margin or expend more capital inorder to obtain or retain business. If we cannot successfully competewith new or existing security service providers, our business,financial condition and results of operations will be adverselyaffected.

8

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If we are unable toattract, retain and manage security officers and administrative staff,our business will suffer.

Our business involves thelabor-intensive delivery of contract security services. We derive ourrevenues largely from contract security officer services performed byour security officers. As of March  1,  2006, we employedapproximately 36,700 security officers and 1,800 toll collectors. Ourfuture performance depends in large part upon our ability to attract,develop, motivate and retain skilled security officers andadministrative staff. Qualified security officers and administrativestaff are in demand, and there is significant competition for theseindividuals from other security firms, government agencies and othersimilar enterprises. As a result, we may not be able to attract andretain sufficient numbers of these qualified individuals in the future,which may adversely affect our futureperformance.

Turnover of contract security officers issignificant. The loss of the services of, or the failure to recruit, asignificant number of skilled security officers and administrativestaff would harm our business, financial condition and results ofoperations, including our ability to secure and complete servicecontracts. Furthermore, if we do not successfully manage our existingsecurity officers and administrative staff, we may not be able toachieve the anticipated billing rates, engagement quality, level ofovertime and other performance measures that are important to ourbusiness, financial condition and results ofoperations.

Organized labor action oroccupational health and safety laws and regulations could have amaterial adverse effect on our operations.

As ofDecember  31,  2005 approximately 4% of ouremployees were unionized. Our industry has been the subject ofcampaigns to increase the number of unionized employees. Although webelieve that our relationships with our employees are good, we cannotprovide you with any assurances that organized labor action at one ormore of our facilities will not occur, or that any such activities, orany other labor difficulties at our facilities or the facilities of anyof our customers, would not materially affect us.

Inaddition, we are subject to, among other laws and regulations,comprehensive U.S. occupational health and safety laws and regulations.Such laws and regulations may become more stringent and result innecessary modifications to our current practices and facilities thatcould force us to incur additional costs that could materially affectus.

If we lose our executive officers or keypersonnel or are unable to attract and retain senior operationalemployees, our operations could be materially and adverselyaffected.

Our success is dependent to a significant extentupon the continuing efforts, abilities and business generationcapabilities of our senior management team and key employees. We haveprograms in place to motivate, reward and retain our management teams,including cash bonus and equity incentive plans. However, the loss orunavailability of any of our executive officers and key employees couldharm our ability to properly service or retain existing clients oroperate new businesses. Our success and plans for future growth willalso depend on our ability to hire and retain senior operationemployees in all areas of our business.

Ourservice contracts often provide for fixed hourly bill rates or permitlimited fee adjustments, and our business, financial condition andresults of operations will suffer if increases in our costs cannot becharged to our customers.

Our largest expenses arepayroll, payroll taxes and employee related benefits. We believe thatwe have higher wages and related payroll taxes and benefits costs thanother participants in our industry due to our focus on attracting andretaining a highly qualified workforce. Most of our service contractsprovide for a fixed hourly bill rate and some of our service contractsprovide for payments of either fixed fees or fees that increase by onlysmall amounts during the terms of such service contracts or not at all.Competitive pressures also may prevent us from raising our fees orhourly bill rates when contracts are renewed. If, due to inflation orother causes, including increases in statutory payroll taxes, we mustincrease the wages, salaries and related taxes and benefits of ouremployees at rates faster than we can increase the fees charged underour service contracts, our profitability will be adverselyaffected.

9

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We are subject to governmentregulation, and our failure or inability to comply with theseregulations could materially restrict our operations and subject us tosubstantial penalties.

We are subject to a large number ofcity, county and state occupational licensing laws and regulations thatapply to security officers. Most states have laws, or legislationpending, requiring qualification, training and registration of securityofficers, regulating the use of identification cards, badges anduniforms and imposing minimum bond surety or insurance standards. Anyliability we may have from our failure to comply with these regulationsmay materially affect our business by restricting our operations andsubjecting us to substantial penalties. In addition, our current andfuture operations may be subject to additional regulation as a resultof, among other factors, new statutes and regulations and changes inthe manner in which existing statutes and regulations are or may beinterpreted.

Changes in available security technology mayhave an adverse effect on our results of operations and financialcondition.

Our business involves the labor intensivedelivery of contract security services performed by our securityofficers. Changes in technologies that provide alternatives to securityofficer services or that decrease the number of security officersrequired to effectively perform their services may decrease ourcustomers' demand for our security officer services. In addition,if such technologies become available for use in the industry, thesetechnologies may be proprietary in nature and not be available for useby us in servicing our customers. Even if these technologies areavailable for use by us, we may not be able to successfully integratesuch technologies into our business model or may be less successful indoing so than our competitors or new entrants in the industry. Adecrease in demand for our security officer services or our inabilityto effectively utilize such technologies may adversely affect ourbusiness, financial condition and results ofoperations.

Mafco has the power to direct and control ourbusiness.

SpectaGuard Holding Corporation(‘‘SpectaGuard Holding’’), a corporationwholly-owned through Mafco by Ronald O. Perelman, a member of our Boardof Managers, has the power under our operating agreement(‘‘Operating Agreement’’), subject tocertain exceptions, to designate all of the members of our Board ofManagers. Mafco is therefore able to direct and control our policiesand those of our subsidiaries, including, subject to exceptions, withrespect to certain mergers, sales of assets and similartransactions.

Item 1B.  Unresolved StaffComments.

None.

10

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Item2. Properties.

Our principal executive officesare located at 3606 Horizon Drive, King of Prussia, Pennsylvania 19406.Our principal real estate consists primarily of our executive officesand district offices, with additional smaller offices to handlerecruiting and other administrative functions in some areas. Asignificant number of these facilities are held under long-termoperating leases, while others are held under short-term ormonth-to-month leases. As of December  31,  2005, wemaintained over 70 district offices nationwide (excluding the FDOT).All of these are leased, and none are owned. We believe that if we wereunable to renew the lease on any of these facilities, we would be ableto lease other suitable facilities on commercially reasonable terms. Wedo not believe that any individual facility or lease is material to ourbusiness.

Item 3.    Legal Proceedings. 

Wemay be held liable for the negligent acts or misconduct of our agentsor employees performed while on duty and in the course and scope oftheir employment. We experience a significant volume of claims andlitigation in the ordinary course of business asserting that we areliable for damages as a result of the conduct of our employees orothers. Individuals may bring personal injury lawsuits against usseeking substantial damages based on alleged negligence or othertheories of liability in our provision of security services, includingwith respect to injuries not directly caused by, or within the controlof, our security officers. Under principles of common law, we generallycan be held liable for wrongful acts or omissions to act of our agentsor employees during the course, and within the scope, of their agencyor employment with us.

In addition, many of our customercontracts contain provisions whereby we are contractually obligated todefend, indemnify and hold harmless our clients. These provisions varyfrom indemnification for our own negligence and misconduct to providingindemnification for any claims related to our services regardless ofour fault. In a limited number of situations, we may also be requiredto indemnify our customers in cases of their own contributorynegligence.

We maintain self-insurance programs and insurancecoverage for this general liability risk, which we believe adequatelyinsure us. We also seek to mitigate this risk exposure throughindemnification or liability limitations in our contracts, analysis ofcustomer facilities and implementation of programs for employeescreening, training, supervision and safety and anonymous reporting byour employees. We believe that we have established adequate reservesfor litigation liabilities in our consolidated financial statements.From time to time, we are involved in arbitrations or legal proceedingsthat arise in the ordinary course of business. We cannot predict thetiming or outcome of these claims and proceedings. Currently, we arenot involved in any arbitration and/or legal proceeding that we expectto have a material effect on our business, financial condition orresults of operations. Exposure to litigation is inherent in ourongoing business and may harm our business in the future.

Item4. Submission of Matters to a Vote of SecurityHolders.

Not applicable.

11

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PARTII

|               |                                                                                                                        |
|---------------|------------------------------------------------------------------------------------------------------------------------|
| Item 5.  | Market for theCompany’s Common Equity, Related Security Holder Matters andIssuer Purchases of Equity Securities. |

There is noestablished public trading market for any class of our membershipinterests. As of December  31,  2005, there were890,985, 77,627 and 124,074 Class A, Class B and Class C unitsoutstanding, respectively. Of the Class C units outstanding as of suchdate, 71,808 had vested and 52,266 remained unvested. All Class A,Class B and Class C units are non-voting.

We pay distributionsto our members with respect to income taxes that they owe on earningsthat are allocated to them in accordance with our Operating Agreement(as defined below). Our Credit Facility (as defined below) restrictsour ability to pay dividends or other distributions (other thantax-related distributions and certain other limited exceptions) on ourequity interests. The indenture governing the Notes (as defined below)also places certain restrictions on our ability to pay dividends andmake other distributions (other than the tax-related distributions andcertain other limited exceptions). Tax-related distributions paid were$1.5  million in 2005 and $0 for 2004.

Item6.    Selected Financial Data.

The following tablesets forth our selected consolidated statements of operations data forthe years ended December  31,  2001 and 2002, period fromJanuary  1,  2003 to February  18,  2003, theperiod from February  19,  2003 to December31,  2003 and the years ended December  31,  2004 andDecember  31,  2005, and our selected consolidated balancesheet data as of December  31,  2001 and 2002,February  18,  2003 and December  31,  2003,2004, and 2005, and have been derived from our consolidated financialstatements, which have been audited by Ernst & Young LLP(‘‘EY’’), an independent registered publicaccounting firm.

Our selected consolidated financial data setforth below should be read in conjunction with‘‘Management's Discussion and Analysis of FinancialCondition and Results of Operations’’ and theconsolidated financial statements and the related notes theretoincluded elsewhere in this Annual Report on Form 10-K.

12

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|                                                  |  |                                   |         |                                           |  |                                             |         |                        |  |          |         |         |  |        |         |        |  |        |         |         |  |        |           |         |  |  |
|--------------------------------------------------|--|-----------------------------------|---------|-------------------------------------------|--|---------------------------------------------|---------|------------------------|--|----------|---------|---------|--|--------|---------|--------|--|--------|---------|---------|--|--------|-----------|---------|--|--|
|                                             |  | Predecessor(1)                    |         | Successor(1)                              |
|                                             |  | Year EndedDecember31,             |         | Period FromJanuary 1, 2003 to February18, |  | Period FromFebruary 19, 2003 to December31, |         | Year Ended December31, |
|                                             |  | 2001(2)                           |         | 2002                                      |  | 2003                                        |         | 2003(2)                |  | 2004 (2) |         | 2005    |
|                                             |  | (tabular information inthousands) |
| ConsolidatedStatement of OperationsData:         |  |                              |
| Revenues                                         |  | $                                 | 450,474 |                                      |  | $                                           | 510,592 |                   |  | $        | 70,419  |    |  | $      | 483,725 |   |  | $      | 873,401 |    |  | $      | 1,124,549 |    |
| Costof revenues                                  |  |                              | 374,210 |                                      |  |                                        | 425,221 |                   |  |     | 59,568  |    |  |   | 402,509 |   |  |   | 736,775 |    |  |   | 957,497   |    |
|                                             |  |                              | 76,264  |                                      |  |                                        | 85,371  |                   |  |     | 10,851  |    |  |   | 81,216  |   |  |   | 136,626 |    |  |   | 167,052   |    |
| Branchand corporate overhead expenses(3)         |  |                              | 48,169  |                                      |  |                                        | 52,036  |                   |  |     | 11,119  |    |  |   | 48,014  |   |  |   | 83,588  |    |  |   | 93,100    |    |
| Depreciationand amortization                     |  |                              | 16,073  |                                      |  |                                        | 14,566  |                   |  |     | 1,447   |    |  |   | 15,587  |   |  |   | 26,301  |    |  |   | 35,365    |    |
| Losson early extinguishment of debt(4)           |  |                              |    |                                      |  |                                        |    |                   |  |     | 3,291   |    |  |   |    |   |  |   | 18,742  |    |  |   |      |    |
| Initialpublic offering abandonment(5)            |  |                              | — |                                      |  |                                        | 1,878   |                   |  |     | — |    |  |   | — |   |  |   | — |    |  |   | —   |    |
| Operatingincome (loss)                           |  |                              | 12,022  |                                      |  |                                        | 16,891  |                   |  |     | (5,006  | )  |  |   | 17,615  |   |  |   | 7,995   |    |  |   | 38,587    |    |
| Interestexpense, net                             |  |                              | 13,909  |                                      |  |                                        | 12,062  |                   |  |     | 6,190   |    |  |   | 15,581  |   |  |   | 31,385  |    |  |   | 40,341    |    |
| Income(loss) before income tax expense (benefit) |  |                              | (1,887  | )                                    |  |                                        | 4,829   |                   |  |     | (11,196 | )  |  |   | 2,034   |   |  |   | (23,390 | )  |  |   | (1,754    | )  |
| Incometax expense (benefit) (6)                  |  |                              | 2,860   |                                      |  |                                        | (544    | )                 |  |     | (1,421  | )  |  |   | — |   |  |   | — |    |  |   | —   |    |
| Income(loss) before discontinuedoperations       |  |                              | (4,747  | )                                    |  |                                        | 5,373   |                   |  |     | (9,775  | )  |  |   | 2,034   |   |  |   | (23,390 | )  |  |   | (1,754    | )  |
| Lossfrom discontinued operations(7)              |  |                              | (767    | )                                    |  |                                        | — |                   |  |     | — |    |  |   | — |   |  |   | — |    |  |   | —   |    |
| Netincome (loss)                                 |  |                              | (5,514  | )                                    |  |                                        | 5,373   |                   |  |     | (9,775  | )  |  |   | 2,034   |   |  |   | (23,390 | )  |  |   | (1,754    | )  |
| Preferredstock dividends (8)                     |  |                              | (8,724  | )                                    |  |                                        | — |                   |  |     | — |    |  |   | — |   |  |   | — |    |  |   | —   |    |
| Netincome (loss) applicable tomembers            |  | $                                 | (14,238 | )                                    |  | $                                           | 5,373   |                   |  | $        | (9,775  | )  |  | $      | 2,034   |   |  | $      | (23,390 | )  |  | $      | (1,754    | )  |
|                                                  |

|                                     |  |                                                                   |        |                                            |  |                                              |        |                       |  |        |         |            |  |        |        |        |  |        |        |                |  |        |        |        |  |  |
|-------------------------------------|--|-------------------------------------------------------------------|--------|--------------------------------------------|--|----------------------------------------------|--------|-----------------------|--|--------|---------|------------|--|--------|--------|--------|--|--------|--------|----------------|--|--------|--------|--------|--|--|
|                                |  | Predecessor(1)                                                    |        | Successor(1)                               |
|                                |  | Year EndedDecember31,                                             |        | Period From January 1, 2003 to February18, |  | Period From February 19, 2003 to December31, |        | Year EndedDecember31, |
|                                |  | 2001                                                              |        | 2002                                       |  | 2003                                         |        | 2003                  |  | 2004   |         | 2005       |
|                                |  | (tabularinformation in thousands, except for per hourinformation) |
| OtherFinancial and OperatingData    |  |                                                              |
| EBITDA (9)                          |  | $                                                                 | 28,095 |                                       |  | $                                            | 31,457 |                  |  | $      | (3,559) | (10)  |  | $      | 33,202 |   |  | $      | 34,296 | (10)(11)  |  | $      | 73,952 |   |
| Cashflows from operating activities |  | $                                                                 | 13,380 |                                       |  | $                                            | 29,136 |                  |  | $      | 587     |       |  | $      | 21,790 |   |  | $      | 24,009 |           |  | $      | 31,407 |   |
| Capitalexpenditures                 |  | $                                                                 | 5,395  |                                       |  | $                                            | 5,712  |                  |  | $      | 902     |       |  | $      | 6,064  |   |  | $      | 10,879 |           |  | $      | 16,267 |   |
| SecurityOfficer:                    |  |                                                              |
| Hours billed                        |  |                                                              | 30,306 |                                       |  |                                         | 32,458 |                  |  |   | 4,351   |       |  |   | 29,487 |   |  |   | 51,708 |           |  |   | 62,117 |   |
| Averagebill rate per hour           |  | $                                                                 | 14.46  |                                       |  | $                                            | 14.98  |                  |  | $      | 15.22   |       |  | $      | 15.42  |   |  | $      | 15.54  |           |  | $      | 15.94  |   |
| Hourspaid(12)                       |  |                                                              | 31,153 |                                       |  |                                         | 33,157 |                  |  |   | 4,422   |       |  |   | 30,283 |   |  |   | 53,372 |           |  |   | 64,158 |   |
| Averagepay rate per hour            |  | $                                                                 | 9.97   |                                       |  | $                                            | 10.30  |                  |  | $      | 10.44   |       |  | $      | 10.59  |   |  | $      | 10.61  |           |  | $      | 11.19  |   |
|                                     |

|                          |  |                                  |         |                   |  |                 |         |        |  |      |         |        |  |   |         |        |  |   |         |        |  |   |         |        |  |  |
|--------------------------|--|----------------------------------|---------|-------------------|--|-----------------|---------|--------|--|------|---------|--------|--|---|---------|--------|--|---|---------|--------|--|---|---------|--------|--|--|
|                     |  | Predecessor(1)                   |         | Successor (1)     |
|                     |  | AsofDecember 31,                 |         | As ofFebruary 18, |  | AsofDecember31, |
|                     |  | 2001                             |         | 2002              |  | 2003            |         | 2003   |  | 2004 |         | 2005   |
|                     |  | (tabularinformation inthousands) |
| BalanceSheet Data:       |  |                             |
| Cash and cashequivalents |  | $                                | — |              |  | $               | 1,696   |   |  | $    | — |   |  | $ | 8,102   |   |  | $ | 11,008  |   |  | $ | 10,710  |   |
| Accountsreceivable, net  |  | $                                | 62,752  |              |  | $               | 53,046  |   |  | $    | 52,486  |   |  | $ | 65,438  |   |  | $ | 129,729 |   |  | $ | 135,461 |   |
| Totalassets              |  | $                                | 216,835 |              |  | $               | 200,909 |   |  | $    | 196,208 |   |  | $ | 404,324 |   |  | $ | 641,364 |   |  | $ | 623,773 |   |
| Totaldebt                |  | $                                | 111,945 |              |  | $               | 90,885  |   |  | $    | 90,270  |   |  | $ | 181,662 |   |  | $ | 390,212 |   |  | $ | 377,306 |   |
| Totalmembers equity (13) |  | $                                | 23,945  |              |  | $               | 26,022  |   |  | $    | 20,908  |   |  | $ | 130,205 |   |  | $ | 108,501 |   |  | $ | 99,638  |   |
|                          |

13

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|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | SpectaGuardwas acquired by Mafco on February  19,  2003. See‘‘Management's Discussion and Analysis of FinancialCondition and Results of Operations — Acquisition byMafco.’’ Financial data presented herein for periodsprior to and including February  18,  2003 relate toSpectaGuard prior to the Mafco transaction (the‘‘Predecessor’’). Financial data presentedherein for periods beginning on and after February  19,2003 relate to SpectaGuard after the Mafco transaction (the‘‘Successor’’). |

|     |                                                                                                                                                                       |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Ourselected consolidated historical financial data includes the effect ofthe following business transactions, from and after the date of thetransactions, as follows: |

|  |        |                                                                                   |
|--|--------|-----------------------------------------------------------------------------------|
|  | • | Yearended December  31,  2001: Electronics division sold during2001 for $840,000; |

|  |        |                                                                                                               |
|--|--------|---------------------------------------------------------------------------------------------------------------|
|  | • | Period fromFebruary  18,  2003 to December  31,  2003: PSBacquired on December  19,  2003 for $45,766,000;and |

|  |        |                                                                                                                                                                                                            |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | • | Year ended December31,  2004: Certain assets and liabilities of SSI acquired onMarch  19,  2004 for $10,574,000 subject to certainadjustments; the Barton Acquisition on August  2,  2004 for$181,033,000. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | An affiliate of GryphonSpectaGuard Partners, L.P., the Predecessor's majority owner,charged the Predecessor an administrative fee for management servicesperformed on its behalf and the Predecessor paid reimbursements forcertain costs incurred in connection with those services. Fees andreimbursements for the period from January  1,  2003 toFebruary  18,  2003, totaled $188,000. As a result of theMafco transaction, the Predecessor cancelled the agreement pursuant towhich such amounts were paid resulting in a termination fee of$2,680,000. In addition, certain members of management receivedtransaction related compensation upon completion of the Mafcoacquisition totaling $1,320,000. |

|     |                                                                                                                                                                                                                                                                                                        |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Inconnection with the Mafco transaction in February  2003,$87,822,000 of SpectaGuard's then existing debt was repaid,resulting in a loss of $3,291,000. In connection with the BartonAcquisition in August  2004, $186,900,000 of our then existingdebt was repaid, resulting in a loss of$18,742,000. |

|     |                                                                                   |
|-----|-----------------------------------------------------------------------------------|
| (5) | Expenses relate to an initialpublic offering which was withdrawn in December2002. |

|     |                                                                                                                                                                                                                                                                                                                              |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (6) | The members of the Successor haveelected to be treated as a partnership for both federal and stateincome taxes. Certain Predecessor subsidiaries were taxed underSubchapter C of the Internal Revenue Code. For additional detail, seethe audited financial statements included elsewhere in this AnnualReport on Form 10-K. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (7) | Pursuant to ABP No. 30‘‘Reporting the Results of Operations — Reportingthe Effects of Disposal of a Segment of a Business, and Extraordinary,Unusual and Infrequently Occurring Events andTransactions,’’ the consolidated financial statementshave been reclassified to reflect the sale of the Predecessor’selectronics division for $840,000 during2001. |

|     |                                                                                                                                                                                                                                                                                                                                        |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (8) | Amounts represents accrued dividendsrelated to Series A and Series B preferred shares of the Predecessor.The Series A and Series B preferred shares accrued dividends at therates of 10% and 14% respectively, compounded annually.The preferred shares and accrued dividends were repaid upon theacquisition of SpectaGuard by Mafco. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (9) | EBITDAis defined as income (loss) before discontinued operations, beforeinterest expense, income taxes and depreciation and amortization.EBITDA is presented because we believe it is useful to investors as awidely accepted financial indicator of a company's ability toservice and/or incur indebtedness and because such disclosure providesinvestors with additional criteria used by us to evaluate our operatingperformance. |

|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | EBITDA is not defined underUnited States generally accepted accounting principles, or GAAP, shouldnot be considered in isolation or as a substitute for a measure of ourliquidity or performance prepared in accordance with GAAP and is notindicative of income from operations as determined under GAAP. EBITDAand other non-GAAP financial measures have limitations which you shouldconsider if you use these measures to evaluate our liquidity orfinancial performance. EBITDA does not include interest expense, whichhas required significant uses of our cash in the past and will requireus to expend significant cash resources in the future. EBITDA also doesnot include income tax expense or depreciation and amortizationexpense, which may be necessary in evaluating our operating results andliquidity requirements or those of businesses we may acquire. Ourmanagement compensates for these limitations by using EBITDA as asupplement to GAAP results to provide a more comprehensiveunderstanding of the factors and trends affecting our business or thebusiness we may acquire. Our computation of EBITDA may not becomparable to other similarly titled measures provided by othercompanies, because all companies do not calculate this measure in thesame fashion. |

|  |  |                                                                                                           |
|--|--|-----------------------------------------------------------------------------------------------------------|
|  |  | The following table reconcilesincome (loss) before discontinued operations, as presented above, toEBITDA: |

|                                                                        |
|------------------------------------------------------------------------|
|                                                                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                   |  | Predecessor(1) |  | Successor(1) |
|                                                                   |  | YearEndedDecember 31, |  | Period From January 1, 2003to February 18, |  | Period From February 19,2003 to December 31, |  | Year Ended December31, |
|                                                                   |  | 2001 |  | 2002 |  | 2003 |  | 2003 |  | 2004 |  | 2005 |
|                                                                   |  | (tabularinformation inthousands) |
| Reconciliationof Income (Loss)Before Discontinued Operations toEBITDA: |  |   |
| Income (loss) beforediscontinuedoperations                             |  | $ | (4,747 | )  |  | $ | 5,373 |   |  | $ | (9,775 | )  |  | $ | 2,034 |   |  | $ | (23,390 | )  |  | $ | (1,754 | )  |
| Interestexpense,net                                                    |  |   | 13,909 |   |  |   | 12,062 |   |  |   | 6,190 |   |  |   | 15,581 |   |  |   | 31,385 |   |  |   | 40,341 |   |
| Incometax expense(benefit)                                             |  |   | 2,860 |   |  |   | (544 | )  |  |   | (1,421 | )  |  |   | — |   |  |   | — |   |  |   | — |   |
| Depreciationandamortization                                            |  |   | 16,073 |   |  |   | 14,566 |   |  |   | 1,447 |   |  |   | 15,587 |   |  |   | 26,301 |   |  |   | 35,365 |   |
| EBITDA                                                                 |  | $ | 28,095 |   |  | $ | 31,457 |   |  | $ | (3,559) |  (10)  |  | $ | 33,202 |   |  | $ | 34,296 | (10)(11)  |  | $ | 73,952 |   |
|                                                                        |

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|      |                                                                                                                                                                                                 |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (10) | Includes theeffect of loss on early extinguishments of debt totaling $3,291,000 forthe period from January  1,  2003 to February18,  2003 and $18,742,000 for the year ended December31,  2004. |

|      |                                                                                                                                                                                                                                     |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (11) | EBITDA for theyear ended December  31,  2004 as shown in this table doesnot include the historical results of operations of Barton and SSIprior to their respective acquisition dates on August  2,2004 and March  19,  2004.  |

|      |                                                                                                                                 |
|------|---------------------------------------------------------------------------------------------------------------------------------|
| (12) | Hours paid generallyexceed hours billed due to training and overtime hours incurred but notbillable, per our customercontracts. |

|      |                                                                                                                                                                                                                                                                                                                                                                                             |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (13) | Mafco and certain ofits affiliates, certain members of management and other investorscontributed $116,915,000 of cash to us in February  2003 and anadditional $10,000,000 of cash to us in May  2003. InDecember  2003, Mafco and certain of its affiliates, certainmembers of management and other investors contributed $7,500,000 ofcash to us to partially fund the acquisition ofPSB. |

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|              |                                                                                      |
|--------------|--------------------------------------------------------------------------------------|
| Item7.  | Management's Discussion andAnalysis of Financial Condition and Results ofOperations. |

The discussion and analysis offinancial condition and results of operations are based upon financialstatements which have been prepared in accordance with United Statesgenerally accepted accounting principles, and should each be readtogether with the applicable consolidated financial statements, thenotes to those financial statements and the other financial informationappearing elsewhere in this Annual Report on Form10-K.

This following discussion contains certainstatements of a forward-looking nature that involve risks anduncertainties. As a result of many factors, including those set forthunder the section entitled ‘‘Risk Factors’’in this Annual Report on Form 10-K, actual results may differmaterially from those anticipated by such forward-looking statements.See ‘‘Statement Regarding Forward-LookingDisclosure.’’

Overview

We offer premiumcontract security officer services to quality-conscious customers innine vertical markets throughout the United States: commercial realestate management companies, corporate complexes, shopping centers,financial institutions, healthcare facilities, colleges anduniversities, manufacturing and distribution facilities, residentialcommunities and government service sites. We are responsible forrecruiting, screening, hiring, training, uniform outfitting, schedulingand supervising our security officers. Our security officers workon-location at our customers' sites and their responsibilitiesprimarily include deterring, observing, detecting and reportingperceived, potential or actual security threats. In addition, weprovide personnel for toll collection services to the FDOT. As ofMarch  1,  2006, we employed approximately 38,500 securityofficers and toll collectors. As of December  31,  2005, weprovided contract security officer services to over 2,100 clients,including approximately 130 of the Fortune 500 companies, in 42 statesand the District ofColumbia.

 Revenues

Our revenuesare primarily generated from customer contracts wherein we areobligated to provide security officer services at agreed upon hourlybilling rates to our customers such as commercial real estatemanagement companies, corporate complexes, shopping centers, financialinstitutions, healthcare facilities, colleges and universities,manufacturing and distribution facilities, residential communities andgovernment service sites. Our standard customer contract is a one-yearcontract that can be terminated by either our customer or us on 30days' notice at any time. Many of our larger contracts aremultiyear and we have found that we generally have been successful inextending these contracts and negotiating increased adjustments tobilling rates. Revenues from our contracts with the FDOT are generatedin substantially the same manner in which we generate revenues from oursecurity officer contracts.

Our contract security officerrevenues are dependent on our ability to attract and retainhigh-quality employees. We pay above market average wage rates to ourcontract security officers and provide benefits which many of ourcompetitors do not. In addition, we engage in extensive candidatescreening, training and development which supports employee retention.The turnover rate for our security officers and toll collectors wasapproximately 54% for the year ended December  31,2005, which compares favorably to our industry. This allows us torespond to our targeted customers who demand high-quality securityofficer services.

 Cost ofRevenues

Our largest operating expenses are payroll,payroll taxes and employee related benefits. We believe that we havehigher wages and related payroll taxes and benefits costs than othersin our industry due to our focus on attracting and retaining a highlyqualified workforce. Our expenses also include workers compensation andgeneral liability costs. The major components of cost of revenues areaffected by general wage inflation, payroll tax increases and insurancepremiums and related claim costs, most of which we have been able topass on to our customers through bill rateincreases.

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Acquisition by Mafco

OnFebruary  19,  2003, Mafco, through its wholly-ownedsubsidiary SpectaGuard Holding, acquired the Predecessor, whichincluded SpectaGuard and its wholly owned subsidiaries, from GryphonPartners II, L.P. (‘‘Gryphon’’) and otherminority owners for approximately $263.6  million. This purchasewas funded through borrowings of $151.2  million and cashcontributions of $116.9  million recorded as follows:$113.0  million from Mafco and its affiliates for Class A Units,$2.3  million from OCM Specta Holdings Inc.(‘‘OCM’’) for Class A Units, $1.5million from Blackstone SG Mezzanine Corp.(‘‘Blackstone’’) for Class A units, and$0.1  million from members of our senior management for Class Band Class C units.

In connection with this transaction, asyndication of lending institutions underwrote $125,000,000 of SeniorSecured Credit Facilities (the ‘‘Refinanced SeniorSecured Credit Facilities’’). The Refinanced SeniorSecured Credit Facilities consisted of (i) a $20,000,000 5-yearRevolving Credit Facility (the ‘‘RefinancedRevolver’’) and (ii) a $105,000,000 7-year Senior TermLoan Facility (the ‘‘Refinanced Senior TermLoan’’). In addition, we issued at a discount SeniorSubordinated Notes (the ‘‘Refinanced Senior SubordinatedNotes’’) to affiliates of OCM and Blackstone with anaggregate face value of $50,000,000 for net proceeds of $46,156,000.The Refinanced Senior Secured Credit Facilities and the RefinanceSenior Subordinated Notes were refinanced in August  2004 inconnection with the Barton Acquisition. See ‘‘The BartonAcquisition — The Refinancing."

The BartonAcquisition

On May  12,  2004, SpectaGuard, BPS LLC,a newly formed Delaware limited liability company and wholly-ownedsubsidiary of SpectaGuard, Barton and Barton’s shareholders (the‘‘Shareholders’’) entered into an Agreementand Plan of Merger (the ‘‘MergerAgreement’’), pursuant to which we acquired Bartonthrough the merger of Barton with and into BPS LLC, with BPS LLC as thesurviving limited liability company. Upon completion of the BartonAcquisition, on August  2,  2004, all shareholders ofBarton, holders of vested stock options and holders of phantom stockunits received merger consideration in an aggregate amount of$181.0  million in cash and BPS LLC changed its name to BartonProtective Services LLC. Also in connection with the closing of theBarton Acquisition, the members of SpectaGuard became the members ofAllied Holdings (and Allied Holdings became the sole member ofSpectaGuard) through the contribution of their Class A, Class B, andClass C units, as applicable, of SpectaGuard in exchange for anidentical number of Class A, Class B and Class C units, as applicable,of Allied Holdings. The SpectaGuard operating agreement then in effectwas terminated and the members of Allied Holdings entered into thecurrent Operating Agreement, which contains provisions substantiallysimilar to the SpectaGuard Operating Agreement. The Barton Acquisitionand the related financing transactions are referred to collectively asthe ‘‘Transactions.’’

TheRefinancing

Simultaneous with the closing of the BartonAcquisition on August  2,  2004, we entered into a seniorsecured credit facility (the ‘‘CreditFacility’’). As described below, the Credit Facility wasamended on May  10,  2005 to modify certain of its terms.The Credit Facility initially provided for (i) a $210.0  millionsix-year senior term loan (the ‘‘Senior TermLoan’’) and (ii) a $50.0  million five-yearrevolver (the ‘‘Revolver’’) with certainsub-limits for letters of credit and swing line loans. In addition, weissued $180.0  million in aggregate principal amount of seniorsubordinated notes (the ‘‘Notes’’) whichmature on July  15,  2011. We used initial borrowings underthe Credit Facility, together with the net proceeds from the offeringof the Notes, to finance the purchase price for Barton, to repayamounts outstanding under the Refinanced Senior Secured CreditFacility, to redeem the then outstanding Refinanced Senior SubordinatedNotes and to pay related fees, expenses and redemption premiums. Wedrew down the full amount of the Senior Term Loan and none of theRevolver in connection with the Transactions.

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As of August  2,  2004 andprior to giving effect to the Transactions, we had $125.0million in term loans outstanding under the Refinanced Senior SecuredCredit Facility, which term loans provided for interest at a rate of7.50% per annum at such date. The Refinanced Senior SubordinatedNotes comprised $50.0  million aggregate face value of seniorsubordinated notes due June  30,  2010 which provided forcash interest at 12.00% per annum and paid-in-kind(‘‘PIK’’) interest at 3.00% perannum, each payable quarterly, and $10.5  million aggregate facevalue of senior subordinated notes due June  30,  2010which provided for cash interest at 12.00% per annum and PIKinterest at 4.25% per annum, each payable quarterly. We had$61.9  million principal outstanding, including PIK interest, ofRefinanced Senior Subordinated Notes as of August  2,  2004prior to the redemption of the Refinanced Senior SubordinatedNotes.

On May  10,  2005, we executed an amendment(‘‘Amendment No. 1’’) to the CreditFacility. Amendment No. 1 contains the following terms and provisions,among others: (i) for the Senior Term Loan, the interest rateapplicable to Eurodollar rate loans was decreased from LIBOR plus4.25% to LIBOR plus 3.75% (with a step down to LIBOR plus3.50% when the Company’s leverage ratio is below 3.5x);(ii) the basket for permitted acquisitions was increased from$30.0  million to $60.0  million; (iii) cash expendituresfor permitted acquisitions was added as a deduction to the calculationof ‘‘excess cash flow’’; (iv) mandatoryprincipal repayment of the Senior Term Loan was decreased for fiscalyears 2005 and 2006; and (v) the sub limit for letter of creditavailability under the Revolver was increased from $40.0  millionto $50.0  million.

Other RecentAcquisitions

Acquisition of Certain Assets and Liabilitiesof Security Systems, Inc.

On March  19,  2004,we acquired certain assets and liabilities of SSI, including the rightsto perform under SSI's customer contracts, for approximately$10.6  million, subject to certain post-closing adjustments, aportion of which was settled in September  2004. Prior to the SSIacquisition, SSI was a provider of high-quality contract securityservices to universities and corporate customers primarily in Boston.The SSI acquisition was funded through the issuance of a $7.5million term loan which was permitted as a delayed draw under theRefinanced Senior Secured Credit Facility.

In connection with theSSI acquisition, we implemented a cost reduction plan to reduceheadcount in corporate and branch administrative functions and exitduplicative facilities. As of March  31,  2004, this costreduction plan was complete.

Acquisition of ProfessionalSecurity Bureau, Ltd.

On December  19,  2003,we acquired all of the outstanding common shares of PSB, a provider ofhigh-quality contract security services to corporate customersprimarily within the same northeast United States region as certain ofour operations. The cost of the acquisition was subject to a workingcapital purchase price adjustment, which was settled in February2004. The cost of the acquisition (exclusive of financing costs) wasapproximately $45.8  million.

The PSB acquisition wasfunded through aggregate borrowings of $40.5  million and cashcontributions of $7.5  million. The Refinanced Senior SecuredCredit Facility was amended and restated to provide for an additional$30.0  million senior term loan and an additional $10.0million of availability under the Refinanced Revolver. In addition, weissued $10.5  million of additional Refinanced SeniorSubordinated Notes due June  30,  2010 to OCM Mezzanine,Blackstone Mezzanine and Blackstone Holdings. The Refinanced SeniorSecured Credit Facility and the Refinanced Senior Subordinated Noteswere refinanced as part of the Transactions. See ‘‘TheBarton Acquisition — The Refinancing.’’

Inconnection with this transaction, we adopted a formal plan to terminatecertain PSB employees, exit duplicative PSB office facilities andreduce certain other corporate and branch administrative expenses. Weaccrued $1.3  million of costs related to severance-relatedbenefits and lease termination costs. As of December  31,2004, the severance-related benefits portion of the plan wascomplete.

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Basis of Presentation and CriticalAccountingPolicies

 Revenues

Revenues arerecorded on an accrual basis through client billings. Billings arebased on client contracts, which generally include a markup on wagespaid or a stated bill rate for hours worked. The vast majority ofcustomers are billed a rate for hours worked which includes wages andbenefits. In certain cases, clients require specific items be excludedfrom the billed rate, such as medical benefits, vehicle leases andmaintenance. In those cases, these items are billed separately, incertain cases with a negotiated markup and in other instances at costas incurred. Clients are billed on a weekly, biweekly, monthly orquarterly basis.

 Cost ofRevenues

The direct cost of revenues is primarily comprisedof direct labor, related payroll taxes, medical and life benefits andworkers compensation and liability insurance. All security officers andaccount manager payroll and payroll related expenses are classified ascost of revenues. Wages paid include regular pay, overtime, bonus,vacation, training, holiday and sick time. The total hours paidnormally exceed total hours billed mainly due to overtime and trainingtime, which is generally not billable. Medical benefit costs are basedon self-insured plans, which cover the majority of our workforce, andpremium-based plans. The self-insured medical costs are recorded byapplying internal estimates based on actual claims history. Thepremium-based plan costs are charged based on actual premiums paid.Workers compensation and liability insurance costs are recorded byapplying historical rates based on actual claims history and premiumand administrative costs. The estimated charge covers all premiums,claims and administrative costs. These charges are monitored closelyagainst established reserves.

 Branch andCorporate Overhead Expense

Branch overhead expense includesall salaries, salary related expenses, benefits and travel andentertainment costs paid to branch level employees. Branchadministrative personnel typically include division presidents, vicepresident/general managers, district managers, support andadministrative staff. Other primary branch overhead expenses includerent, classified advertisements, office expenses and bad debt expense.Corporate overhead expense includes all expenses related to ourheadquarters, salaries and related expenses, including benefits,commissions, incentive compensation, travel and entertainment costs,rent, marketing costs, professional and consulting fees, and officeexpenses.

 Depreciation and AmortizationExpense

Depreciation expense consists of depreciation ofuniforms, furniture and fixtures, computers, automotive equipment andleasehold improvements. Amortization consists of the amortization ofthe value of the customer lists related to the Mafco, PSB, SSI, and theBarton Acquisitions. It also includes the amortization of covenantsnot-to-compete.

 InterestExpense

Interest expense consists of the cost of interestrelated to our Senior Term Loan, Notes and related discount, Revolverand insurance premium financing. It also includes amortization ofdeferred financing fees and the accretion of liabilities related to dueto affiliate and noncompetitioncovenants.

 Critical AccountingPolicies

The preparation of financial statements inconformity with U.S. generally accepted accounting principles requiresmanagement to make certain estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and thereported amounts of revenues and expenses during the reporting period.The following are critical accounting policies that we believe requireus to make significant estimates and judgments. Actual results maydiffer from these estimates under different assumptions orconditions.

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Accounts ReceivableReserve. Our customers are located throughout the UnitedStates. We grant credit to our customers and generally do not requirecollateral. We maintain an allowance for doubtful accounts whichmanagement believes to be sufficient to cover potential credit lossesand estimated billing adjustments. Management reviews the components oftheir accounts receivable balance on a monthly basis and performsadditional detail review on a quarterly basis. This process includes ananalysis of specific reserves based upon known credit collection issuesand potential reserve adjustments.

InsuranceReserves. We maintain insurance coverage, subject tocertain self insured retentions, for workers compensation, medicalclaims and general liability. Reserves have been provided for certainof these claims based upon insurance coverages and management'sjudgment. Management reviews these estimates on a quarterly basis basedupon currently available information and adjusts the reservesaccordingly. In the opinion of management, we believe our insurancereserves are sufficient to cover the ultimate outcome of theseclaims.

Goodwill and Intangible Assets. UnderSFAS No. 142, goodwill and intangible assets with indefinite lives arenot amortized; rather, they are tested for impairment on at least anannual basis. Additionally, intangible assets, such as customer lists,with finite lives continue to be amortized over their usefullives.

SFAS No. 142 requires a two-step impairment test forgoodwill. The first step is to compare the carrying amount of thereporting unit's assets to the fair value of the reporting unit.If the fair value exceeds the carrying value, no further work isrequired and no impairment loss is recognized. If the carrying amountexceeds the fair value then the second step is required to becompleted, which involves allocating the fair value of the reportingunit to each asset and liability, with the excess being impliedgoodwill. An impairment loss occurs if the amount of the recordedgoodwill exceeds the implied goodwill. The determination of the fairvalue of our reporting unit is based, among other things, on estimatesof future operating performance of the reporting unit being valued. Weare required to complete an impairment test for goodwill and record anyresulting impairment losses annually. Changes in market conditions,among other factors, may have an impact on these estimates. Wecompleted our required annual impairment test in the fourth quarter offiscal 2005 and determined that there was no impairment.

Customer lists are amortized over six years. We perform periodicanalyses and adjust through accelerated amortization any impairment ofcustomer lists. None of the acquired customer lists have requiredaccelerated amortization to date.

Results ofOperations

SpectaGuard was acquired by Mafco on February19,  2003, and therefore, in the following discussion of ourhistorical results of operations, ‘‘fiscal2003’’ refers to the combined presentation of the resultsof operations of the Predecessor for the period from January1,  2003 to February  18,  2003 combined with theresults of operations of the Successor for the period fromFebruary  19,  2003 to December  31,2003.

Fiscal 2005 Compared to Fiscal2004

Revenues. Revenues increased by$251.1  million, or 28.7%, to $1,124.5  million forfiscal 2005 from $873.4  million for fiscal 2004. This increasewas attributable to a full year of results in fiscal 2005 related tothe Barton Acquisition which resulted in an additional $206.8million of revenues as compared to five months of additional revenuesin fiscal 2004. The increase is also attributable to increased securityofficer billable hours and to increases in billable security officerrates. Security officer hours billed increased by 10.4  millionhours to 62.1  million for fiscal 2005 from 51.7  millionhours for fiscal 2004, or 20.1%. The Barton Acquisitionaccounted for 8.8  million of these increased security officerhours due to a full year of results in fiscal 2005 as compared to fivemonths of results in fiscal 2004. The average security officer billingrate also increased 2.6% to $15.94 for fiscal 2005 from $15.54for fiscal 2004 primarily as a result of increased pay rates forsecurity officers.

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Cost of Revenues. Cost ofrevenues increased by $220.7  million, or 30.0%, to$957.5  million for fiscal 2005 from $736.8  million forfiscal 2004. The increase was mainly the result of higher labor costsin connection with a full year of results related to the BartonAcquisition in fiscal 2005 as compared to five months of results infiscal 2004. Cost of revenues as a percentage of revenues increased to85.1% for fiscal 2005 from 84.4% for fiscal 2004. Theincrease was due mainly to higher business insurance and labor costs.Security officer hours paid also increased 10.7  million hours or20.0% to 64.1  million for fiscal 2005 from 53.4million for fiscal 2004. The average security officer pay rate per houralso increased 5.5% to $11.19 for fiscal 2005 from $10.61 forfiscal 2004 due primarily to inflation and requirements under new andexisting customer contracts.

Branch and Corporate OverheadExpenses. Branch and corporate overhead expenses increasedby $9.5  million, or 11.4%, to $93.1  million forfiscal 2005 from $83.6  million for fiscal 2004. The increase inoverhead expenses was a direct result of a full year of results relatedto the Barton Acquisition in fiscal 2005 as compared to five months ofresults in fiscal 2004. As a percentage of revenues, branch andcorporate overhead expenses decreased to 8.3% for fiscal 2005from 9.6% for fiscal 2004. This decrease is primarily the resultof the achievement of planned cost savings related to the integrationof the Barton Acquisition as well as a decrease in incentive-relatedcompensation.

Depreciation andAmortization. Depreciation and amortization increased by$9.1  million to $35.4  million for fiscal 2005 from$26.3  million for fiscal 2004. This increase was primarilyattributable to increased amortization expense of $4.1  milliondue to increased customer list values resulting from a full year of theBarton Acquisition as compared to five months in fiscal 2004 as well asan increased number of uniforms resulting from the BartonAcquisition.

Loss on early extinguishment ofdebt. For fiscal 2005 there was no loss on earlyextinguishment of debt. For fiscal 2004, loss on early extinguishmentof debt related to the write-off of $6.9  million in deferredfinancing fees, a write-off of $3.2  million of debt discount onthe Refinanced Senior Subordinated Notes and an $8.6  millionprepayment penalty on the early extinguishment of the Refinanced SeniorSecured Credit Facility and Refinanced Senior Subordinated Notesincurred in connection with the Barton Acquisition in August2004.

Operating Income (Loss).    Operating incomeincreased by $30.6  million, or 382.5%, to $38.6million for fiscal 2005 from $8.0  million for fiscal 2004. Thisincrease was primarily related to the $18.7  million loss onearly extinguishment of debt in fiscal 2004 as well as additionalrevenues in fiscal 2005 compared to fiscal 2004 as discussedabove.

Interest Expense, Net. Interest expense,net increased $8.9  million to $40.3  million for fiscal2005 from $31.4  million for fiscal 2004. The increase was due tohigher outstanding average debt balances as a result of a full year infiscal 2005 relating the Barton Acquisition as compared to five monthsin fiscal 2004 and the accretion of covenants not-to-compete and due toaffiliate liabilities.

Income Tax Expense(Benefit).    Subsequent to the Mafco transaction, our membershave elected to be treated as a partnership for both federal and stateincome tax purposes. In accordance with applicable regulations, ourtaxable income or loss is required to be reported in the income taxreturns of our members in accordance with our Operating Agreement.Accordingly, we do not have income tax expense (benefit) for fiscal2005 and 2004. In lieu of paying income taxes, we pay distributions toour members with respect to income tax that they owe on earnings thatare allocated to them in accordance with our Operating Agreement.Tax-related distributions paid were $1.5  million in fiscal 2005and $0 for fiscal 2004.

Net Loss. Net lossdecreased by $21.6  million to a net loss of $1.8  millionfor fiscal 2005 from a net loss of $23.4  million for fiscal2004, as a result of the items described above.

Fiscal 2004Compared to Fiscal 2003

Revenues. Revenuesincreased by $319.3  million, or 57.6%, to $873.4million for fiscal 2004 from $554.1  million for fiscal 2003.This increase was attributable to the Barton Acquisition and the PSBand SSI acquisitions which resulted in an additional $264.1million of revenues for fiscal 2004, increased billable hours due toadditional contracts secured during the period and increases inbillable 

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rates under existing contracts. Securityofficer hours billed increased by 17.9  million hours to51.7  million for fiscal 2004 from 33.8  million hours forfiscal 2003, or 53.0%. The average security officer billing ratealso increased 1.0% to $15.54 for fiscal 2004 from $15.39 forfiscal 2003. This increase was primarily related to increased pay ratesfor security officers due primarily to inflation and requirements undernew and existing customer contracts.

Cost ofRevenues. Cost of revenues increased by $274.7million, or 59.4%, to $736.8  million for fiscal 2004 from$462.1  million for fiscal 2003. The increase was mainly theresult of higher labor costs in connection with the acquisitions infiscal 2004 described above. Cost of revenues as a percentage ofrevenues increased to 84.4% for fiscal 2004 from 83.4%for fiscal 2003. The increase was due mainly to higher sub-contractlabor from acquired accounts, mainly the FDOT, as well as largeincreases in payroll tax rates. Security officer hours paid alsoincreased 18.7  million hours or 53.9% to 53.4million for fiscal 2004 from 34.7  million for fiscal 2003. Theaverage security officer pay rate per hour also increased 0.4%to $10.61 for fiscal 2004 from $10.57 for fiscal 2003.

Branch and Corporate Overhead Expenses. Branch andcorporate overhead expenses increased by $24.5  million, or41.5%, to $83.6  million for fiscal 2004 from $59.1million for fiscal 2003. The increase in overhead expenses was a directresult of the Barton Acquisition and the PSB and SSI acquisitions, aswell as an increase in professional fees. Branch and corporate overheadexpenses in fiscal 2003 included $4.0  million of transactioncosts related to the Mafco acquisition.

Depreciation andAmortization. Depreciation and amortization increased by$9.3  million to $26.3  million for fiscal 2004 from$17.0  million for fiscal 2003. This increase was primarilyattributable to increased amortization expense of $5.7  milliondue to increased customer list values resulting from the Mafcotransaction, the Barton Acquisition and the PSB and SSIacquisitions.

Loss on Early Extinguishment ofDebt. For fiscal 2004, loss on early extinguishment of debtrelated to the write-off of $6.9  million in deferred financingfees, a write-off of $3.2  million of debt discount on theRefinanced Senior Subordinated Notes and an $8.6  millionprepayment penalty on the early extinguishment of the Refinanced SeniorSecured Credit Facility and Refinanced Senior Subordinated Notesincurred in connection with the Barton Acquisition in August2004. For fiscal 2003, loss on early extinguishment of debt related tothe write-off of $1.7  million in deferred financing fees, awrite-off of $0.3  million of debt discount on the extinguishedsenior subordinated notes and a $1.3  million prepayment penaltyon the early extinguishment of term loans incurred as a result of theMafco transaction in February  2003.

Operating Income(Loss).    Operating income decreased by $4.6  million, or36.5%, to $8.0  million for fiscal 2004 from $12.6million for fiscal 2003. This decrease was primarily related to the$18.7  million loss on early extinguishment of debt in fiscal2004, partially offset by the $3.3  million of loss on earlyextinguishment of debt and $4.0  million of transaction costsrelated to the Mafco transaction in 2003.

Interest Expense,Net. Interest expense, net increased $9.6  million to$31.4  million for fiscal 2004 from $21.8  million forfiscal 2003. Offsetting this increase was a $5.1  million loss onthe realization of an interest rate swap recognized as a result of theMafco transaction in February  2003. The increase was due tohigher debt balances as a result of the Barton Acquisition, the PSB andSSI acquisitions and the accretion of non-compete and due to affiliateliabilities.

Income Tax Expense(Benefit).    Subsequent to the Mafco transaction, our membershave elected to be treated as a partnership for both federal and stateincome tax purposes. In accordance with applicable regulations, ourtaxable income or loss is required to be reported in the income taxreturns of our members in accordance with our Operating Agreement.Accordingly, we did not have income tax expense (benefit) for fiscal2004. In lieu of paying income taxes, we pay distributions to ourmembers with respect to income tax that they owe on earnings that areallocated to them in accordance with our Operating Agreement.Tax-related distributions declared were $0 in 2004 and $2.3million for 2003.

Net Loss. Net loss increased by$15.7  million to a net loss of $23.4  million for fiscal2004 from a net loss of $7.7  million for fiscal 2003, as aresult of the items described above.

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Liquidity and CapitalResources

Our primary liquidity requirements are for debtservice, working capital and capital expenditures. Our primary sourceof liquidity is cash provided by operating activities.

Cashprovided by operating activities for fiscal 2005, fiscal 2004 andfiscal 2003 were $31.4  million, $24.0  million and$22.4  million, respectively. For fiscal 2005, fiscal 2004 andfiscal 2003, cash provided by operating activities was generatedprimarily from operating income of $38.6  million, $8.0million and $12.6  million, respectively. Operating income forfiscal 2004 includes the loss on early extinguishment of debt totaling$18.7  million. Cash paid for interest for fiscal 2005, fiscal2004 and fiscal 2003 were $36.8  million, $17.2  millionand $15.7  million, respectively.

Cash used in investingactivities for fiscal 2005, fiscal 2004 and fiscal 2003 were$16.1  million, $202.6  million and $53.0  million,respectively. Investing activities have historically consisted ofpurchases of property and equipment, primarily uniforms. In 2005, 2004and 2003, we paid $16.3  million, $10.9  million and$7.0  million for purchases of property and equipment,respectively. In fiscal 2004, we paid approximately $181.0million for the Barton Acquisition and approximately $10.6million for the SSI acquisition, both of which were subject to certainpurchase price adjustments. We expect $18.9  million in capitalexpenditures in 2006.

Financing activities have primarilyconsisted of borrowings and repayments on long-term debt associatedwith acquisitions of businesses. Cash used in financing activities forfiscal 2005 was $15.5  million, primarily related to therepayment of debt and member tax distributions. Cash provided byfinancing activities was $181.4  million for fiscal 2004 and$37.1  million for fiscal 2003. In fiscal 2004, cash flowprovided by financing activities is primarily the result of netproceeds from the issuance of debt as part of the Transactions. Infiscal 2003, net proceeds from the issuance of debt totaling$26.6  million and capital contributions of $17.4  millionwere used primarily for the PSB acquisition.

As of August2,  2004 and prior to giving effect to the Transactions, noamounts under the revolver and $125.0  million in term loans wereoutstanding under the Refinanced Senior Secured Credit Facility and$61.9  million aggregate face value of Refinanced SeniorSubordinated Notes were outstanding. As part of the Transactions, werepaid amounts outstanding under the Refinanced Senior Secured CreditFacility and redeemed the Refinanced Senior SubordinatedNotes.

Simultaneously with the closing of the Barton Acquisition,we entered into the Credit Facility with Bear Stearns Corporate LendingInc., as Administrative Agent, and a syndicate of lenders arranged byBear, Stearns & Co. Inc. Our Credit Facility provides forcommitments by the lenders for original term loans of $210.0million and of $50.0  million in revolving loans, with certainsub-limits for letters of credit and swing line loans. Our obligationsunder the Credit Facility are guaranteed by each of our domesticsubsidiaries and our obligations and the obligations of our subsidiaryguarantors are secured by a first priority lien on substantially all ofour, and each subsidiary guarantor's, present and future tangibleand intangible assets.

We drew down the full amount of the termloans and none of the revolving loans in connection with theTransactions. This amount was used together with the net proceeds fromthe offering of the Notes to finance the Barton Acquisition, to repaysubstantially all of our then existing indebtedness and to pay relatedfees, expenses and prepayment premiums.

In the ordinary course ofbusiness, we enter into short-term financing agreements in order tofund our business insurance policy premiums. On August13,  2004, we entered into a financing agreement with Cananwill,Inc. for a total amount of $11.2  million. Payments were due inequal monthly installments through May  1,  2005 and borean annual interest rate of 2.99%. As of May  1,2005, this financing agreement, including accrued interest, was repaidin full. On August  15,  2005, the Company entered intosuch a financing agreement with Cananwill, Inc. for a total amount of$10.6  million. Payments are due in equal monthly installmentsthrough May  1,  2006 and bear an annual interest rate of4.99%. As of December  31,  2005, the remainingbalance of this financing agreement, including accrued interest, was$5.9  million.

23

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As of December  31,  2005 wehad approximately $377.3  million of indebtedness, which includesthe Notes, amounts outstanding under our Credit Facility and insurancepremium financing. In addition, as of December  31,  2005,we had $25.3  million of unused borrowing capacity under ourCredit Facility, net of the issuance of $24.7  million ofoutstanding letters of credit.

The Credit Facility requires anexcess cash flow calculation commencing with the fiscal year endingDecember  31,  2005. If such excess cash flow exists asdefined in the Credit Facility, prepayment of the Term Loans isrequired in an amount equal to such excess cash flow no later than fivedays after the earlier of (i) the date on which the financialstatements are required to be delivered to the lenders, and (ii) thedate such financial statements are actually delivered. We anticipatemaking an excess cash flow prepayment of the Term Loans ofapproximately $668,000 on or about March  31,2006.

The following table summarizes our contractual obligationsby year at December  31,2005:

|                               |  |                                 |         |        |  |        |        |        |  |        |         |        |  |            |        |        |  |        |         |        |  |        |         |        |  |        |         |        |  |  |
|-------------------------------|--|---------------------------------|---------|--------|--|--------|--------|--------|--|--------|---------|--------|--|------------|--------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                          |  | PaymentsDue by Year December31, |
|                          |  | Total                           |         | 2006   |  | 2007   |        | 2008   |  | 2009   |         | 2010   |  | Thereafter |
|                          |  | (inthousands)                   |
| ContractualObligations:       |  |                            |    |   |  |   |   |   |  |   |    |   |  |       |   |   |  |   |    |   |  |   |    |   |  |   |    |   |
| Long-termdebt                 |  | $                               | 377,306 |   |  | $      | 11,537 |   |  | $      | 30,000  |   |  | $          | 30,000 |   |  | $      | 30,000  |   |  | $      | 97,582  |   |  | $      | 178,187 |   |
| FixedRate DebtInterest        |  |                            | 122,850 |   |  |   | 20,475 |   |  |   | 20,475  |   |  |       | 20,475 |   |  |   | 20,475  |   |  |   | 20,475  |   |  |   | 20,475  |   |
| Non-cancelableoperatingleases |  |                            | 20,621  |   |  |   | 7,519  |   |  |   | 5,285   |   |  |       | 3,575  |   |  |   | 2,265   |   |  |   | 1,467   |   |  |   | 510     |   |
| Covenantsnot-to-compete       |  |                            | 1,450   |   |  |   | 450    |   |  |   | 500     |   |  |       | 500    |   |  |   | — |   |  |   | — |   |  |   | — |   |
| Duetoaffiliates               |  |                            | 16,251  |   |  |   | 10,339 |   |  |   | — |   |  |       | 5,912  |   |  |   | — |   |  |   | — |   |  |   | — |   |
| Total                         |  | $                               | 538,478 |   |  | $      | 50,320 |   |  | $      | 56,260  |   |  | $          | 60,462 |   |  | $      | 52,740  |   |  | $      | 119,524 |   |  | $      | 199,172 |   |
|                               |

Inlieu of paying income taxes, we pay distributions to our members withrespect to income tax that they owe on earnings that are allocated tothem in accordance with our operating agreement. Member taxdistributions paid were $1.5  million in 2005 and $0 for2004.

Based upon our current level of operations, we believe thatour existing cash and cash equivalents balances and our cash fromoperating activities, together with available borrowings under ourCredit Facility, will be adequate to meet our anticipated requirementsfor working capital, capital expenditures, commitments and interestpayments for the foreseeable future. There can be no assurance,however, that our business will continue to generate cash flow atcurrent levels or that currently anticipated improvements will beachieved. If we are unable to generate sufficient cash flow fromoperations to service our debt, we may be required to sell assets,reduce capital expenditures, refinance all or a portion of ourindebtedness or obtain additional financing. Our ability to makescheduled principal payments or to pay interest on or to refinance ourindebtedness depends on our future performance and financial results,which, to a certain extent, are subject to general conditions in oraffecting our industry and to general conditions and factors that arebeyond our control. There can be no assurance that sufficient fundswill be available to enable us to service our indebtedness or to makecapital expenditures. As of December  31,  2005, we do nothave any material commitments related to capitalexpenditures.

Off-Balance Sheet Arrangements

We are notcurrently a party to any off-balance sheetarrangements.

Inflation

In general, our costs areaffected by inflation and we may experience the effects of inflation infuture periods. Management believes, however, that such effects havenot been material to us during the past three years.

24

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Forward-Looking Statements

ThisAnnual Report for the period ended December  31,  2005, aswell as certain written, electronic and oral disclosures made by usfrom time to time, contain forward-looking statements that involverisks and uncertainties, which are based on estimates, objectives,projections, forecasts, plans, strategies, beliefs, intentions,opportunities and expectations of our management. Such statements aremade in reliance upon the safe harbor provisions of the PrivateSecurities Litigation Reform Act of 1995. Actual results may differmaterially from anticipated results or expectations and investors arecautioned not to place undue reliance on any forward-lookingstatements. Statements that are not historical facts, includingstatements about the Company's strategy, future operations,financial position, estimated revenues, projected costs or theprojections, prospects, plans and objectives of management, areforward-looking statements. Forward-looking statements can beidentified by, among other things, the use of forward-looking language,such as ‘‘believes,’’‘‘estimates,’’‘‘expects,’’‘‘projects,’’‘‘forecasts,’’‘‘may,’’‘‘will,’’‘‘should,’’‘‘seeks,’’‘‘plans,’’ ‘‘scheduledto,’’ ‘‘anticipates’’ or‘‘intends’’ or the negative of those terms,or other variations of those terms or comparable language, or bydiscussions of strategy or intentions, although not all forward-lookingstatements contain such words.

The following factors, amongothers, including those described in Item 1A. ‘‘RiskFactors’’ in this Annual Report on Form 10-K, could causeour actual results to differ materially from those expressed in anyforward-looking statements made byus:

|  |              |                                                                                                                                                                                                                                                                 |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The Company's dependence on itsrelationships with its customers and reputation for providinghigh-quality contract security services, as well as the risk that theCompany's reputation may be damaged as a result of a publicizedincident or breach of security; |

|  |              |                                                                                                                                                                                                                                                                                                                                               |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | TheCompany's ability to retain existing security officer servicecontracts (which contracts can typically be terminated by either partyon 30 days' written notice and which may also be subject toperiodic bidding procedures) and to obtain new security servicecontracts, including in each case on terms which are favorable to theCompany; |

|  |              |                                                                                                                                                                                                                                                                                                                                            |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The failure of the FDOT tomaintain its toll operator service contracts with the Company (whichcontracts are terminable at will by the FDOT for any reason if in theinterests of the FDOT) or the failure of the FDOT to award us a newcontract after the existing contracts expire in May  2006 onterms which are favorable to theCompany; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The Company's exposure toliability, particularly to the extent not covered by insurance and/orwhere state law prohibits insurance coverage, for certain damagesarising from services it provides to its customers, including by reasonof the acts or omissions of the Company's agents or employees orwith respect to events that are not within the control of such agentsor employees, and the Company's indemnification obligations undercertain service contracts for events occurring on clientpremises; |

|  |              |                                                                                                                                                                                                                                                              |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The Company's inabilityto pass cost increases to customers in light of the price-sensitivenature of the contract security officer industry and the fixed hourlybill rates or limited fee adjustments provided for in many of theCompany's customercontracts; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Competitive pressuresresulting from (i) new or existing security service providers, some ofwhich have greater resources than the Company and/or are willing toprovide security services at lower prices, (ii) increasingconsolidation in the contract security officer industry, (iii) localand regional companies that may be better able to secure and retaincustomers in their regions, and (iv) decreasing expenditures of clientresources on quality securityservices; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The Company's ability to(i) attract, retain, train and manage security officers andadministrative staff (and the costs associated therewith) in light ofthe significant number of officers the Company requires to operate itsbusiness and increasing demand and competition for such persons, and(ii) attract and retain senior operations employees and key executivesand the potential loss of business resulting from the departure of keyemployees; |

|  |              |                                                            |
|--|--------------|------------------------------------------------------------|
|  | •  | The effects of workstoppages and other labor disturbances; |

25

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|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | TheCompany's failure or inability to comply with city, county, stateor federal laws and regulations, including security industry-relatedlaws and regulations and occupational health and safety laws andregulations and, in each case, the costs associated with suchcompliance, as well as the costs of complying with new laws andregulations, changes in existing laws and regulations or the manner inwhich existing laws and regulations are interpreted; |

|  |              |                                                                                                                                                                               |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The risk that non-compliance with statesecurity licensing regulations could result in the Company beingprohibited from operating its business in all or part of a givenstate; |

|  |              |                                                                                                                                                                                                                                                  |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The effect of changes in securitytechnology, including advances in technology that may decrease demandfor security officers, as well as the Company's ability toacquire and effectively integrate available technologies into itsbusiness model; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Delays, difficulties orrisks in implementing the Company's business strategy,successfully integrating acquired businesses, including retainingacquired contracts and achieving cost savings (including with respectto Barton and the other businesses recently acquired by the Company),and the Company's exposure to risks associated with acquiredbusinesses, including the possibility of undisclosed or unforeseenliabilities resulting from suchacquisitions; |

|  |              |                                                                                                                                                                                                    |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The effects of terroristactivity or the threat of terrorism at locations serviced by theCompany or elsewhere, including the Company's exposure toliabilities not covered by insurance for attacks; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                  |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The Company's ability to obtaininsurance coverage on a cost effective basis or at all (including as aresult of the possible non-renewal of the federal government'sTerrorism Reinsurance Extension Act when it expires at the end of 2007,which act allows insurance carriers to seek reimbursement from thegovernment for certain liabilities arising out of terroristattacks); |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The insufficiency of theCompany's existing working capital, together with cash availableunder its Credit Facility and anticipated cash flow from operatingactivities, to meet the Company’s expected operating, capitalspending and debt service requirements for the foreseeable future andthe inability of the Company to comply with the financial covenants inthe Company’s financing arrangements and/or to obtainamendments; |

|  |              |                                                                                                                                                                                                                                                   |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The Company's levelof indebtedness, the restrictions or obligations imposed on the Companyby the Credit Facility and the indenture governing the Notes, and theCompany's exposure to fluctuations in interest rates under theCredit Facility; and |

|  |              |                                                                                                            |
|--|--------------|------------------------------------------------------------------------------------------------------------|
|  | •  | Unanticipatedinternal control deficiencies or weaknesses or ineffective disclosurecontrols and procedures. |

In addition, we encourage investors toread the discussion of risk factors included in Item 1A.‘‘Risk Factors’’ and the discussion ofcritical accounting policies included in this Item 7 under the heading‘‘— Basis of Presentation and Critical AccountingPolicies’’, as such discussions may be modified orsupplemented by subsequent reports that we file with the SEC.Forward-looking statements speak only as of the date they are made, andexcept for our ongoing obligations under the U.S. federal securitieslaws, we undertake no obligation to publicly update any forward-lookingstatements, whether as a result of new information, future events orotherwise.

26

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|               |                                                            |
|---------------|------------------------------------------------------------|
| Item7A.  | Quantitative and Qualitative Disclosuresabout Market Risk. |

We are exposed to interest rate riskrelated to changes in interest rates for borrowings under our SeniorTerm Loan and Revolver. These borrowings bear interest at variablerates. At December  31, 2005, a hypothetical 10% increasein interest rates applicable to our Credit Facility would haveincreased our annual interest expense by approximately $1.7million and would have decreased our annual cash flow from operationsby approximately $1.0  million.

Prior to July  2005,we had exposure to foreign currency exchange rate fluctuations as thefinancial results of our U.K. operations, acquired as part of theBarton Acquisition, were translated into U.S. dollars. As exchangerates varied, these results, when translated, may have varied fromexpectations and adversely impacted our financial position or resultsof operations. We do not enter into forward exchange contracts as ahedge against foreign currency exchange risk or for speculative ortrading purposes. A hypothetical 10% increase in foreigncurrency exchange rates would not have a material impact on ourfinancial position or results of operations as of December31,  2005. In July  2005, the Company ceased all of itsforeign operations.

|               |                                             |
|---------------|---------------------------------------------|
| Item 8.  | FinancialStatements and Supplementary Data. |

The information requiredby Item 8 of Part II is incorporated by reference to the ConsolidatedFinancial Statements filed with this Annual Report on Form 10-K. SeeItem 15 of Part IV.

|              |                                                                                                                       |
|--------------|-----------------------------------------------------------------------------------------------------------------------|
| Item9.  | Changes in and Disagreements with IndependentRegistered Public Accounting Firm on Accounting and FinancialDisclosure. |

None.

|               |                          |
|---------------|--------------------------|
| Item9A.  | Controls and Procedures. |

(a)Disclosure Controls and Procedures. Our management, with theparticipation of our Chief Executive Officer and Chief FinancialOfficer, has evaluated the effectiveness of our disclosure controls andprocedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)under the Securities Exchange Act of 1934, as amended (the‘‘Exchange Act’’)) as of the end of theperiod covered by this report. Based on such evaluation, our ChiefExecutive Officer and Chief Financial Officer have concluded that, asof the end of such period, our disclosure controls and procedures areeffective.

(b) Internal Control Over Financial Reporting. Therehave not been any changes in our internal control over financialreporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)under the Exchange Act) during the fiscal quarter ended December31,  2005 that have materially affected, or are reasonably likelyto materially affect, our internal control over financialreporting.

Item 9B. OtherInformation.

None.

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PARTIII

|                |                                                |
|----------------|------------------------------------------------|
| Item 10.  | Managers andExecutive Officers of the Company. |

Allied Holdings is aDelaware limited liability company that became the sole member ofSpectaGuard Acquisition LLC on August  2,  2004 inconnection with the Transactions. The business and affairs of AlliedHoldings are managed by a Board of Managers which operates in a mannersimilar to the board of directors of a corporation. As ofJanuary  1,  2006, the Board of Managers consisted of tenindividuals, each of whom is referred to as a Manager.

Set forthbelow is information concerning Allied Holdings' executiveofficers and Managers as of January  1,2006.

|                         |  |        |    |          |  |                                                  |  |  |  |  |
|-------------------------|--|--------|----|----------|--|--------------------------------------------------|--|--|--|--|
| Name                    |  | Age    |    | Position |
| AlbertJ.Berger          |  |   | 69 |     |  | Chairmanand Manager                              |
| William C. Whitmore,Jr. |  |   | 53 |     |  | President, Chief Executive Officer andManager    |
| David I.Buckman         |  |   | 44 |     |  | Executive Vice President and GeneralCounsel      |
| William A.Torzolini     |  |   | 45 |     |  | Senior Vice President and Chief FinancialOfficer |
| Ronald O.Perelman       |  |   | 63 |     |  | Manager                                          |
| Floyd I.Clarke          |  |   | 63 |     |  | Manager                                          |
| Donald G.Drapkin        |  |   | 57 |     |  | Manager                                          |
| Todd J.Slotkin          |  |   | 52 |     |  | Manager                                          |
| General JackKeane       |  |   | 63 |     |  | Manager                                          |
| Michael J.Regan         |  |   | 63 |     |  | Manager                                          |
| John A.Fry              |  |   | 45 |     |  | Manager                                          |
| RayWirta                |  |   | 62 |     |  | Manager                                          |
|                         |

Albert J.Berger has served as Chairman and a Manager of Allied Holdingssince its formation in August  2004 until February  2006,at which time he completed his service as Chairman. Mr.  Bergeralso served as a manager of SpectaGuard from February  2003 untilAugust  2004. Mr.  Berger had served as Chief ExecutiveOfficer of SpectaGuard from 1998 to February  2003. From 1994through 1998, Mr.  Berger redeveloped a hotel property andconsulted with Gryphon Investors, Inc. and others in the securitybusiness. Mr.  Berger served as Director, President and ViceChairman of Pinkerton from 1990 to 1994 and as a Director of CaliforniaPlant Protection from 1975 to 1987 and consultant and Director from theacquisition of Pinkerton by California Plant Protection (from AmericanBrands) in 1988 until 1989. Mr.  Berger served as President ofHCC Industries from 1985 to 1987. From 1961 through 1985 Mr.Berger held various positions in the chemical industry and owned aspecialty chemical business from 1965 through 1985.

WilliamC. Whitmore, Jr. has served as President, Chief Executive Officerand a Manager of Allied Holdings since its formation in August2004. Mr. Whitmore also served as a manager of SpectaGuard fromFebruary  2003 until August  2004. In addition, Mr.Whitmore was appointed Chairman in March  2006. Mr. Whitmore hadserved as President and, until his appointment as Chief ExecutiveOfficer in February  2003, Chief Operating Officer of SpectaGuardsince 1990. Mr. Whitmore is a member of the Private Sector SeniorAdvisory Committee for the Homeland Security Advisory Council. From1983 until 1986, Mr. Whitmore served as Vice President of SpectaGuardInc., managing all aspects of operations, marketing and sales forcommercial security services. From 1986 until 1990, Mr. Whitmore servedas Executive Vice President of SpectaGuard Inc., managing all companyoperations and support functions. Prior to joining us, Mr. Whitmore wasemployed in public sector law enforcement.

28

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David I. Buckman hasserved as Allied Holdings' Executive Vice President and GeneralCounsel since January  1,  2006. From April  2005through December  2005, Mr.  Buckman held the title ofSenior Vice President and General Counsel. As General Counsel,Mr.  Buckman is responsible for the legal affairs of the Company,including its regulatory compliance and risk management functions. Healso supervises Allied Holdings human resources functions, includingrecruitment and training. From 1994 until he joined Allied Holdings,Mr.  Buckman was Associate General Counsel of AramarkCorporation, an international provider of managed services, includingfood, facility and uniform services. From 1988 until 1994, Mr.Buckman was associated with the law firm of Morgan, Lewis & BockiusLLP.

William A. Torzolini has served as AlliedHoldings' Senior Vice President and Chief Financial Officer sinceits formation in August  2004. Mr.  Torzolini has alsoserved as SpectaGuard's Chief Financial Officer since 2001. Inhis position, he oversees all of our accounting, finance and reporting,as well as management of our Information Systems department. From 2000to 2001, Mr.  Torzolini served as Senior Vice President and ChiefFinancial Officer of Crothall Services Group, a national hospitalhousekeeping, linen and plant maintenance outsourcing company. From1998 to 2000, Mr.  Torzolini served as Chief Financial Officer ofORBIT/FR, Inc., a supplier of sophisticated microwave test andmeasurement solutions for the satellite, automotive, wireless andaerospace industries. From 1990 to 1998, he was the Vice President andChief Financial Officer of the Outpatient Division at Novacare, Inc.,the country's second largest provider of healthcarerehabilitation services.

Ronald O. Perelmanhas served as a Manager of Allied Holdings since its formation inAugust  2004. Mr.  Perelman served as a manager ofSpectaGuard from February  2003 until August  2004.Mr.  Perelman has been Chairman of the Board of Directors andChief Executive Officer of Mafco and various of its affiliates since1980. Mr.  Perelman also is Chairman of the Board of RevlonConsumer Products Corporation (‘‘RevlonProducts’’) and Revlon, Inc.(‘‘Revlon’’). Mr.  Perelman served asChairman of the Board of Directors of Panavision Inc. untilSeptember  2003 and thereafter began service as Co-Chairman.Mr.  Perelman is a director of the following entities which arerequired to file reports pursuant to the Exchange Act: M & FWorldwide Corp. (‘‘M & F Worldwide’’),Panavision Inc., Revlon Products, Revlon, REV Holdings LLC andScientific Games Corporation.

Floyd I. Clarkehas served as a Manager of Allied Holdings since its formation inAugust  2004. Mr.  Clarke has been Vice President forCorporate Compliance at Mafco since January  1994. Prior to that,Mr.  Clarke served in various positions with the Federal Bureauof Investigation from 1964 to 1994, including: Special Agent in theBirmingham and Boston Field Offices; Supervisory Special Agent in theIdentification Division; Assistant Special Agent in Charge of thePhiladelphia Office; Special Agent in Charge of the Kansas City Office;Assistant Director of the Criminal Investigative Division; ExecutiveAssistant Director — Administration; and Deputy Director. InJuly  1993, then President Clinton appointed Mr.  Clarke asthe Acting Director of the FBI, the position in which he served untilSeptember  1993. Mr.  Clarke is also a member of the Boardof Directors of LexisNexis Special Services Inc. and the FBI’sDirector’s Advisory Board.

Donald G.Drapkin has served as a Manager of Allied Holdings since itsformation in August  2004. Mr.  Drapkin served as a managerof SpectaGuard from February  2003 until August  2004.Mr.  Drapkin has been a Director and Vice Chairman of Mafco since1987. Prior to joining Mafco, Mr.  Drapkin was a partner in thelaw firm of Skadden, Arps, Slate, Meagher & Flom LLP for more thanfive years. Mr.  Drapkin is also a director of the followingcorporations which are required to file reports pursuant to theExchange Act: Anthracite Capital Inc., Nephros Inc., PlayboyEnterprises, Inc., Revlon, Revlon Products and SIGA Technologies,Inc.

Todd J. Slotkin has served as a Managerof Allied Holdings since its formation in August  2004.Mr.  Slotkin served as a manager of SpectaGuard fromFebruary  2003 until August  2004. Mr.  Slotkin hasbeen Executive Vice President and Chief Financial Officer of Mafcosince 1999 and was Senior Vice President of Mafco from 1992 to 1999.Mr.  Slotkin has been Executive Vice President and ChiefFinancial Officer of M & F Worldwide since 1999. Prior to 1992,Mr.  Slotkin was Senior Managing Director and Senior CreditOfficer of Citicorp. Mr.  Slotkin is also a member of the Boardof Directors of CBIZ, Inc. and REV Holdings LLC, each of which isrequired to file reports pursuant to the Exchange Act.

29

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General Jack Keane has served asa Manager of Allied Holdings since March  2005. General Keaneserved 37 years in the U.S. Army, rising to the rank of four-starGeneral and most recently holding the position of Vice Chief of Staffof the Army. General Keane is President of GSI, LLC, an independentconsulting firm. He is a senior advisor to Kohlberg, Kravis, Roberts& Co. and an advisor to URS Corporation. General Keane is also aDirector of METLIFE, Inc. and General Dynamics Corporation. He is amember of the Secretary of Defense's Policy Board and is amilitary analyst for ABC News.

Michael J. Regan hasserved as a Manager of Allied Holdings since March  2005.Mr.  Regan is a former Vice Chairman and the Chief AdministrativeOfficer of KPMG LLP, a leading provider of audit and tax services. Overhis 40 years with KPMG, Mr. Regan was involved in a wide range ofbusiness activities, was lead partner for many Fortune 500 companiesand was head of the New York Audit Practice. He is a graduate ofManhattan College, where he is currently a member of the board oftrustees, and served four years as a naval officer. Mr.  Regansits on the Board of Scientific Games, which is a publicly tradedcompany on the Nasdaq Stock Market. He is also a member and formerchairman of the board of directors for the United Way of Bergen County,New Jersey.

John A. Fry has served as a Manager ofAllied Holdings since September  2005. Mr.  Fry isPresident of Franklin & Marshall College, a position he has heldsince 2002. Prior to joining Franklin & Marshall, Mr.  Frywas the Executive Vice President of the University of Pennsylvaniawhere he was responsible for all matters related to finance,investments, human resources, facilities and real estate, publicsafety, information systems, corporate relations and audit andcompliance. He is a member of the National Collegiate AthleticAssociation's Division III President's Council and is aPresidential Appointee of the Benjamin Franklin TercentenaryCommission.

Ray Wirta has served as a Manager of AlliedHoldings since September  2005. Mr. Wirta previously served foreight years as Chief Executive Officer of CB Richard Ellis, a Fortune500 company. He is vice chairman and a director of CB Richard Ellis andchairman and director of CB Richard Ellis Realty Finance. Prior tojoining CB Richard Ellis, Mr. Wirta was President of the KollCompany.

Audit Committee Financial Expert

AlliedHoldings’ Board of Managers has established an audit committeewith an ‘‘audit committee financialexpert’’ as such term is defined in Item 401(h) ofRegulation S-K under the Securities Act of 1933, as amended (the‘‘Securities Act’’). On March9,  2005, Allied Holdings’ Board of Managers determinedthat Michael J. Regan, based upon his experience, training andeducation, qualifies as an audit committee financial expert. Mr.Regan is independent of management.

Code ofEthics

Allied Holdings has adopted a Code of Ethics applicableto all of its Managers and officers, including its Chief ExecutiveOfficer and principal financial officer. The Code of Ethics consists ofa set of written standards designed to deter wrongdoing and promotehonest and ethical conduct; full, fair, accurate, timely andunderstandable disclosure in its securities law filings and investorcommunications; compliance with law; the prompt internal reporting ofany violation of the Code of Ethics; and accountability for adherenceto its standards. Anyone wishing to obtain a copy of the Code of Ethicsmay do so, without charge, by writing to the Corporate ComplianceOfficer at the address on the cover of this Annual Report on Form10-K.

Appointments to the Board of Managers

As discussedelsewhere in this Annual Report on Form 10-K, SpectaGuard Holding,which is wholly-owned through Mafco by Ronald O. Perelman, a member ofour Board of Managers, is entitled under our Operating Agreement,subject to certain exceptions, to designate all members of the AlliedHoldings’ Board of Managers. On March  9,  2005, theBoard of Managers appointed two individuals to the Board: General JackKeane and Michael J. Regan. On September  6,  2005, theBoard of Managers appointed two individuals to the Board: John A. Fryand Ray Wirta.

30

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Compensation of Managers

The Boardof Managers has adopted a compensation arrangement for the independentmembers of the Board of Managers pursuant to which such independentmembers would receive compensation for 2005 Board membership of $50,000and $1,000 for each Board meeting attended. The Audit CommitteeChairperson also receives $10,000 and each other committee chairpersonreceives $5,000 for their service as chairpersons, and each committeemember receives $1,000 for each committee meeting attended.

Item11. Executive Compensation.

SummaryCompensation Table

Pursuant to the Management Agreement (asdescribed in ‘‘Certain Relationships and Related PartyTransactions — Management Agreement’’),SpectaGuard Holding provides us with certain advisory and managementservices, including the services of certain members of our seniormanagement, as requested by us and approved by SpectaGuard Holding. Wereimburse SpectaGuard Holding for all costs and expenses incurred inconnection with its performance under the agreement, including cashcompensation paid to certain members of our senior management asdescribed below.

The following table sets forth informationconcerning total compensation paid to our Chairman and our threecurrent executive officers and a fourth individual who served as anexecutive officer during 2005, in each case for services rendered in2005, 2004 and 2003, as applicable. Amounts reported as cashcompensation were paid to the listed individuals by SpectaGuardHolding, which amounts were reimbursed to SpectaGuard Holding by uspursuant to the Management Agreement. The Class C unit awards describedbelow refer to awards to the listed individuals by us of our Class Cunits pursuant to Class C unit award agreements between the listedindividual andus.

|                            |  |                    |      |                       |  |          |         |                             |  |                                |         |                          |  |         |  |         |  |                     |  |  |  |  |  |  |  |  |
|----------------------------|--|--------------------|------|-----------------------|--|----------|---------|-----------------------------|--|--------------------------------|---------|--------------------------|--|---------|--|---------|--|---------------------|--|--|--|--|--|--|--|--|
|                       |  | AnnualCompensation |      | Long-TermCompensation |  |     |
| Nameand Principal Position |  | Year               |      | Salary                |  | Bonus(1) |         | Other AnnualCompensation(2) |  | RestrictedStockUnit Awards (3) |         | AllOtherCompensation (4) |
| Albert J.Berger(5)         |  |               | 2005 |                  |  | $        | 250,000 |                        |  | $                              | 142,645 |                     |  | — |  | — |  | —             |
| Chairman                   |  |               | 2004 |                  |  | $        | 281,731 |                        |  | $                              | 192,080 |                     |  | — |  | — |  | —             |
|                       |  |               | 2003 |                  |  | $        | 362,524 |                        |  | $                              | 182,500 |                     |  | — |  | — |  | $300,000            |
| WilliamC. Whitmore,Jr.     |  |               | 2005 |                  |  | $        | 463,901 |                        |  | $                              | 216,000 |                     |  | — |  | — |  | —             |
| PresidentandChief          |  |               | 2004 |                  |  | $        | 442,461 |                        |  | $                              | 200,000 |                     |  | — |  | — |  | —             |
| ExecutiveOfficer           |  |               | 2003 |                  |  | $        | 382,032 |                        |  | $                              | 200,000 |                     |  | — |  | — |  | $300,000            |
| DavidI. Buckman(6)         |  |               | 2005 |                  |  | $        | 155,769 |                        |  | $                              | 7,500   |                     |  | — |  | — |  | —             |
| ExecutiveVicePresident     |  |               | 2004 |                  |  |     | — |                        |  |                           | — |                     |  | — |  | — |  | —             |
| andGeneralCounsel          |  |               | 2003 |                  |  |     | — |                        |  |                           | — |                     |  | — |  | — |  | —             |
| MarkP. Desrosiers(7)       |  |               | 2005 |                  |  | $        | 201,731 |                        |  | $                              | 107,500 |                     |  | — |  | — |  | —             |
| ExecutiveVicePresident     |  |               | 2004 |                  |  | $        | 223,269 |                        |  | $                              | 107,500 |                     |  | — |  | — |  | —             |
|                       |  |               | 2003 |                  |  | $        | 209,703 |                        |  | $                              | 107,500 |                     |  | — |  | — |  | $  50,000 |
| WilliamA.Torzolini         |  |               | 2005 |                  |  | $        | 276,178 |                        |  | $                              | 122,540 |                     |  | — |  | — |  | —             |
| SeniorVice Presidentand    |  |               | 2004 |                  |  | $        | 246,789 |                        |  | $                              | 110,000 |                     |  | — |  | — |  | —             |
| ChiefFinancialOfficer      |  |               | 2003 |                  |  | $        | 220,000 |                        |  | $                              | 110,000 |                     |  | — |  | — |  | $150,000            |
|                            |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                   |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Annualbonus represents bonuses paid in March of the year noted relating tothe Company's performance in the previous  year, so thatbonus payments in 2005, for example, relate to 2004performance. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | The dollar value ofperquisites and other personal benefits provided for the benefit ofMessrs. Berger, Whitmore, Buckman, Desrosiers and Torzolini during2005, 2004 and 2003 did not exceed the lesser of (i) $50,000 or (ii)10% of the total annual salary and bonus reported for suchindividuals in 2005, 2004 and 2003. There were no other amounts ofcompensation required to be reported as ‘‘Other AnnualCompensation’’ by Item 402 of Regulation S-K of theSecurities Act earned by Messrs. Berger, Whitmore, Buckman, Desrosiersand Torzolini. |

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|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | During 2003,80,000 Class C units of SpectaGuard were granted to Messrs. Berger,Whitmore, Desrosiers and Torzolini as set forth below. On August2,  2004, in connection with the consummation of theTransactions, the members of SpectaGuard contributed their Class A,Class B and Class C units, as applicable, of SpectaGuard to AlliedHoldings in exchange for an identical number of Class A, Class B andClass C units, as applicable, of Allied Holdings. In addition, theholders of Class C units of SpectaGuard, including Messrs. Berger,Whitmore, Desrosiers and Torzolini executed Class C unit awardagreements with Allied Holdings having identical terms and conditionsas the award agreements governing the Class C units of SpectaGuard. TheSpectaGuard award agreements were cancelled. The Class C unitsgenerally vest over a period of three and five years with respect toMr.  Berger and Messrs. Whitmore, Desrosiers and Torzolini,respectively, provided that such individual remains employed bySpectaGuard Holding and, provided further with respect to certain ClassC units, that established performance goals are met (which performancegoals were met for 2003 and 2004). For 2005 performance goals were notmet and all performance related Class C units were forfeited andcancelled. The following table sets forth information with respect tothe Class C Units for each of Messrs. Berger, Whitmore, Buckman,Desrosiers and Torzolini for each of 2003, 2004 and 2005: |

|                         |  |        |      |                    |  |                    |         |                        |  |                      |         |                    |  |        |         |        |  |        |         |        |  |        |         |        |  |  |
|-------------------------|--|--------|------|--------------------|--|--------------------|---------|------------------------|--|----------------------|---------|--------------------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
| Name                    |  | Year   |      | Class CUnit Grants |  | Class CUnitsVested |         | Class CUnits Forfeited |  | Class CUnitsUnvested |         | Class CUnits Value |
| Albert J.Berger         |  |   | 2005 |               |  |               | — |                   |  |                 | 3,334   |               |  |   | 3,334   |   |  |   | — |   |  |   | — |   |
|                    |  |   | 2004 |               |  |               | — |                   |  |                 | 6,666   |               |  |   | — |   |  |   | 6,668   |   |  |   | — |   |
|                    |  |   | 2003 |               |  |               | 20,000  |                   |  |                 | 6,666   |               |  |   | — |   |  |   | 13,334  |   |  |   | — |   |
| WilliamC. Whitmore, Jr. |  |   | 2005 |               |  |               | — |                   |  |                 | 4,000   |               |  |   | 4,000   |   |  |   | 16,000  |   |  |   | — |   |
|                    |  |   | 2004 |               |  |               | — |                   |  |                 | 8,000   |               |  |   | — |   |  |   | 24,000  |   |  |   | — |   |
|                    |  |   | 2003 |               |  |               | 40,000  |                   |  |                 | 8,000   |               |  |   | — |   |  |   | 32,000  |   |  |   | — |   |
| MarkP. Desrosiers       |  |   | 2005 |               |  |               | — |                   |  |                 | 3,000   |               |  |   | 3,000   |   |  |   | — |   |  |   | — |   |
|                    |  |   | 2004 |               |  |               | — |                   |  |                 | 2,000   |               |  |   | — |   |  |   | 6,000   |   |  |   | — |   |
|                    |  |   | 2003 |               |  |               | 10,000  |                   |  |                 | 2,000   |               |  |   | — |   |  |   | 8,000   |   |  |   | — |   |
| DavidI. Buckman         |  |   | 2005 |               |  |               | 10,000  |                   |  |                 | 417     |               |  |   | 417     |   |  |   | 9,166   |   |  |   | — |   |
|                    |  |   | 2004 |               |  |               | — |                   |  |                 | — |               |  |   | — |   |  |   | — |   |  |   | — |   |
|                    |  |   | 2003 |               |  |               | — |                   |  |                 | — |               |  |   | — |   |  |   | — |   |  |   | — |   |
| WilliamA. Torzolini     |  |   | 2005 |               |  |               | — |                   |  |                 | 1,000   |               |  |   | 1,000   |   |  |   | 4,000   |   |  |   | — |   |
|                    |  |   | 2004 |               |  |               | — |                   |  |                 | 2,000   |               |  |   | — |   |  |   | 6,000   |   |  |   | — |   |
|                    |  |   | 2003 |               |  |               | 10,000  |                   |  |                 | 2,000   |               |  |   | — |   |  |   | 8,000   |   |  |   | — |   |
|                         |

|     |                                                                                                                                                                                                                                                                   |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Anaffiliate of Gryphon SpectaGuard Partners, L.P. paid Messrs. Berger,Whitmore, Desrosiers and Torzolini discretionary sale bonuses of$300,000, $300,000, $50,000 and $150,000, respectively, in connectionwith the sale of SpectaGuard to Mafco in February2003. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | Mr. Berger’semployment agreement was amended on February  17,  2006.The amendment modifies the payment terms applicable to a SpecialPayment (as described below) payable to Mr.  Berger in theapproximate amount of $7,000,000 (with a gross-up payment to the extentthat the Special Payment is taxed at a rate higher than the highestfederal capital gains rate) previously payable to Mr.  Berger onFebruary  19,  2006. Specifically, the amendment modifiesthe timing of the payment such that $1,000,000 of the Special Paymenthas been paid to Mr.  Berger on February  17,  2006and the balance of the Special Payment is payable on April28,  2006 (in each instance, with a gross-up payment to theextent that the Special Payment is taxed at a rate higher than thehighest federal capital gains rate). |

|     |                                                                                                             |
|-----|-------------------------------------------------------------------------------------------------------------|
| (6) | Mr.  Buckman’s compensationrepresents amounts received since he joined the Company on April25,  2005. |

|     |                                                                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (7) | Mr.Desrosiers’ employment with the Company ended as ofNovember  4,  2005. As of that date, he forfeited 3,000unvested Performance-Based Class C Units. |

EmploymentAgreements and Related Matters

 EmploymentAgreement with Mr.  Berger

SpectaGuard Holding isparty to an employment agreement with Mr.  Berger, dated as ofFebruary  19,  2003, as amended and restated onAugust  2,  2004, with a term which expired onFebruary  19,  2006. Pursuant to this agreement, Mr.Berger served as a member of the Board of Directors of SpectaGuardHolding and as an employee of SpectaGuard Holding in an executiveposition mutually agreed upon by Mr.  Berger and SpectaGuardHolding. Mr.  Berger’s base salary was $365,000 for thefirst year of the term of his agreement and is $250,000 for each yearof the remainder of the term. Mr.  Berger was also eligible toreceive a performance based bonus for each fiscal year during the termof his employment agreement, with a target bonus of 50% of hisbase salary if certain objectives are achieved. In the event of certainqualifying terminations of his employment, Mr.  Berger wasentitled to receive certain severance payments and continued benefitsincluding payment of his base salary for the remainder of the term ofhis employment agreement, the target bonus for the year 

32

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of his termination of employment and vestingof his Time Based Class C Units and Performance Based Class C Units(each as defined below) with respect to the year of termination only tothe extent that applicable performance criteria were met. Mr.Berger also is entitled to receive a Special Payment (as described in‘‘Certain Relationships and Related Party Transactions— Ownership by Mafco’’) of approximately$7.0  million (with a gross-up payment to the extent that thespecial payment is taxed at a rate higher than the highest federalcapital gains rate). The Special Payment was to be payable on the firstto occur of (i) a public offering of the registrable securities ofAllied and/or certain sales of assets or equity of Allied, (ii)expiration of the term of his employment agreement or (iii) certainqualifying terminations of his employment. Mr. Berger’semployment agreement was amended on February  17,  2006.The amendment modifies the payment terms applicable to a the SpecialPayment payable to Mr.  Berger (with a gross-up payment to theextent that the special payment is taxed at a rate higher than thehighest federal capital gains rate) previously payable to Mr.Berger on February  19,  2006. Specifically, the amendmentmodified the timing of the payment such that $1.0  million of thespecial payment was paid to Mr.  Berger on February17,  2006 and the balance of the special payment is payable onApril  28,  2006 (in each instance, with a gross-up paymentto the extent that the special payment is taxed at a rate higher thanthe highest federal capital gains rate). Following the expiration ofthe term of his employment agreement on February 19, 2006, Mr.Berger is subject to a noncompetition covenant relating to SpectaGuardHolding and Allied for a period of two years.

EmploymentAgreement with Mr. Whitmore

SpectaGuard Holding is party toan employment agreement with Mr. Whitmore, dated as of February19,  2003, as amended and restated on August  2,2004, with a term expiring on February  19,  2008. Pursuantto this agreement, Mr. Whitmore will serve as a member of the Board ofDirectors of SpectaGuard Holding and the Chief Executive Officer andPresident of SpectaGuard Holding. Mr. Whitmore’s base salaryincreases by 8% per year. His 2005 annual base salary was$466,000. Mr. Whitmore also is eligible to receive a performance basedbonus for each fiscal year during the term of his employment agreement,with a target bonus of 50% of his base salary if certainobjectives are achieved. In the event of certain qualifyingterminations of his employment, Mr. Whitmore is entitled to receivecertain severance payments and continued benefits including payment ofhis base salary for the remainder of the term of his employmentagreement, the target bonus for the year of his termination ofemployment and vesting of his Time Based Class C Units and hisPerformance Based Class C Units with respect to the year of terminationonly to the extent that applicable performance criteria are met. Mr.Whitmore is also entitled to receive a Special Payment of approximately$4.3  million (with a gross-up payment to the extent that thespecial payment is taxed at a rate higher than the highest federalcapital gains rate) on the first to occur of (i) a public offering ofthe registrable securities of Allied and/or certain sales of the assetsof equity of Allied, (ii) expiration of the term of his employmentagreement or (iii) certain qualifying terminations of employment.Following a termination of his employment, Mr. Whitmore also will besubject to a noncompetition covenant relating to SpectaGuard Holdingand Allied for a period that, in the case of a termination ofemployment for which Mr. Whitmore becomes eligible to receiveseverance, will be equal to the severance period. Otherwise, thenoncompetition covenant extends for the longer of the remainder of theoriginally scheduled term and two years fromtermination.

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 Additional EmploymentAgreements

In addition to the employment agreements withMessrs. Berger and Whitmore described above, SpectaGuard Holding isparty to individual employment agreements with certain other members ofsenior management (including Messrs. Buckman and Torzolini). Each ofthe employment agreements has an original term of three years or lessthat extends for an additional year unless proper notice of terminationof the agreement is given. Each employment agreement provides that theexecutive will be entitled to receive certain severance payments andcontinued benefits in the event of certain qualifying terminations ofhis or her employment, including payment of the executive's basesalary for the remainder of the term of his or her employment agreement(or twelve months, if longer), a pro rata bonus, only to the extentthat applicable performance criteria are met, for the year of his orher termination of employment (provided that the termination occurs atleast six months into the fiscal year) and continued health and welfarebenefits during the severance period.

 SpecialPayment Plan

SpectaGuard Holding maintains a SpecialPayment Plan for certain present and former members of seniormanagement (other than Messrs. Berger and Whitmore), including Messrs.Desrosiers and Torzolini, pursuant to which each individual wasentitled to receive a Special Payment (with a gross-up payment to theextent that the special payment is taxed at a rate higher than thehighest federal capital gains rate) on the first to occur of (i) apublic offering of the registrable securities of Allied and/or certainsales of assets or equity of Allied or (ii) February  19,2006. An aggregate of approximately $0.56  million was paid tothe members of senior management on February  19,  2006pursuant to the Special Payment Plan (with a gross-up payment to theextent that the special payment is taxed at a rate higher than thehighest federal capital gains rate), including approximately$0.11  million and $0.08  million paid to Messrs.Desrosiers and Torzolini,respectively.

 Restricted Class C UnitAwards

On February  19,  2003, certain membersof senior management, including Messrs. Berger, Whitmore, Desrosiersand Torzolini, were granted Class C units of SpectaGuard, subject tothe vesting requirements described below. On August  2,2004, in connection with the consummation of the Transactions, themembers of SpectaGuard contributed their Class A, Class B and Class Cunits, as applicable, of SpectaGuard to Allied Holdings in exchange foran identical number of Class A, Class B and C units, as applicable, ofAllied Holdings. In addition, the holders of Class C units ofSpectaGuard, including Messrs. Berger, Whitmore, Desrosiers andTorzolini executed Class C unit award agreements with Allied Holdingshaving identical terms and conditions as the award agreements governingthe Class C units of SpectaGuard. The SpectaGuard award agreements werecancelled. The Class C units generally vest over a period of five years(or in the case of Mr.  Berger, three years), provided that theindividual remains employed by SpectaGuard Holding(‘‘Time Based Class C Units’’) and,provided further with respect to certain Class C units, thatestablished performance goals are met (‘‘PerformanceBased Class C Units’’). The Class C units may also vestupon certain sales of the equity or assets of Allied or upon certainqualifying terminations of employment. On May  17,  2005and on December  6,  2005, 7,500 and 2,500 unvested Class Cunits were issued to Mr.  Buckman for approximately $7,500 and$1,667, respectively. Mr.  Buckman’s  Class  Cunits vest over six years under the same conditions describedabove.

 Sale Bonuses

Certain salebonuses were paid to Messrs. Berger, Whitmore, Desrosiers and Torzoliniin connection with the sale of Allied to Mafco in February  2003.See footnote 3 to ‘‘— Summary CompensationTable.’’

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|                |                                                                                               |
|----------------|-----------------------------------------------------------------------------------------------|
| Item 12.  | SecurityOwnership of Certain Beneficial Owners and Management and Related UnitHolder Matters. |

The business and affairs of Allied Holdingsare managed by the Board of Managers. Pursuant to our OperatingAgreement, SpectaGuard Holding, which is wholly-owned through Mafco byRonald O. Perelman, a member of our Board of Managers, is entitled,subject to certain exceptions, to designate all of the members ofAllied Holdings’ Board of Managers. All classes of membershipinterests of Allied Holdings, comprising Class A units, Class B unitsand Class C units, are non-voting.

On August  2,2004, simultaneously with the consummation of the Transactions, themembers of SpectaGuard became the members of Allied Holdings (andAllied Holdings became the sole member of SpectaGuard) through thecontribution of their Class A, Class B and Class C units, asapplicable, of SpectaGuard to Allied Holdings in exchange for anidentical number of Class A, Class B and Class C units, as applicable,of Allied Holdings. The SpectaGuard Operating Agreement was terminatedand the members of Allied Holdings entered into the Operating Agreementwhich contained provisions substantially similar to the SpectaGuardOperating Agreement.

The following table sets forth informationwith respect to the beneficial ownership of our Class A, Class B andClass C units as of December  31,  2005 by each of ourManagers, each of our executive officers and all of our executiveofficers and Managers as a group.

The amounts and percentages ofmembership interests beneficially owned are reported on the basis ofSEC regulations governing the determination of beneficial ownership ofsecurities. Under SEC rules, a person is deemed to be a‘‘beneficial owner’’ of a security if thatperson has or shares voting power or investment power, which includesthe power to dispose of or to direct the disposition of such security.A person is also deemed to be a beneficial owner of any security ofwhich that person has a right to acquire beneficial ownership within 60days. Securities that can be so acquired are not deemed to beoutstanding for purposes of computing any other person’spercentage. Under these rules, more than one person may be deemed to bethe beneficial owner of the same underlying securities as to which anysuch person has no economic interest.

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|                                                           |  |                                                                             |  |                                                          |         |         |  |  |  |  |
|-----------------------------------------------------------|--|-----------------------------------------------------------------------------|--|----------------------------------------------------------|---------|---------|--|--|--|--|
| Name                                                      |  | Amountand Nature of Beneficial Ownership                                    |  | Percentage ofTotal Class A, Class B and Class C Units(1) |
| Ronald O.Perelman                                         |  | 752,954(Class A units) (2)                                                  |  |                                                     | 68.9    | %  |
| Albert J.Berger                                           |  | 2,033 (Class A units) 46,097 (Class B units)16,666 (Class C units)(3)       |  |                                                     | 5.9     | %  |
| William C. Whitmore,Jr.                                   |  | 2,722 (Class A units) 27,894 (Class B units)36,000 (Class C units) (3)      |  |                                                     | 6.1     | %  |
| DavidI. Buckman                                           |  | 9,583 (Class C units)(3)                                                    |  |                                                     |         | *  |
| Mark P. Desrosiers                                        |  | 105 (ClassA units) 751 (Class B units) 7,000 (Class C units)(3)             |  |                                                     |         | *  |
| William A. Torzolini                                      |  | 73 (ClassA units) 524 (Class B units) 9,000 (Class C units)(3)              |  |                                                     |         | *  |
| Floyd I.Clarke                                            |  | —                                                                     |  |                                                     | — |    |
| DonaldG. Drapkin                                          |  | 67,970 (Class Aunits)                                                       |  |                                                     | 6.1     | %  |
| Todd J.Slotkin                                            |  | —                                                                     |  |                                                     | — |    |
| GeneralJackKeane                                          |  | —                                                                     |  |                                                     | — |    |
| MichaelJ.Regan                                            |  | —                                                                     |  |                                                     | — |    |
| JohnA.Fry                                                 |  | —                                                                     |  |                                                     | — |    |
| RayWirta                                                  |  | —                                                                     |  |                                                     | — |    |
| AllManagers and Executive Officers as a Group (13persons) |  | 825,857 (Class A units) (4)75,266 (Class B units) 78,249 (Class C units)(3) |  |                                                     | 89.5    | %  |
|                                                           |

|  |
|--|
|  |  |
|  |

|   |                                               |
|---|-----------------------------------------------|
| * | Indicatesbeneficial ownership of less than1%. |

|     |                                                                                                                                                                                                                                                                                    |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Asof December  31, 2005, there were 890,985, 77,627 and 124,074Class A, Class B and Class C units outstanding, respectively. Of theClass C units outstanding as of such date, 71,808 had vested and 62,942remained unvested. All Class A, Class B and Class C units arenon-voting. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Mr.Perelman, through Mafco, the sole stockholder of SpectaGuard Holding,beneficially owns 752,954 Class A units. Of these Class A units,739,175 Class A units are held by SpectaGuard Holding and 13,779 ClassA units are held by SpectaGuard Holding Two Corporation, a Delawarecorporation wholly-owned by SpectaGuard Holding. These Class A unitsare currently, and may from time to time be, pledged to secureobligations of Allied  Holdings and/or Mafco. A default underthese obligations could cause a foreclosure with respect to suchpledgedunits. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | TheClass C units generally vest over a period of three and five years withrespect to Mr.  Berger and Messrs. Whitmore, Buckman, Desrosiersand Torzolini, respectively, provided that such individual remainsemployed by SpectaGuard Holding and, provided further with respect tocertain Class C units, that established performance goals are met. Asof December  31,  2005, 16,666, 20,000, 417 and 5,000 ofthe Class C units held by Messrs. Berger, Whitmore, Buckman, Desrosiersand Torzolini, respectively, had vested. Effective November4,  2005, Mr.  Desrosiers’ employment withSpectaGuard Holding wasterminated. |

|     |                                                                                                            |
|-----|------------------------------------------------------------------------------------------------------------|
| (4) | Includes the752,954 Class A units which are beneficially owned by Mr.Perelman through SpectaGuard Holding. |

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|                |                                                |
|----------------|------------------------------------------------|
| Item 13.  | CertainRelationships and Related Transactions. |

TransactionsRelated to the Formation of Allied Holdings

On August2,  2004, simultaneously with the consummation of theTransactions, the members of SpectaGuard became the members of AlliedHoldings (and Allied Holdings became the sole member of SpectaGuard)through the contribution of their Class A, Class B and Class C units,as applicable, of SpectaGuard to Allied Holdings in exchange for anidentical number of Class A, Class B and C units, as applicable, ofAllied Holdings. The SpectaGuard Operating Agreement was terminated andthe members of Allied Holdings entered into the Operating Agreement,which contained provisions substantially similar to the SpectaGuardOperating Agreement.

Ownership by Mafco

For a discussionof the February  2003 acquisition of Allied by Mafco, see‘‘Management's Discussion and Analysis of FinancialCondition and Results of Operations — Acquisition byMafco.’’

In connection with the acquisition ofAllied by Mafco in February  2003, approximately $4.5million of the aggregate purchase price was paid to Mr.  Berger,representing aggregate consideration in exchange for certainpre-acquisition common and preferred interests of SpectaGuard held byMr.  Berger, less approximately $0.3  million that was usedto repay in full amounts owed, pre-acquisition, by Mr.  Berger toSpectaGuard under a note dated March  1,  2000. Inconnection with the payment of a portion of the aggregate purchaseprice to certain members of management in exchange for certain commonand preferred interests of the pre-acquisition company held by suchpersons, approximately $0.08  million, $2.3  million and$0.03  million was paid to Messrs. Desrosiers, Whitmore andTorzolini, respectively.

In addition, in connection with theFebruary  2003 acquisition of Allied by Mafco, members of seniormanagement of SpectaGuard forfeited their vested options to purchasepre-acquisition interests in SpectaGuard in exchange for a future cashpayment. As of December  31,  2005, SpectaGuard Holding wasobligated to make these payments to these members of senior management(with respect  to each member of senior management, a‘‘Special Payment’’) in an aggregate amountof approximately $11.9  million (with gross-up payments to theextent that the Special Payments are taxed at a rate higher than thehighest federal capital gains rate). Under the Management Agreementdescribed below, cash amounts paid by SpectaGuard Holding with respectto these Special Payments are reimbursed by us to SpectaGuard Holding.On February  19,  2006, Special Payments aggregatingapproximately $0.56  million were paid to members of seniormanagement (other than Messrs. Berger and Whitmore) pursuant to theSpecial Payment Plan. For further discussion of the SpecialPayments,  see ‘‘Item 11. ExecutiveCompensation’’; ‘‘— EmploymentAgreement with Mr.  Berger’’, ‘‘— Employment Agreement with Mr.Whitmore’’ and ‘‘— Special PaymentPlan.’’

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Additional Contributions

OnApril  29,  2003, in connection with the May2,  2003 amendment and restatement of the Refinanced SeniorSecured Credit Facilities, additional Class A units of SpectaGuard wereissued for cash contributions in an aggregate amount of $10.0million, comprising approximately $4.5  million from SpectaGuardHolding and approximately $5.1  million from certain executivesof Mafco who were members of SpectaGuard, $0.2  million from OCMSpecta Holdings Inc. (‘‘OCM’’) and$0.2  million from certain members of senior management(including approximately $0.16  million from Mr.Whitmore).

On December  19,  2003, in connection withour acquisition of PSB, additional Class A units of SpectaGuard wereissued for cash contributions in an aggregate amount of $7.5million, comprising approximately $3.2  million from SpectaGuardHolding and approximately $3.4  million from certain executivesof Mafco who were members of SpectaGuard, $0.2  million from OCM,$0.1  million from Blackstone and $0.6  million fromcertain members of senior management (including approximately$0.3  million and $0.2  million from Messrs. Berger andWhitmore, respectively).

Operating Agreement

Thefollowing is a description of certain terms our Operating Agreement,dated as of August  2,  2004.

ManagerDesignation Rights

The business and affairs of AlliedHoldings are managed by the Board of Managers. Under our OperatingAgreement, SpectaGuard Holding is entitled to designate and remove,with or without cause, all ten of the members of the Board of Managers,except that SpectaGuard Holding must designate (i) Mr.  Berger asa Manager until the earlier of Mr.  Berger ceasing to be a memberof Allied Holdings or ceasing to be employed by SpectaGuard Holding and(ii) Mr. Whitmore as a Manager until the earlier of Mr. Whitmoreceasing to be a member of Allied Holdings or ceasing to be employed bySpectaGuard Holding. Mr.  Berger’s employment bySpectaguard Holding ceased on February  19,  2006. He hasremained as a Manager of Allied Holdings.

RegistrationRights

In the event that Allied Holdings' Board ofManagers determines to reorganize Allied Holdings into a corporationfor purposes of commencing an initial public offering or for some otherreason (such surviving corporation is referred to as the‘‘Company Offeror’’) and the CompanyOfferor, subject to certain exceptions, proposes to register under theSecurities Act an offering of any class of its equity securities oroffer any capital securities for sale pursuant to an effective shelfregistration statement, then each of our members will have the right,with respect to its Registrable Securities (as defined in our OperatingAgreement) of the Company Offeror, to require the Company Offeror touse its reasonable best efforts as described in our Operating Agreementto cause the managing underwriters of the proposed underwrittenoffering to permit such Registrable Securities to be included in theproposed offering. Such registration rights are subject, among otherthings, to certain rights in favor of the Company Offeror to reduce, oreliminate entirely, the number of Registrable Securities registered inthe offering in certain circumstances. The Company Offeror isresponsible for expenses (other than underwriting discounts andtransfer fees) in connection with the registration of the RegistrableSecurities as provided for in our OperatingAgreement.

38

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Put Option of Mr.Berger

Subject to certain exceptions, Mr.  Berger hasthe right to cause Allied Holdings to purchase all, but not less thanall, of his outstanding Class B units at any time during the periodFebruary  19,  2006 to May  17,  2006, inaccordance with a specified calculation (based on AlliedHoldings' operating results and financial condition at such time)as set forth in our Operating Agreement. If Mr.  Berger exercisesthis option, the price that he receives for his units will be reducedby the amount of any Special Payment he receives under the terms of hisemployment agreement with SpectaGuard Holding. As of December31,  2005, the fair market value of this put was $2.4million. Mr.  Berger has indicated that he will not exercise theput. Mr. Berger’s employment agreement was amended and restatedon February  17,  2006. The amendment modifies the paymentterms applicable to the Special Payment payable to Mr.  Berger inthe approximate amount of $7.0  million (with a gross-up paymentto the extent that the special payment is taxed at a rate higher thanthe highest federal capital gains rate) previously payable toMr.  Berger on February  19,  2006. Specifically, theamendment modifies the timing of the payment such that $1.0million of the special payment was paid to Mr.  Berger onFebruary  17,  2006 and the balance of the special paymentis payable on April  28,  2006 (in each instance, with agross-up payment to the extent that the special payment is taxed at arate higher than the highest federal capital gainsrate).

Indemnification

In the absence of fraud, willfulmisconduct, bad faith or gross negligence, (i) no covered person(including Allied Holdings' Managers, members and officers) willbe liable to Allied Holdings or any other person for acts or omissionsrelating to Allied Holdings, its business or our Operating Agreementand related documents and transactions, taken or omitted to be taken ingood faith by such covered person in the reasonable belief that suchact or omission was in or not opposed to the best interests of AlliedHoldings and (ii) to the fullest extent permitted by law, AlliedHoldings has agreed to indemnify and hold harmless each covered personfrom and against certain claims relating to Allied Holdings or itsaffairs. Expenses incurred by a covered person investigating ordefending a claim shall be paid in advance by Allied Holdings uponreceipt of an undertaking as provided for in our OperatingAgreement.

Management Agreement

Pursuant to an Amendedand Restated Management Agreement by and between SpectaGuard andSpectaGuard Holding, dated as of August  2,  2004 (the‘‘Management Agreement’’), SpectaGuardHolding provides us with certain advisory and management services,including the services of certain members of our senior management(including Messrs. Berger, Torzolini and Whitmore), as requested by usand approved by SpectaGuard Holding. The Management Agreement providesthat we will reimburse SpectaGuard Holding for all costs and expensesincurred in connection with its performance under the agreement,including amounts paid by SpectaGuard Holding with respect to SpecialPayments by SpectaGuard Holding to members of senior management. Theagreement also provides that we indemnify and hold harmless SpectaGuardHolding and related parties for matters arising out of the ManagementAgreement.

Contract Security Services

During 2005 and2004, the Company provided contract security officer services to Revlonand its subsidiaries. For 2005 and 2004, the Company received aggregatepayments from Revlon for such services of $1.0  million and$0.4  million, respectively.

During fiscal 2005 and 2004,the Company provided contract security officer services to PanavisionInc. and its subsidiaries. For 2005 and 2004, the Company receivedaggregate payments from Panavision Inc. for such services of$0.2  million and $0.1  million, respectively.

During2005 and 2004, the Company provided contract security officer servicesto M & F Worldwide and its subsidiaries. For 2005 and 2004, theCompany received aggregate payments from M & F Worldwidefor such services of $0.5  million and $0.3  million,respectively.

39

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During 2005, the Company providedcontract security officer services to AM General and its subsidiaries.For 2005, the Company received aggregate payments from AM General forsuch services of $0.6  million.

Mafco is the controllingstockholder of each of Revlon and Panavision Inc. and as ofDecember  31,  2005, beneficially owned approximately38% of the outstanding common stock of M & FWorldwide. As of December  31,  2005, a subsidiary of Mafcowas the managing member of AM General. The rates charged for theseservices were competitive with industry rates for similarly situatedsecurity firms.

|                |                                        |
|----------------|----------------------------------------|
| Item 14.  | PrincipalAccountant Fees and Services. |

EY has audited theconsolidated financial statements of the predecessor of Allied Holdingsfor more than the past five years. Allied Holdings’ Board ofManagers, which is the equivalent of a Board of Directors, maintains anAudit Committee. The Audit Committee is responsible for theappointment, compensation, retention and oversight of the work of EY inconnection with the preparation and issuance of its audit report orperformance of other audit, review or attest services. The AuditCommittee is directly responsible for reviewing, in advance, andgranting any appropriate pre-approval of (a) all auditing services tobe provided to Allied Holdings by the independent auditor and (b) allnon-audit services to be provided to Allied Holdings by the independentauditor (as permitted by the Exchange Act), and, in connectiontherewith, to approve all fees and other terms of engagement, asrequired by the applicable rules promulgated by the SEC under theExchange Act and subject to the exemptions provided for in such rules.To carry out such pre-approval responsibilities, the Audit Committeeadopted an Audit Committee Pre-Approval Policy for pre-approving allpermissible audit and non-audit services performed by EY for AlliedHoldings in December  2005.

The aggregate fees billed forprofessional services by EY in 2005 and 2004 for these various serviceswere:

|                   |
|-------------------|
|                   |  |  |  |  |  |  |  |  |  |  |
| TypesofFees       |  | 2005 |  | 2004 |
| AuditFees         |  | $ | 511,000 |   |  | $ | 790,000 |   |
| Audit RelatedFees |  |   | 78,000 |   |  |   | 520,000 |   |
| TaxFees           |  |   | 245,000 |   |  |   | 226,000 |   |
| All OtherFees     |  |   | — |   |  |   | 10,000 |   |
| TotalFees         |  | $ | 834,000 |   |  | $ | 1,546,000 |   |
|                   |

Inthe above table, in accordance with SEC definitions and rules,‘‘audit fees’’ are fees Allied Holdingspaid EY for professional services rendered for the audit of AlliedHoldings annual financial statements and review of quarterly financialstatements, and for services that are normally provided by theaccountant in connection with statutory and regulatory filings orengagements; ‘‘audit-related fees’’ arefees billed by EY for assurance and related services that aretraditionally performed by the auditor, including employee benefit planaudits, attest services not required by statute or regulation, andaudits performed for acquired entities; ‘‘taxfees’’ are fees for tax compliance, tax advice and taxplanning; and ‘‘all other fees’’ are feesbilled by EY to Allied Holdings for any services not included in thefirst three categories.

40

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PARTIV

|                |                                            |
|----------------|--------------------------------------------|
| Item 15.  | Exhibits and FinancialStatement Schedules. |

(a) 1.    ConsolidatedFinancial Statements of Allied Security Holdings LLC

Seeindex on Page F-1

2.          FinancialStatement Schedule

Schedule II — Valuation andQualifying Accounts   F-25

All otherschedules called for under Regulation S-X are not submitted becausethey are not applicable, not required, or because the requiredinformation is not material or is included in the financial statementsor notes thereto.

3.    List of Exhibits

|            |  |                                                                                                                                                                                                                                                                                                                                                                                       |  |  |  |  |
|------------|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description ofExhibit                                                                                                                                                                                                                                                                                                                                                                 |
| 2.1        |  | Agreementand Plan of Merger, dated as of May  12,  2004, by andamong SpectaGuard Acquisition LLC, BPS LLC, Barton Protective ServicesIncorporated and the Shareholders  (as defined in the Agreementand Plan of Merger) (incorporated herein by reference to Exhibit 2.1 toAllied Security Holdings LLC's Registration Statement on Form S-4filed on September  20,2004) *            |
| 2.2        |  | Amendment No. 1 to theAgreement and Plan of Merger, dated as of May  21,  2004(incorporated herein by reference to Exhibit 2.2 to Allied SecurityHoldings LLC's Registration Statement on Form S-4 filed onSeptember  20, 2004)*                                                                                                                                                      |
| 2.3        |  | AmendmentNo. 2 to the Agreement and Plan of Merger, dated as of May27,  2004 (incorporated herein by reference to Exhibit 2.3 toAllied Security Holdings LLC's Registration Statement on Form S-4filed on September  20,2004)*                                                                                                                                                        |
| 2.4        |  | Amendment No. 3 to the Agreementand Plan of Merger, dated as of June  7,  2004(incorporated herein by reference to Exhibit 2.4 to Allied SecurityHoldings LLC's Registration Statement on Form S-4 filed onSeptember  20, 2004)*                                                                                                                                                      |
| 3.1        |  | Certificateof Formation of Allied Security Holdings LLC, dated as of July16,  2004 (incorporated herein by reference to Exhibit 3.1 toAllied Security Holdings LLC's Registration Statement on Form S-4filed on September  20,2004)*                                                                                                                                                  |
| 3.2        |  | Operating Agreement of AlliedSecurity Holdings LLC, dated as of August  2,  2004(incorporated herein by reference to Exhibit 3.2 to Allied SecurityHoldings LLC's Registration Statement on Form S-4 filed onSeptember  20, 2004)*                                                                                                                                                    |
| 4.1        |  | Indenture,dated as of July  14,  2004, by and between Allied SecurityEscrow Corp. and The Bank of New York, as Trustee, relating to the11.375% Senior Subordinated Notes due 2011 (incorporated hereinby reference to Exhibit 4.1 to Allied Security Holdings LLC'sRegistration Statement on Form S-4 filed on September  20,2004)*                                                   |
| 4.2        |  | Form of 11.375% SeniorSubordinated Note due 2011 (incorporated herein by reference to Exhibit4.1 to Allied Security Holdings LLC's Registration Statement onForm S-4 filed on September  20,2004)*                                                                                                                                                                                    |
| 4.3        |  | First Supplemental Indenture,dated as of August  2,  2004, by and among Allied SecurityHoldings LLC, Allied Security Finance Corp. and The Bank of New York,as Trustee, relating to the 11.375% Senior Subordinated Notesdue 2011 (incorporated herein by reference to Exhibit 4.3 to AlliedSecurity Holdings LLC's Registration Statement on Form S-4 filedon September  20, 2004) * |
|            |

41

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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |  |  |
|------------|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description ofExhibit                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.4        |  | Second SupplementalIndenture, dated as of August  2,  2004, by and amongAllied Security Holdings LLC, Allied Security Finance Corp., theGuarantors party thereto and The Bank of New York, as Trustee, relatingto the 11.375% Senior Subordinated Notes due 2011 (incorporatedherein by reference to Exhibit 4.4 to Allied Security HoldingsLLC's Registration Statement on Form S-4 filed onSeptember  20, 2004)* |
| 4.5        |  | RegistrationRights Agreement, dated as of July  14,  2004, by andbetween Allied Security Escrow Corp. and Bear, Stearns & Co. Inc.(incorporated herein by reference to Exhibit 4.5 to Allied SecurityHoldings LLC's Registration Statement on Form S-4 filed onSeptember  20, 2004)*                                                                                                                           |
| 4.6        |  | AssumptionAgreement, dated as of August  2,  2004, by and amongAllied Security Holdings LLC, Allied Security Finance Corp. and theGuarantors party thereto (incorporated herein by reference to Exhibit4.6 to Allied Security Holdings LLC's Registration Statement onForm S-4 filed on September  20,2004)*                                                                                                       |
| 10.1       |  | Credit Agreement, dated as ofAugust  2,  2004, by and among Allied Security HoldingsLLC, Bear Stearns Corporate Lending Inc., as Administrative Agent, andthe other Lenders (as defined in the Credit Agreement) party thereto(incorporated herein by reference to Exhibit 10.1 to Allied SecurityHoldings LLC's Registration Statement on Form S-4 filed onSeptember  20, 2004)*                                  |
| 10.2       |  | AmendmentNo. 1 to the Credit Agreement, dated as of May  10,  2005(incorporated herein by reference to Exhibit 10.1 to Allied SecurityHoldings LLC's Form 8-K filed on May  11,2005)*                                                                                                                                                                                                                              |
| 10.3       |  | Guarantee and CollateralAgreement, dated as of August  2,  2004, by Allied SecurityHoldings LLC and certain of its subsidiaries in favor of Bear StearnsCorporate Lending Inc., as Administrative Agent (incorporated herein byreference to Exhibit 10.2 to Allied Security Holdings LLC'sRegistration Statement on Form S-4 filed on September  20,2004)*                                                         |
| 10.4       |  | Second Amended and RestatedManagement Agreement, dated as of August  2,  2004, by andbetween SpectaGuard Holding Corporation and SpectaGuard Acquisition LLC(incorporated herein by reference to Exhibit 10.3 to Allied SecurityHoldings LLC's Registration Statement on Form S-4 filed onSeptember  20, 2004)*                                                                                                    |
| 10.5       |  | Amended andRestated Employment Agreement, dated as of August  2,2004, by and among SpectaGuard Holding Corporation, SpectaGuardAcquisition LLC and Albert J. Berger (incorporated herein by referenceto Exhibit 10.4 to Allied Security Holdings LLC's RegistrationStatement on Form S-4 filed on September  20,2004)*                                                                                             |
| 10.6       |  | First Amendment to Amended andRestated Employment Agreement, dated as of February  17,2006, by and among SpectaGuard Holding Corporation, SpectaGuardAcquisition LLC and Albert J. Berger (incorporated herein by referenceto Exhibit 10.1 to Allied Security Holdings LLC's Form 8-K filedon February  22, 2006)*                                                                                                 |
| 10.7       |  | Amendedand Restated Employment Agreement, dated as of August  2,2004, by and among SpectaGuard Holding Corporation, SpectaGuardAcquisition LLC and William C. Whitmore, Jr. (incorporated herein byreference to Exhibit 10.5 to Allied Security Holdings LLC'sRegistration Statement on Form S-4 filed on September  20,2004)*                                                                                     |
| 10.8       |  | Form of SpectaGuard HoldingCorporation Employment Agreement for Senior Management (incorporatedherein by reference to Exhibit 10.6 to Allied Security HoldingsLLC's Registration Statement on Form S-4 filed onSeptember  20, 2004)*                                                                                                                                                                               |
|            |

42

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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  |  |
|------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description ofExhibit                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.9       |  | Amended and RestatedRestricted Class C Unit Award Agreement, dated as of August2,  2004, by and between Allied Security Holdings LLC and AlbertJ. Berger (incorporated herein by reference to Exhibit 10.7 to AlliedSecurity Holdings LLC's Registration Statement on Form S-4 filedon September  20, 2004)*                                                                                                                                 |
| 10.10      |  | Amendedand Restated Restricted Class C Unit Award Agreement, dated as ofAugust  2,  2004, by and between Allied Security HoldingsLLC and William C. Whitmore, Jr. (incorporated herein by reference toExhibit 10.8 to Allied Security Holdings LLC's RegistrationStatement on Form S-4 filed on September  20,2004)*                                                                                                                         |
| 10.11      |  | Form of Allied SecurityHoldings LLC Amended and Restated Restricted Class C Unit AwardAgreement for Senior Management (incorporated herein by reference toExhibit 10.9 to Allied Security Holdings LLC's RegistrationStatement on Form S-4 filed on September  20,2004)*                                                                                                                                                                     |
| 10.12      |  | Amended and RestatedSpectaGuard Holding Corporation Special Payment Plan (incorporatedherein by reference to Exhibit 10.10 to Allied Security HoldingsLLC's Registration Statement on Form S-4 filed onSeptember  20, 2004)*                                                                                                                                                                                                                 |
| 10.13      |  | IndemnityEscrow Agreement, dated as of August  2,  2004, by andamong SpectaGuard Acquisition LLC, certain shareholders of BartonProtective Services Incorporated, Charles Barton Rice, Sr., asShareholders’ Representative, and The Bank of New York TrustCompany, as Escrow Agent (incorporated herein by reference to Exhibit10.11 to Allied Security Holdings LLC's Registration Statement onForm S-4 filed on September  20,2004)* |
| 10.14      |  | Summary of CompensationArrangements (incorporated herein by reference to Exhibit 10.1 toAllied Security Holdings LLC's Form 10-Q filed on May  13,2005)*                                                                                                                                                                                                                                                                                     |
| 21.1       |  | Subsidiaries of Allied SecurityHoldings LLC (filedherewith)                                                                                                                                                                                                                                                                                                                                                                                  |
| 31.1       |  | Certification of ChiefExecutive Officer of Allied Security Holdings LLC pursuant to Rule13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 (filedherewith)                                                                                                                                                                                                                                                                           |
| 31.2       |  | Certification of ChiefFinancial Officer of Allied Security Holdings LLC pursuant to Rule13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 (filedherewith)                                                                                                                                                                                                                                                                           |
| 32.1       |  | Certifications of ChiefExecutive Officer and Chief Financial Officer of Allied SecurityHoldings LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002 (furnishedherewith)                                                                                                                                                                                                              |
|            |

|  |
|--|
|  |  |
|  |

|   |                  |
|---|------------------|
| * | Previouslyfiled. |

43

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INDEXTO FINANCIAL STATEMENTSALLIED SECURITY HOLDINGS, LLC

|                                                                                                                                                                                                                                                      |  |                 |  |  |  |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|-----------------|--|--|--|--|
|                                                                                                                                                                                                                                                 |  | PAGE            |
| Reportof Independent Registered Public AccountingFirm                                                                                                                                                                                                |  | F-2   |
| ConsolidatedBalance Sheets as of December  31,  2005 andDecember  31,  2004                                                                                                                                                                          |  | F-3   |
| Consolidated Statement ofOperations for the Years Ended December  31,  2005, andDecember  31,  2004 for the Period from February19,  2003 to December  31,  2003, and for the Periodfrom January  1,  2003 to February  18,2003                      |  | F-4   |
| Consolidated Statement ofChanges in Members’ Equity for the Period from February 19, 2003through December 31, 2003 and for the Years Ended December31,  2005, and December  31,2004                                                            |  | F-5   |
| Consolidated Statement ofChanges in Members’ Equity for the Period from January1,  2003 through February  18,2003                                                                                                                              |  | F-6   |
| Consolidated Statement ofCash Flows for the Years Ended December  31,  2005,December  31,  2004 for the Period from February19,  2003 to December  31,  2003, and for the Periodfrom January  1,  2003 to February  18,  2003                        |  | F-7   |
| Notes to Consolidated FinancialStatements                                                                                                                                                                                                            |  | F-8   |
| Schedule II —Valuation and Qualifying Accounts for the Years Ended December 31,2005, and December 31, 2004 and for the Period from January1,  2003 through February 18, 2003 and for the Period fromFebruary 19, 2003 through December 31,2003 |  | F-24            |
|                                                                                                                                                                                                                                                      |

F-1

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REPORT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM

Board ofManagersAllied Security Holdings LLC

We have auditedthe accompanying consolidated balance sheets of Allied SecurityHoldings LLC as of December  31,  2005 and 2004 and therelated consolidated statements of operations, changes inmembers’ equity, and cash flows for the years endedDecember  31,  2005 and 2004, for the period fromFebruary  19,  2003 to December  31,  2003, andfor the period from January  1,  2003 to February18, 2003 (predecessor). Our audits also included the financialstatement schedule listed in the Index to Financial Statements. Thesefinancial statements and schedule are the responsibility of theCompany’s management. Our responsibility is to express anopinion on these financial statements and schedule based on ouraudits.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements arefree of material misstatement. We were not engaged to perform an auditof the Company’s internal control over financial reporting. Ouraudit included consideration of internal control over financialreporting as a basis for designing audit procedures that areappropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the Company’s internalcontrol over financial reporting. Accordingly, we express no suchopinion. An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates madeby management, and evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis forour opinion.

In our opinion, the financial statementsreferred to above present fairly, in all material respects, theconsolidated financial position of Allied Security Holdings LLC atDecember  31,  2005 and 2004, and the consolidated resultsof its operations and its cash flows for the year ended December31,  2004, for the period from February  19,  2003 toDecember  31,  2003, and for the period from January1,  2003 to February  18,  2003 (predecessor), inconformity with U.S. generally accepted accounting principles. Also, inour opinion, the related financial statement schedule, when consideredin relation to the basic financial statements taken as a whole,presents fairly in all material respects the information set forththerein.

/s/ Ernst & YoungLLP

Philadelphia, PennsylvaniaFebruary27,  2006

F-2

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Allied Security HoldingsLLCConsolidated Balance Sheets(Dollars in thousands,except unit data)

|                                                                                                                                                |  |                 |         |                  |  |        |         |         |  |  |
|------------------------------------------------------------------------------------------------------------------------------------------------|--|-----------------|---------|------------------|--|--------|---------|---------|--|--|
|                                                                                                                                           |  | December31,2005 |         | December 31,2004 |
| Assets                                                                                                                                         |  |            |    |             |  |   |    |    |
| Currentassets:                                                                                                                                 |  |            |    |             |  |   |    |    |
| Cash and cashequivalents                                                                                                                       |  | $               | 10,710  |             |  | $      | 11,008  |    |
| Restrictedcash                                                                                                                                 |  |            | 10,402  |             |  |   | 7,951   |    |
| Accountsreceivable, net of allowance for doubtful accounts of $1,877 and$1,393                                                                 |  |            | 135,461 |             |  |   | 129,729 |    |
| Other                                                                                                                                          |  |            | 8,454   |             |  |   | 11,003  |    |
| Totalcurrentassets                                                                                                                             |  |            | 165,027 |             |  |   | 159,691 |    |
| Property andequipment,net                                                                                                                      |  |            | 23,013  |             |  |   | 20,838  |    |
| Goodwill                                                                                                                                       |  |            | 345,567 |             |  |   | 347,766 |    |
| Otherintangible assets,net                                                                                                                     |  |            | 78,366  |             |  |   | 99,683  |    |
| Deferred financingfees, net                                                                                                                    |  |            | 11,406  |             |  |   | 12,897  |    |
| Otherassets                                                                                                                                    |  |            | 394     |             |  |   | 489     |    |
| Totalassets                                                                                                                                    |  | $               | 623,773 |             |  | $      | 641,364 |    |
| Liabilitiesand members'equity                                                                                                                  |  |            |    |             |  |   |    |    |
| Currentliabilities:                                                                                                                            |  |            |    |             |  |   |    |    |
| Currentmaturities of long-termdebt                                                                                                             |  | $               | 5,668   |             |  | $      | 16,000  |    |
| Insurancepremiumfinancing                                                                                                                      |  |            | 5,869   |             |  |   | 6,246   |    |
| Accountspayable                                                                                                                                |  |            | 8,423   |             |  |   | 4,046   |    |
| Accruedexpenses                                                                                                                                |  |            | 20,177  |             |  |   | 26,353  |    |
| Interestpayable                                                                                                                                |  |            | 9,433   |             |  |   | 9,438   |    |
| Accruedclaimsreserves                                                                                                                          |  |            | 26,125  |             |  |   | 25,511  |    |
| Accruedpayroll and related payrolltaxes                                                                                                        |  |            | 41,600  |             |  |   | 40,227  |    |
| Accruedterminationcosts                                                                                                                        |  |            | 1,580   |             |  |   | 6,110   |    |
| Advancepayments                                                                                                                                |  |            | 14,536  |             |  |   | 13,460  |    |
| Due toaffiliates                                                                                                                               |  |            | 10,217  |             |  |   | — |    |
| Totalcurrentliabilities                                                                                                                        |  |            | 143,628 |             |  |   | 147,391 |    |
| Seniorterm loan                                                                                                                                |  |            | 187,582 |             |  |   | 190,000 |    |
| Seniorsubordinatednotes                                                                                                                        |  |            | 178,187 |             |  |   | 177,966 |    |
| Due toaffiliates                                                                                                                               |  |            | 4,865   |             |  |   | 13,323  |    |
| Otherlong-termliabilities                                                                                                                      |  |            | 1,624   |             |  |   | 1,473   |    |
| Class Aunits subject to put rights: 22,317 units authorized, issued andoutstanding                                                             |  |            | 5,819   |             |  |   | 2,710   |    |
| Class Bunits subject to put rights: 46,097 units authorized, issued andoutstanding                                                             |  |            | 2,430   |             |  |   | — |    |
| Members'equity:                                                                                                                                |  |            |    |             |  |   |    |    |
| Units:                                                                                                                                         |  |            |    |             |  |   |    |    |
| ClassA, 9,500,000 units authorized, 868,668 units issued andoutstanding                                                                        |  |            | 131,618 |             |  |   | 131,618 |    |
| ClassB, 200,000 units authorized, 31,530 and 77,627 units issued andoutstanding as of December  31,  2005 and December31, 2004,respectively    |  |            | 20      |             |  |   | 50      |    |
| Class C,300,000 units authorized, 124,074 and 122,750 units issued andoutstanding as of December  31,  2005 and December31,  2004,respectively |  |            | 56      |             |  |   | 44      |    |
| Additionalpaid-incapital                                                                                                                       |  |            | — |             |  |   | 393     |    |
| Accumulateddeficit                                                                                                                             |  |            | (32,011 | )           |  |   | (23,641 | )  |
| Accumulatedother comprehensive income(loss)                                                                                                    |  |            | (45     | )           |  |   | 37      |    |
| Totalmembers'equity                                                                                                                            |  |            | 99,638  |             |  |   | 108,501 |    |
| Totalliabilities and members'equity                                                                                                            |  | $               | 623,773 |             |  | $      | 641,364 |    |
|                                                                                                                                                |

SeeAccompanying Notes

F-3

----

Allied Security HoldingsLLCConsolidated Statements of Operations(Dollars inthousands)

|                                       |  |                           |           |                           |  |                                               |         |                                                            |  |        |         |        |  |        |         |         |  |  |
|---------------------------------------|--|---------------------------|-----------|---------------------------|--|-----------------------------------------------|---------|------------------------------------------------------------|--|--------|---------|--------|--|--------|---------|---------|--|--|
|                                  |  | YearendedDecember 31,2005 |           | Year endedDecember31,2004 |  | Period fromFebruary 19throughDecember 31,2003 |         | (Predecessor) Period fromJanuary 1 through February18,2003 |
| Revenues                              |  | $                         | 1,124,549 |                      |  | $                                             | 873,401 |                                                       |  | $      | 483,725 |   |  | $      | 70,419  |    |
| Costofrevenues                        |  |                      | 957,497   |                      |  |                                          | 736,775 |                                                       |  |   | 402,509 |   |  |   | 59,568  |    |
|                                  |  |                      | 167,052   |                      |  |                                          | 136,626 |                                                       |  |   | 81,216  |   |  |   | 10,851  |    |
| Branchand corporate overheadexpenses  |  |                      | 93,100    |                      |  |                                          | 83,588  |                                                       |  |   | 48,014  |   |  |   | 11,119  |    |
| Depreciationandamortization           |  |                      | 35,365    |                      |  |                                          | 26,301  |                                                       |  |   | 15,587  |   |  |   | 1,447   |    |
| Losson early extinguishment ofdebt    |  |                      | —   |                      |  |                                          | 18,742  |                                                       |  |   | — |   |  |   | 3,291   |    |
| Operatingincome(loss)                 |  |                      | 38,587    |                      |  |                                          | 7,995   |                                                       |  |   | 17,615  |   |  |   | (5,006  | )  |
| Interestexpense,net                   |  |                      | 40,341    |                      |  |                                          | 31,385  |                                                       |  |   | 15,581  |   |  |   | 6,190   |    |
| Income(loss) before income taxbenefit |  |                      | (1,754    | )                    |  |                                          | (23,390 | )                                                     |  |   | 2,034   |   |  |   | (11,196 | )  |
| Incometaxbenefit                      |  |                      | —   |                      |  |                                          | — |                                                       |  |   | — |   |  |   | (1,421  | )  |
| Netincome(loss)                       |  | $                         | (1,754    | )                    |  | $                                             | (23,390 | )                                                     |  | $      | 2,034   |   |  | $      | (9,775  | )  |
|                                       |

SeeAccompanying Notes

F-4

----

AlliedSecurity Holdings LLCConsolidated Statement of Changes inMembers’ EquityPeriod from February 19, 2003 throughDecember 31, 2003 andYears ended December  31,  2005and December  31,  2004(Dollars in thousands,except unitdata)

|                                                       |  |          |         |                |  |        |         |                         |  |                    |         |                                     |  |                           |         |         |  |        |         |        |  |        |         |         |  |        |         |         |  |        |         |         |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|-------------------------------------------------------|--|----------|---------|----------------|--|--------|---------|-------------------------|--|--------------------|---------|-------------------------------------|--|---------------------------|---------|---------|--|--------|---------|--------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                  |  | ClassA   |         | Class B        |  | ClassC |         | AdditionalPaidinCapital |  | AccumulatedDeficit |         | AccumulatedOtherComprehensiveIncome |  | TotalMembers’Equity |
| NumberofUnits                                         |  | Amount   |         | Number ofUnits |  | Amount |         | Number ofUnits          |  | Amount             |
| Vested                                                |  | Unvested |
| Balanceat February  19, 2003(a)                       |  |     | 739,733 |           |  | $      | 112,984 |                    |  |               | 77,627  |                                |  | $                         | 50      |    |  |   | — |   |  |   | 110,000 |    |  | $      | 37      |    |  | $      | 497     |    |  | $      | — |    |  | $      | — |    |  | $      | 113,568 |    |
| Membercontributions                                   |  |     | 115,156 |           |  |   | 16,990  |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | 7,500   |    |  |   | 2       |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 16,992  |    |
| Returnofcapital                                       |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | — |    |  |   | — |    |  |   | (104    | )  |  |   | — |    |  |   | — |    |  |   | (104    | )  |
| Netincome                                             |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 2,034   |    |  |   | — |    |  |   | 2,034   |    |
| Memberdistributions declared                          |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |  |   | (2,285  | )  |  |   | — |    |  |   | (2,285  | )  |
| ClassCvesting                                         |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | 26,166  |   |  |   | (26,166 | )  |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Balanceat December  31, 2003                          |  |     | 854,889 |           |  | $      | 129,974 |                    |  |               | 77,627  |                                |  | $                         | 50      |    |  |   | 26,166  |   |  |   | 91,334  |    |  | $      | 39      |    |  | $      | 393     |    |  | $      | (251    | )  |  | $      | — |    |  | $      | 130,205 |    |
| Returnofcapital                                       |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | (9,750  | )  |  |   | (5      | )  |  |   | — |    |  |   | — |    |  |   | — |    |  |   | (5      | )  |
| Net(loss)                                             |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |  |   | (23,390 | )  |  |   | — |    |  |   | (23,390 | )  |
| Currencytranslationadjustment                         |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 37      |    |  |   | 37      |    |
| Membercontributions                                   |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | 15,000  |    |  |   | 10      |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 10      |    |
| ClassCVesting                                         |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | 29,466  |   |  |   | (29,466 | )  |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Reclassificationof Class A Units subject to putrights |  |     | 13,779  |           |  |   | 1,644   |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 1,644   |    |
| Balanceat December  31, 2004                          |  |     | 868,668 |           |  | $      | 131,618 |                    |  |               | 77,627  |                                |  | $                         | 50      |    |  |   | 55,632  |   |  |   | 67,118  |    |  | $      | 44      |    |  | $      | 393     |    |  | $      | (23,641 | )  |  | $      | 37      |    |  | $      | 108,501 |    |
| Canceled                                              |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | (16,176 | )  |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Net(loss)                                             |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |  |   | (1,754  | )  |  |   | — |    |  |   | (1,754  | )  |
| Currencytranslationadjustment                         |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | (82     | )  |  |   | (82     | )  |
| Membercontributions                                   |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | 17,500  |    |  |   | 12      |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | 12      |    |
| MemberTaxdistributions                                |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |  |   | (1,500  | )  |  |   | — |    |  |   | (1,500  | )  |
| ClassCVesting                                         |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | 16,176  |   |  |   | (16,176 | )  |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Reclassificationof Class A Units subject to putrights |  |     | — |           |  |   | — |                    |  |               | — |                                |  |                      | — |    |  |   | — |   |  |   | — |    |  |   | — |    |  |   | (393    | )  |  |   | (2,716  | )  |  |   | — |    |  |   | (3,109  | )  |
| Reclassificationof Class B Units subject to putrights |  |     | — |           |  |   | — |                    |  |               | (46,097 | )                              |  |                      | (30     | )  |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |  |   | (2,400  | )  |  |   | — |    |  |   | (2,430  | )  |
| Balanceat December  31, 2005                          |  |     | 868,668 |           |  | $      | 131,618 |                    |  |               | 31,530  |                                |  | $                         | 20      |    |  |   | 71,808  |   |  |   | 52,266  |    |  | $      | 56      |    |  | $      | — |    |  | $      | (32,011 | )  |  | $      | (45     | )  |  | $      | 99,638  |    |
|                                                       |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                 |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) | Beginningbalance at February  19,  2003 reflects certain adjustmentsrecorded as a result of a change in ownership related to the Mafcoacquisition (See Note 1.) |

See AccompanyingNotes

F-5

----

Allied Security Holdings LLC(Predecessor)Consolidated Statements of Changes in Members’EquityPeriod from January  1,  2003 throughFebruary  18,  2003(Dollars in thousands, exceptsharedata)

|                                               |  |                          |         |                 |  |                          |         |                      |  |                                           |            |                    |  |                           |         |        |  |        |         |        |  |        |         |         |  |        |         |         |  |        |         |         |  |        |         |         |  |  |
|-----------------------------------------------|--|--------------------------|---------|-----------------|--|--------------------------|---------|----------------------|--|-------------------------------------------|------------|--------------------|--|---------------------------|---------|--------|--|--------|---------|--------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                          |  | SeriesB Preferred Shares |         | CommonShares    |  | AdditionalPaid-inCapital |         | UnearnedCompensation |  | AccumulatedOtherComprehensive(Loss)Income |            | AccumulatedDeficit |  | TotalMembers’Equity |
| Number ofShares                               |  | Amount                   |         | Number ofShares |  | Amount                   |
| Balance at December31,2002                    |  |                     | 46,967  |            |  | $                        | 68,131  |                 |  |                                      | 37,854,662 |               |  | $                         | 5,594   |   |  | $      | 1,349   |   |  | $      | (43     | )  |  | $      | (4,712  | )  |  | $      | (44,297 | )  |  | $      | 26,022  |    |
| StockIssuances,net                            |  |                     | — |            |  |                     | — |                 |  |                                      | —    |               |  |                      | — |   |  |   | — |   |  |   | — |    |  |   | — |    |  |   | — |    |  |   | — |    |
| Accretionofpreferred stock to redemptionvalue |  |                     | — |            |  |                     | 1,306   |                 |  |                                      | —    |               |  |                      | — |   |  |   | — |   |  |   | — |    |  |   | — |    |  |   | (1,359  | )  |  |   | (53     | )  |
| Amortizationof unearnedcompensation           |  |                     | — |            |  |                     | — |                 |  |                                      | —    |               |  |                      | — |   |  |   | — |   |  |   | 2       |    |  |   | — |    |  |   | — |    |  |   | 2       |    |
| Decreasein fair value of hedgeinstrument      |  |                     | — |            |  |                     | — |                 |  |                                      | —    |               |  |                      | — |   |  |   | — |   |  |   | — |    |  |   | (352    | )  |  |   | — |    |  |   | (352    | )  |
| Realizationof loss on hedgeinstrument         |  |                     | — |            |  |                     | — |                 |  |                                      | —    |               |  |                      | — |   |  |   | — |   |  |   | — |    |  |   | 5,064   |    |  |   | — |    |  |   | 5,064   |    |
| Netloss                                       |  |                     | — |            |  |                     | — |                 |  |                                      | —    |               |  |                      | — |   |  |   | — |   |  |   | — |    |  |   | — |    |  |   | (9,775  | )  |  |   | (9,775  | )  |
| Balanceat February  18,2003                   |  |                     | 46,967  |            |  | $                        | 69,437  |                 |  |                                      | 37,854,662 |               |  | $                         | 5,594   |   |  | $      | 1,349   |   |  | $      | (41     | )  |  | $      | — |    |  | $      | (55,431 | )  |  | $      | 20,908  |    |
|                                               |

SeeAccompanying Notes

F-6

----

Allied Security HoldingsLLCConsolidated Statement of Cash Flows(Dollars inthousands)

|                                                                                        |  |                           |         |                           |  |                                                       |          |                                                                 |  |        |         |         |  |        |         |         |  |  |
|----------------------------------------------------------------------------------------|--|---------------------------|---------|---------------------------|--|-------------------------------------------------------|----------|-----------------------------------------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                                                   |  | YearendedDecember 31,2005 |         | Year endedDecember31,2004 |  | Period fromFebruary 19, 2003through December 31, 2003 |          | (Predecessor) PeriodfromJanuary 1, 2003through February 18,2003 |
| Cashflows from operatingactivities                                                     |  |                      |    |                      |  |                                                  |     |                                                            |  |   |    |    |  |   |    |    |
| Netincome(loss)                                                                        |  | $                         | (1,754  | )                    |  | $                                                     | (23,390  | )                                                          |  | $      | 2,034   |    |  | $      | (9,775  | )  |
| Adjustmentsto reconcile net income (loss) to net cash provided by operatingactivities: |  |                      |    |                      |  |                                                  |     |                                                            |  |   |    |    |  |   |    |    |
| Depreciationandamortization                                                            |  |                      | 35,365  |                      |  |                                                  | 26,301   |                                                            |  |   | 15,587  |    |  |   | 1,447   |    |
| Deferredincome taxbenefit                                                              |  |                      | — |                      |  |                                                  | —  |                                                            |  |   | — |    |  |   | (461    | )  |
| Losson early extinguishment ofdebt                                                     |  |                      | — |                      |  |                                                  | 18,742   |                                                            |  |   | — |    |  |   | 3,291   |    |
| Non-cashinterestexpense                                                                |  |                      | 4,137   |                      |  |                                                  | 4,812    |                                                            |  |   | 2,806   |    |  |   | 5,112   |    |
| Changesin assets and liabilities (net of impact of acquiredbusinesses):                |  |                      |    |                      |  |                                                  |     |                                                            |  |   |    |    |  |   |    |    |
| Accountsreceivable,net                                                                 |  |                      | (5,732  | )                    |  |                                                  | (11,514  | )                                                          |  |   | (1,389  | )  |  |   | 560     |    |
| Othercurrent assets and liabilities,net                                                |  |                      | 1,236   |                      |  |                                                  | (5,793   | )                                                          |  |   | 3,686   |    |  |   | (3,511  | )  |
| Accountspayable and accruedexpenses                                                    |  |                      | (2,565  | )                    |  |                                                  | 10,468   |                                                            |  |   | (6,326  | )  |  |   | 3,924   |    |
| Advancepayments                                                                        |  |                      | 1,076   |                      |  |                                                  | 4,783    |                                                            |  |   | 5,392   |    |  |   | — |    |
| Non-competepayments                                                                    |  |                      | (400    | )                    |  |                                                  | (400     | )                                                          |  |   | — |    |  |   | — |    |
| Other                                                                                  |  |                      | 44      |                      |  |                                                  | —  |                                                            |  |   | — |    |  |   | — |    |
| Netcash provided by operatingactivities                                                |  |                      | 31,407  |                      |  |                                                  | 24,009   |                                                            |  |   | 21,790  |    |  |   | 587     |    |
| Cashflows from investingactivities                                                     |  |                      |    |                      |  |                                                  |     |                                                            |  |   |    |    |  |   |    |    |
| Considerationreceived (paid) for acquisition of businesses, net of cashacquired        |  |                      | 120     |                      |  |                                                  | (191,707 | )                                                          |  |   | (45,666 | )  |  |   | — |    |
| Purchasesof property andequipment                                                      |  |                      | (16,267 | )                    |  |                                                  | (10,879  | )                                                          |  |   | (6,064  | )  |  |   | (902    | )  |
| Other                                                                                  |  |                      | — |                      |  |                                                  | —  |                                                            |  |   | — |    |  |   | (394    | )  |
| Netcash used in investingactivities                                                    |  |                      | (16,147 | )                    |  |                                                  | (202,586 | )                                                          |  |   | (51,730 | )  |  |   | (1,296  | )  |
| Cashflows from financingactivities                                                     |  |                      |    |                      |  |                                                  |     |                                                            |  |   |    |    |  |   |    |    |
| Repaymentof senior term loans and relatedfees                                          |  |                      | (12,750 | )                    |  |                                                  | (133,813 | )                                                          |  |   | (13,950 | )  |  |   | — |    |
| Repaymentof senior subordinated notes and relatedfees                                  |  |                      | — |                      |  |                                                  | (69,181  | )                                                          |  |   | — |    |  |   | — |    |
| Proceedsfrom issuance of senior termloans                                              |  |                      | — |                      |  |                                                  | 217,500  |                                                            |  |   | — |    |  |   | — |    |
| Proceedsfrom issuance of senior subordinatednotes                                      |  |                      | — |                      |  |                                                  | 177,881  |                                                            |  |   | 40,500  |    |  |   | — |    |
| Contributedcapital,net                                                                 |  |                      | 5       |                      |  |                                                  | 5        |                                                            |  |   | 17,398  |    |  |   | — |    |
| Membertaxdistributions                                                                 |  |                      | (1,500  | )                    |  |                                                  | —  |                                                            |  |   | (2,285  | )  |  |   | — |    |
| Insurancefinancing (payments)/ proceeds,net                                            |  |                      | (377    | )                    |  |                                                  | 2,943    |                                                            |  |   | 634     |    |  |   | (978    | )  |
| Deferredfinancingfees                                                                  |  |                      | (854    | )                    |  |                                                  | (13,889  | )                                                          |  |   | (4,255  | )  |  |   | — |    |
| Other                                                                                  |  |                      | — |                      |  |                                                  | —  |                                                            |  |   | — |    |  |   | (9      | )  |
| Netcash (used in) provided by financingactivities                                      |  |                      | (15,476 | )                    |  |                                                  | 181,446  |                                                            |  |   | 38,042  |    |  |   | (987    | )  |
| Effectof foreign currency rates on cash and cashequivalents                            |  |                      | (82     | )                    |  |                                                  | 37       |                                                            |  |   | — |    |  |   | — |    |
| Netchange in cash and cashequivalents                                                  |  |                      | (298    | )                    |  |                                                  | 2,906    |                                                            |  |   | 8,102   |    |  |   | (1,696  | )  |
| Cashand cash equivalents at beginning ofperiod                                         |  |                      | 11,008  |                      |  |                                                  | 8,102    |                                                            |  |   | — |    |  |   | 1,696   |    |
| Cashand cash equivalents at end ofperiod                                               |  | $                         | 10,710  |                      |  | $                                                     | 11,008   |                                                            |  | $      | 8,102   |    |  | $      | — |    |
|                                                                                        |

SeeAccompanying Notes

F-7

----

AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements December 31,2005

1.    Organization and Basis ofPresentation

SpectaGuard Acquisition LLC(‘‘SpectaGuard’’), a wholly-ownedsubsidiary of Allied Security Holdings LLC (the‘‘Company’’), was formed on February19,  2003, as a result of the purchase transaction by and amongMacAndrews & Forbes Holdings Inc.(‘‘Mafco’’), and certain of its relatedparties, as well as management of SpectaGuard’s predecessor. Asa result of this transaction, Mafco has a substantial controllinginterest in the Company. Prior to this transaction, the Company alsooperated under the name SpectaGuard Acquisition(‘‘Predecessor Company’’). These financialstatements include the results of operations prior to and since thedate of Mafco's acquisition of SpectaGuard and reflect allpurchase accounting adjustments required as of that date.

OnAugust  2,  2004, simultaneous with the acquisition ofBarton Protective Services Incorporated(‘‘Barton’’), the members of SpectaGuardbecame the members of the Company through the contribution of theirClass A, Class B, and Class C units, as applicable, of SpectaGuard inexchange for an identical number of Class A, Class B and Class C units,as applicable, of the Company. The Company has no independent assets oroperations, other than its ownership of all of the membership units ofSpectaGuard.

The Company provides premium contract securityofficer services to commercial organizations throughout the UnitedStates and toll collection services to the State of Florida Departmentof Transportation (‘‘FDOT’’). Theconsolidated financial statements of the Company include the accountsof the Company and its wholly-owned subsidiaries, which are (i)Effective Management Services LLC, (ii) Allied Security LLC, (iii)Allied Security LP, (iv) Professional Security Bureau LLC(‘‘PSB’’), which was acquired onDecember  19,  2003 (see Note 4), (v) Barton ProtectiveServices LLC, which was acquired on August  2,  2004 (seeNote 4), (vi) SpectaGuard Acquisition LLC, (vii) AlliedBarton SecurityServices LLC, (viii) AlliedBarton Security Services LP, and (ix) AlliedSecurity Finance Corp. All significant intercompany transactions havebeen eliminated in consolidation.

The Company operates under thenames of ‘‘Allied Security’’ and‘‘Barton Protective Services’’ nationally,as well as under the name of ‘‘AlliedBarton SecurityServices’’, and also as‘‘SpectaGuard’’ and‘‘Professional Security Bureau’’ in thenortheast region of the United States. The Company’swholly-owned international subsidiary, which ceased operations inJuly  2005, is not significant to the Company’sconsolidated financial statements.

2.    Summary ofSignificant Accounting Policies

Cash and CashEquivalents

Cash and cash equivalents include cash on hand andinvestments with original maturities of three months orless.

Restricted Cash

Restricted cash includes balanceson deposit with the Company’s insurance carrier to payworkers’ compensation claims.

AccountsReceivable

The Company's customers are located primarilythroughout the United States. The Company grants credit to itscustomers and generally does not require collateral. The Companymaintains an allowance for doubtful accounts which management believesto be sufficient to cover potential credit losses and estimated billingadjustments. Management reviews the components of their accountsreceivable balance on a monthly basis and performs an additional detailreview on a quarterly basis. This process includes an analysis ofspecific reserves based upon known credit and collection issues andpotential reserve adjustments. Such amounts are charged off against theallowance for doubtful accounts when the Company concludes that thebalances will not be recoverable.

F-8

----

AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

Property and Equipment

Property andequipment are recorded at cost. Leasehold improvements are amortizedover the respective lives of the leases or the service lives of theimprovements, whichever is shorter. Depreciation of property andequipment is computed using the straight-line method over the estimateduseful lives of the assets. The useful lives are as follows: leaseholdimprovements — up to 10 years; uniforms — 3 years; computerequipment — 1 to 5 years; office furniture, fixtures andequipment — 5 years.

Goodwill and IntangibleAssets

Under SFAS No. 142, goodwill and intangible assetswith indefinite lives are not amortized; rather, they are tested forimpairment on at least an annual basis. Additionally, intangibleassets, such as customer list, with finite lives are amortized overtheir useful lives.

SFAS No. 142 requires a two-step impairmenttest for goodwill. The first step is to compare the carrying amount ofthe reporting unit's assets to the fair value of the reportingunit. If the fair value exceeds the carrying value, no further work isrequired and no impairment loss is recognized. If the carrying amountexceeds the fair value then the second step is required to becompleted, which involves allocating the fair value of the reportingunit to each asset and liability, with the excess being impliedgoodwill. An impairment loss occurs if the amount of the recordedgoodwill exceeds the implied goodwill. The determination of the fairvalue of our reporting unit is based, among other things, on estimatesof future operating performance of the reporting unit being valued. Weare required to complete an impairment test for goodwill and record anyresulting impairment losses annually. Changes in market conditions,among other factors, may have an impact on these estimates. Wecompleted our required annual impairment test in the fourth quarter offiscal 2005 and determined that there was no impairment.

Customer lists are amortized over six years. We perform periodicanalyses and adjust through accelerated amortization any impairment ofcustomer lists. Covenants not-to-compete are amortized using thestraight-line method over 5 years. None of the currently held customerlists have required accelerated amortization adjustments todate.

Long-Lived Assets

The Company has adopted Statementof Financial Accounting Standards(‘‘SFAS’’) No. 144, Accounting forImpairment or Disposal of Long-Lived Assets. This standard requiresthe Company to review its long-lived assets for impairment wheneverevents or changes in circumstances indicate that the carrying amount ofsuch assets may not be recoverable. If the carrying amount of an assetor group of assets exceeds its net realizable value, the asset will bewritten down to its fair value.

InsuranceReserves

We maintain insurance coverage for workerscompensation, medical claims and general liability. Reserves have beenprovided for certain of these claims based upon insurance coverages andmanagement's judgment. Management reviews these estimates on aquarterly basis based upon currently available information and adjuststhe reserves accordingly. In the opinion of management, we believe ourinsurance reserves are sufficient to cover the ultimate outcome ofthese claims.

Revenue Recognition

The Company recognizesrevenue in the period in which services are provided. Advance paymentsrepresent amounts received from customers in advance of performing therelated services.

Financial Instruments

The carryingvalue of short-term financial instruments, such as cash equivalents,accounts receivable, accounts payable and accrued expenses,approximates their fair value based on the short-term maturities ofthese instruments.

F-9

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

Use of Estimates

The preparationof consolidated financial statements in conformity with U.S. generallyaccepted accounting principles requires management to make estimatesand assumptions that affect the reported amounts of certain assets,liabilities, revenues and expenses and the disclosure of certaincontingent assets and liabilities. Actual results may differ from suchestimates.

Reclassifications

Certain amounts in theprior-year consolidated financial statements have been reclassified toconform to their current-year presentation.

Statement of CashFlows

The following non-cash transactions have been excludedfrom the consolidated statement of cash flows for the years endedDecember  31,  2005 and December  31,  2004,the period from February  19,  2003 through December31,  2003, and the period from January  1,  2003through February  18,  2003, respectively (inthousands):

|                                                                         |  |                           |         |                           |  |                                                    |         |                                                               |  |   |                     |        |  |   |         |        |  |  |
|-------------------------------------------------------------------------|--|---------------------------|---------|---------------------------|--|----------------------------------------------------|---------|---------------------------------------------------------------|--|---|---------------------|--------|--|---|---------|--------|--|--|
|                                                                    |  | YearendedDecember 31,2005 |         | Year endedDecember31,2004 |  | Period from February 19,2003throughDecember31,2003 |         | (Predecessor)Period from January 1,2003throughFebruary18,2003 |
| Reclassifications of Class A Unitssubject to put rights to Class AUnits |  | $                         | — |                      |  | $                                                  | 1,644   |                                                          |  | $ |   — |   |  | $ | — |   |
| Reclassificationsof Class B Units subject to put rights to Class BUnits |  | $                         | (2,430  | )                    |  | $                                                  | — |                                                          |  | $ | —             |   |  | $ | — |   |
| Mafcogoodwilladjustments                                                |  | $                         | (1,050  | )                    |  | $                                                  | (3,187  | )                                                        |  | $ | —             |   |  | $ | — |   |
| Increasein redemption amount of Class  A Units subject to putrights     |  | $                         | 3,109   |                      |  | $                                                  | — |                                                          |  | $ | —             |   |  | $ | — |   |
| PSBgoodwilladjustments                                                  |  | $                         | — |                      |  | $                                                  | (56     | )                                                        |  | $ | —             |   |  | $ | — |   |
| BartonAcquisition goodwilladjustments                                   |  | $                         | (1,029  | )                    |  | $                                                  | — |                                                          |  | $ | —             |   |  | $ | — |   |
| Decreasein fair value of interest rate hedge on long-termdebt           |  | $                         | — |                      |  | $                                                  | — |                                                          |  | $ | —             |   |  | $ | 352     |   |
|                                                                         |

Cashinterest paid during the years ended December  31,  2005,and December  31,  2004, for the period fromFebruary  19,  2003 through December  31,2003, and for the period from January  1,  2003 throughFebruary  18,  2003, was approximately $36,846,000,$17,241,000, $14,606,000, $1,089,000,respectively.

3.    Mafco Acquisition

OnFebruary  19,  2003, Mafco, through its wholly-ownedsubsidiary SpectaGuard Holding Corporation, acquired the PredecessorCompany, which included SpectaGuard and its wholly owned subsidiaries,for approximately $263,588,000. This purchase was funded throughborrowings of $151,156,000 and cash contributions of $116,915,000recorded as follows: $112,983,000 from Mafco and its related partiesfor Class A Units, $2,307,000 from OCM Specta Holdings Inc.(‘‘OCM’’) for Class A Units, $1,538,000from Blackstone SG Mezzanine Corp.(‘‘Blackstone’’) for Class A units, and$87,000 from members of the Company's senior management for ClassB and Class C units (See Note  14).

F-10

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

In connection with this transaction, asyndication of lending institutions underwrote $125,000,000 of SeniorSecured Credit Facilities (the ‘‘Refinanced SeniorSecured Credit Facilities’’). The Refinanced SeniorSecured Credit Facilities consisted of (i) a $20,000,000 5-yearRevolving Credit Facility (the ‘‘RefinancedRevolver’’) and (ii) a $105,000,000 7-year Senior TermLoan Facility (the ‘‘Refinanced Senior TermLoan’’). In addition, the Company issued at a discountSenior Subordinated Notes (the ‘‘Refinanced SeniorSubordinated Notes’’) to affiliates of OCM and Blackstonewith an aggregate face value of $50,000,000 for net proceeds of$46,156,000 (See Note 9).

The Company allocated the purchaseprice to the assets acquired and liabilities assumed based upon thefair value at the date of acquisition. The cost of the acquisition wasapproximately $263,588,000 and is allocated as follows (inthousands):

|                            |
|----------------------------|
|                            |  |  |  |  |  |  |
| Currentassets              |  | $ | 55,705 |   |
| Property andequipment      |  |   | 9,913 |   |
| Goodwill                   |  |   | 191,409 |   |
| Customerlist               |  |   | 73,643 |   |
| Otherassets                |  |   | 144 |   |
| Currentliabilities         |  |   | (55,991 | )  |
| Other long-termliabilities |  |   | (11,235 | )  |
|                       |  | $ | 263,588 |   |
|                            |

4.    Acquisitions

OnDecember  19,  2003, the Company acquired all of theoutstanding common shares of PSB (the ‘‘PSBAcquisition’’). The Company allocated the purchase priceto the assets acquired and liabilities assumed based upon the fairvalue at the date of acquisition. The cost of the acquisition wassubject to a working capital purchase price adjustment settled in 2004for $100,000. The cost of the acquisition was approximately $45,766,000and is allocated as follows (inthousands):

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |
| Currentassets, net of cash acquired of$485 |  | $ | 12,099 |   |
| Property andequipment                      |  |   | 533 |   |
| Goodwill                                   |  |   | 31,744 |   |
| Customerlist                               |  |   | 8,877 |   |
| Covenantnot-to-compete                     |  |   | 1,700 |   |
| Otherassets                                |  |   | 66 |   |
| Currentliabilities                         |  |   | (7,553 | )  |
| Covenant not-to-competeliability           |  |   | (1,700 | )  |
|                                       |  | $ | 45,766 |   |
|                                            |

Thispurchase was funded through borrowings of $40,500,000 (see Note 9) andcash contributions of $7,500,000 recorded as follows: $6,651,000 fromMafco and its related parties, $173,000 from OCM, $107,000 fromBlackstone and $569,000 from members of the Company's seniormanagement in each case in exchange for Class A units (see Note14).

F-11

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

In connection with the PSB Acquisition,two former owner/executives entered into covenant-not-to-competeagreements with the Company. The terms of the agreements are five yearsfrom December  19,  2003. In consideration for theseindividuals entering into these agreements, the Company will pay$2,250,000 in the aggregate to these individuals over the term of theagreements. Payments under the covenant not-to-compete agreements aresubordinated to the Company's Credit Facility (as hereinafterdefined) (see Note 9) and have been recorded at the discounted presentvalue of the liability. Covenants not-to-compete are being amortizedover the benefit period of five years and are included in the captionas other long-term liability on the accompanying consolidated balancesheets.

As a result of this transaction, the Company adopted aformal plan (the ‘‘PSB Plan’’) to terminatecertain PSB employees and exit duplicative PSB office facilities. ThePSB Plan includes severance-related benefits for approximately 120 PSBemployees. The PSB Plan also includes lease termination costs in orderto exit 14 PSB office facilities. The Company recorded net reserves of$1,154,000 related to the PSB Plan as a part of the purchase priceallocation above. The PSB Plan was complete as of December31,  2004, other than the payment of the remaining liabilitywhich totaled $204,000 and $404,000 at December  31,  2005and 2004 respectively. As of December  31,  2005, $950,000of payments have been made related to the PSB Plan.

Inconnection with the PSB Acquisition, the Company deposited $3,000,000into an escrow account pursuant to the Indemnity Escrow Agreemententered into contemporaneously with the PSB Acquisition among theCompany, then current shareholders of PSB and the escrow agent. Thefunds remain in the escrow account pending a resolution of theCompany’s outstanding claims for indemnification from thesellers, and any remaining balance not disbursed pursuant to theIndemnity Escrow Agreement will thereafter be remitted to the formerPSB shareholders.

On March  19,  2004, the Companyacquired (the ‘‘SSI Acquisition’’) certainassets of Security Systems, Inc. (‘‘SSI’’).Prior to the SSI Acquisition, SSI provided contract security officerservices to various corporate customers and universities in the BostonMetropolitan area. The Company allocated the purchase price to theassets acquired and liabilities assumed based upon the fair value atthe date of acquisition. The cost of the acquisition was subject torevenue related purchase price adjustments, of which $719,000 has beensettled as of December  31,  2005 and any remainingadjustment will be resolved upon the renewal of a specific customercontract.

The cost of the acquisition was approximately$10,574,000 and is allocated as follows (inthousands):

|                       |
|-----------------------|
|                       |  |  |  |  |  |  |
| Currentassets         |  | $ | 2,910 |   |
| Property andequipment |  |   | 120 |   |
| Goodwill              |  |   | 5,090 |   |
| Customerlist          |  |   | 2,808 |   |
| Currentliabilities    |  |   | (354 | )  |
|                  |  | $ | 10,574 |   |
|                       |

Thispurchase was funded through borrowings of $7,500,000 (see Note9).

On August  2,  2004, the Company acquired Barton(the ‘‘Barton Acquisition’’). Prior to theAcquisition Barton provided premium contract security officer servicesto commercial organizations throughout the United States and tollcollection services to the FDOT. The Company allocated the purchaseprice to the assets acquired and liabilities assumed based upon thefair value at the date of acquisition. The cost of the acquisition wasapproximately $180,913,000 and is allocated as follows (inthousands):

F-12

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

|                       |
|-----------------------|
|                       |  |  |  |  |  |  |
| Currentassets         |  | $ | 50,677 |   |
| Property andequipment |  |   | 7,335 |   |
| Goodwill              |  |   | 117,324 |   |
| Customerlist          |  |   | 40,536 |   |
| Otherassets           |  |   | 246 |   |
| Currentliabilities    |  |   | (35,205 | )  |
|                  |  | $ | 180,913 |   |
|                       |

Thispurchase was funded as part of the borrowings of a $210,000,000 SeniorTerm Loan (as hereinafter defined) and $180,000,000 aggregate principalamount of Notes (as hereinafter defined) (see Note 9). The BartonAcquisition and related financing transactions are referred tocollectively as the‘‘Transactions’’.

As a result of theBarton Acquisition, the Company adopted a formal plan (the‘‘Barton Plan’’) to terminate certainBarton employees and exit duplicative Barton office facilities. TheBarton Plan initially included severance-related benefits forapproximately 246 Barton employees. The Barton Plan also initiallyincluded lease termination costs in order to exit 21 Barton officefacilities. The Company initially recorded a total reserve ofapproximately $6,135,000 related to the Barton Plan as part of thepurchase price allocation above. As of December  31,  2005,approximately $2,322,000 of payments have been made related to theBarton Plan. In 2005, the Company revised its estimate of certain leasetermination and severance costs and reduced the corresponding liabilityby $2,437,000. The Barton Plan was complete as of August  2005,other than the payment of the remaining liability which totals$1,376,000 and $5,706,000 as of December  31,  2005 andDecember  31,  2004, respectively.

In connection withthe Barton Acquisition, the Company deposited $9,000,000 into an escrowaccount pursuant to the Escrow Agreement entered into contemporaneouslywith the Barton Acquisition among the Company, then currentshareholders of Barton and the escrow agent. The funds will be remittedto the former Barton shareholders in accordance with the EscrowAgreement, except for escrow funds subject to outstanding claims forindemnification from the sellers.

The following table shows theactivity for the years ended December  31,  2005 andDecember  31,  2004, respectively for the accruedtermination costs for the above acquisitions (inthousands):

|                                |
|--------------------------------|
|                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                           |  | Lease |  | Severance |  | Total |
| Balanceas of December 31,2003  |  | $ | 551 |   |  | $ | 725 |   |  | $ | 1,276 |   |
| Additions                      |  |   | 3,800 |   |  |   | 2,335 |   |  |   | 6,135 |   |
| Payments                       |  |   | (339 | )  |  |   | (840 | )  |  |   | (1,179 | )  |
| Adjustments                    |  |   | 91 |   |  |   | (213 | )  |  |   | (122 | )  |
| Balanceas of December  31,2004 |  |   | 4,103 |   |  |   | 2,007 |   |  |   | 6,110 |   |
| Payments                       |  |   | (1,523 | )  |  |   | (570 | )  |  |   | (2,093 | )  |
| Adjustments                    |  |   | (1,270 | )  |  |   | (1,167 | )  |  |   | (2,437 | )  |
| Balanceas of December  31,2005 |  | $ | 1,310 |   |  | $ | 270 |   |  | $ | 1,580 |   |
|                                |

F-13

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

Unaudited pro forma results of operationsof the Company are as follows assuming the Barton, SSI, PSB and Mafcoacquisitions occurred at the beginning of the periods presented (inthousands):

|                       |
|-----------------------|
|                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                  |  | YearEndedDecember 31, 2004 |  | Period From February 19,2003throughDecember 31, 2003 |  | Period from January1, 2003throughFebruary 18,2003 |
| Revenues              |  | $ | 1,098,634 |   |  | $ | 880,358 |   |  | $ | 134,936 |   |
| Operatingincome(loss) |  | $ | 1,248 |   |  | $ | 16,550 |   |  | $ | (23,384 | )  |
| Net(loss)             |  | $ | (36,660 | )  |  | $ | (16,252 | )  |  | $ | (33,612 | )  |
|                       |

5.    Propertyand Equipment

Property and equipment consist of the following(inthousands):

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |  |  |  |  |
|                                    |  | December31, 2005 |  | December 31,2004 |
| Leaseholdimprovements                   |  | $ | 766 |   |  | $ | 1,004 |   |
| Uniforms                                |  |   | 30,393 |   |  |   | 23,544 |   |
| Computerequipment                       |  |   | 2,804 |   |  |   | 5,212 |   |
| Officefurniture, fixtures, andequipment |  |   | 121 |   |  |   | 2,046 |   |
|                                    |  |   | 34,084 |   |  |   | 31,806 |   |
| Lessaccumulateddepreciation             |  |   | (11,071 | )  |  |   | (10,968 | )  |
| Propertyand equipment,net               |  | $ | 23,013 |   |  | $ | 20,838 |   |
|                                         |

Depreciationexpense for the years ended December  31,  2005 andDecember  31,  2004, for the period from February19,  2003 through December  31,  2003, and for theperiod from January  1,  2003 through February18,  2003, was $14,048,000, $9,041,000, $4,965,000, and $731,000,respectively.

6.    Goodwill and Other IntangibleAssets

Goodwill is deemed to have an indefinite life and is notamortized, but is subject to annual impairment tests. The Companycompleted its annual impairment assessment in the fourth quarter offiscal 2005 using a multiple of earnings calculation and concluded thatthere is no impairment of goodwill.

The change in carrying amountof goodwill for the years ended December  31, 2005 andDecember  31, 2004, respectively is as follows (inthousands):

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |
| Balanceas of December 31, 2003      |  | $ | 227,347 |   |
| MafcoAcquisition adjustments        |  |   | (3,187 | )  |
| PSBAcquisition adjustments     |  |   | 44 |   |
| SSIAcquisition                 |  |   | 5,090 |   |
| BartonAcquisition                   |  |   | 118,472 |   |
| Balanceas of December  31,2004      |  | $ | 347,766 |   |
| Mafco Acquisitionadjustments        |  |   | (1,050 | )  |
| Barton Acquisitionadjustments  |  |   | (1,149 | )  |
| Balanceas of December  31,2005      |  | $ | 345,567 |   |
|                                     |

F-14

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

Gross carrying amounts and accumulatedamortization for intangible assets as of December 31, 2005 and December31, 2004 are as follows (inthousands):

|                             |
|-----------------------------|
|                             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                        |  | GrossCarrying Amount |  | AccumulatedAmortization |
|                        |  | December31,2005 |  | December 31,2004 |  | December31,2005 |  | December31,2004 |
| Amortized intangibleassets: |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |
| Customerlists               |  | $ | 125,865 |   |  | $ | 125,865 |   |  | $ | (48,519 | )  |  | $ | (27,542 | )  |
| Covenantsnot-to-compete     |  |   | 1,700 |   |  |   | 1,700 |   |  |   | (680 | )  |  |   | (340 | )  |
| Total                       |  | $ | 127,565 |   |  | $ | 127,565 |   |  | $ | (49,199 | )  |  | $ | (27,882 | )  |
|                             |

Thevalue of the customer lists acquired is being amortized using thestraight-line method over 6  years. Covenants not-to-compete arebeing amortized using the straight-line method over 5years.

Amortization expense for the year ended December31,  2005 and December  31,  2004, for the periodfrom February  19,  2003 through December  31,2003 and for the period from January  1,  2003 throughFebruary  18,  2003, was approximately $21,317,000,$17,260,000, $10,622,000, and $716,000, respectively.

Estimatedannual aggregate amortization expense for each of the next five yearsis as follows (inthousands):

|      |
|------|
|      |  |  |  |  |  |  |
| 2006 |  | $ | 21,317 |   |
| 2007 |  | $ | 21,317 |   |
| 2008 |  | $ | 21,317 |   |
| 2009 |  | $ | 10,356 |   |
| 2010 |  | $ | 4,059 |   |
|      |

7.    AccountsReceivable

Accounts receivable consists of the following(inthousands):

|                         |
|-------------------------|
|                         |  |  |  |  |  |  |  |  |  |  |
|                    |  | December31,2005 |  | December 31,2004 |
| Billedreceivables       |  | $ | 115,898 |   |  | $ | 110,791 |   |
| Unbilledreceivables     |  |   | 19,563 |   |  |   | 18,938 |   |
| Accountsreceivables,net |  | $ | 135,461 |   |  | $ | 129,729 |   |
|                         |

Unbilledreceivables represent work performed for which the invoice has not beensent to the customer by the end of the respective period. Substantiallyall unbilled receivables are invoiced in the month following the monthin which the service was performed.

8.    Deferred FinancingFees

Deferred financing fees are being amortized to interestexpense using the effective interest method over the term of theirrespective financing agreements in relation to the Notes and the SeniorTerm Loans, which mature between June  2010 and July  2011(see Note 9).

Amortization of deferred financing fees for theyear ended December  31,  2005 and December  31,2004, for the period from February  19, 2003 throughDecember  31,  2003, and for the period from January1,  2003 through February  18,  2003, wasapproximately $2,345,000, $2,043,000, $1,233,000, and $47,000,respectively.

F-15

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

The estimated annual aggregateamortization expense, which will be included as interest expense, foreach of the next five fiscal years is as follows (inthousands):

|      |
|------|
|      |  |  |  |  |  |  |
| 2006 |  | $ | 2,343 |   |
| 2007 |  | $ | 2,340 |   |
| 2008 |  | $ | 2,221 |   |
| 2009 |  | $ | 2,114 |   |
| 2010 |  | $ | 1,609 |   |
|      |

9.    Debt

TheCompany's debt is summarized as follows (in thousands):

|                                                                                                                                                       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                       |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                  |  | December31,2005 |  | December 31,2004 |
| SeniorTerm Loan, variable rate interest (effective rate 8.28% and6.23% at December  31,  2005 and December31,  2004, respectively), due June  30,2010 |  | $ | 193,250 |   |  | $ | 206,000 |   |
| 11.375%Senior Subordinated Notes, due July  15,2011                                                                                                   |  |   | 178,187 |   |  |   | 177,966 |   |
| 4.99%fixed rate insurance premium financing, due through May1,2006                                                                                    |  |   | 5,869 |   |  |   | — |   |
| 2.99%fixed rate insurance premium financing, due through May1,2005                                                                                    |  |   | — |   |  |   | 6,246 |   |
|                                                                                                                                                  |  |   | 377,306 |   |  |   | 390,212 |   |
| Lesscurrentmaturities                                                                                                                                 |  |   | (11,537 | )  |  |   | (22,246 | )  |
|                                                                                                                                                  |  | $ | 365,769 |   |  | $ | 367,966 |   |
|                                                                                                                                                       |

Inconnection with the February  19,  2003 formation of theCompany, the Company entered into a $125,000,000 Refinanced SeniorSecured Credit Facility. The Refinanced Senior Secured Credit Facilityconsisted of (i) a $20,000,000 5-year Refinanced Revolver and (ii) a$105,000,000 7-year Refinanced Senior Term Loan. The Refinanced SeniorSecured Credit Facility was amended on May  2,  2003 (the‘‘First Amended Refinanced CreditFacility’’) to reduce the Refinanced Senior Term Loan to$95,000,000. As a result of the First Amended Refinanced CreditFacility, an additional 67,778 Class A Units were issued for$10,000,000 to reduce the principal amount of the Refinanced SeniorTerm Loan (see Note 14). The Refinanced Senior Term Loan bore intereston the outstanding principal balance at a rate equal to the three-monthLIBOR (with a floor limit of 2.50%) plus a 5.00%margin.

The Refinanced Revolver included up to $20,000,000 ofletter of credit availability. Amounts outstanding under the RefinancedRevolver would have been due on February  19,  2008.Interest was payable based on LIBOR or base rate plus the applicablemargin of 5.00% or 4.00%, respectively.

TheCompany issued $50,000,000 face value Refinanced Senior SubordinatedNotes at a $3,844,000 discount in connection with its February19,  2003 formation. The terms of the Refinanced SeniorSubordinated Notes included 12.00% annual cash interest and3.00% paid-in-kind ("PIK") interest.Interest was payable quarterly. At its election, the Company could havepaid the PIK interest, or added it to the principal balance asRefinanced Senior Subordinated Notes. The Refinanced SeniorSubordinated Notes were due June  30,  2010. The debtdiscount was being amortized to interest expense over the term of theRefinanced Senior Subordinated Notes.

F-16

----

AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

In connection with the PSB Acquisition onDecember  19,  2003, the First Amended Refinanced CreditFacility was amended and restated (the ‘‘Second AmendedRefinanced Credit Facility’’). The Second AmendedRefinanced Credit Facility provided for an add-on Refinanced SeniorTerm Loan in the amount of $30,000,000 and an additional $10,000,000 inRefinanced Revolver availability resulting in total availability underthe Refinanced Revolver of up to $30,000,000. Other terms of the SecondAmended Refinanced Credit Facility were substantially identical to theFirst Amended Refinanced Credit Facility.

Also as a result of thePSB Acquisition, the Company issued an additional $10,500,000 inRefinanced Senior Subordinated Notes. The terms included 12.00%annual cash interest and 4.25% PIK interest payable quarterly.At its election, the Company could have paid the PIK interest, or addedit to the principal balance as Refinanced Senior Subordinated Notes.The Refinanced Senior Subordinated Notes were due June30,  2010.

On March  19,  2004, in connectionwith the SSI Acquisition, the Company issued a $7,500,000 add-on termloan which was permitted as a delayed draw in the Second AmendedRefinanced Credit Facility.

Simultaneous with the closing of theBarton Acquisition on August  2,  2004, the Company enteredinto a senior secured credit facility (the ‘‘CreditFacility’’) with Bear Stearns Corporate Lending Inc., asAdministrative Agent, and a syndicate of lenders arranged by Bear,Stearns & Co. Inc. The Company executed an amendment to the CreditFacility on May  10,  2005 (‘‘Amendment No.1’’) modifying certain of its terms. The Credit Facilityinitially provided for (i) a $210,000,000 six-year term loan facility(the ‘‘Senior Term Loan’’) and (ii) a$50,000,000 five-year revolving loan (the‘‘Revolver’’) with certain sub-limits forletters of credit and swing line loans. In addition, the Company issued$180,000,000 in aggregate principal amount of senior subordinated notes(the ‘‘Notes’’), at a discount of$2,118,600 and bearing interest of 11.375%, which mature onJuly  15,  2011. The Company used initial borrowings underthe Credit Facility, together with the net proceeds from the Notes, tofinance the purchase price for Barton, to repay amounts outstandingunder the Refinanced Credit Facility, to redeem the then outstandingRefinanced Senior Subordinated Notes and to pay related fees, expensesand redemption premiums. As of August  2,  2004 and priorto giving effect to the Transactions, the Company had $125,000,000 interm loans outstanding under the Refinanced Credit Facility, which termloans provided for interest at a rate of 7.50% per annum at suchdate. The Company had $61,900,000 principal outstanding, including PIKinterest, of Refinanced Senior Subordinated Notes as of August2,  2004 prior to redemption of the Refinanced SeniorSubordinated Notes.

Under the Credit Facility, the Company maychoose Eurodollar rate loans or base rate loans pricing and may electinterest periods of one, two, three or six months for Eurodollarborrowings. Each Eurodollar rate loan initially bore interest at a rateper annum equal to the Eurodollar rate for such day plus 4.50%if it is a revolving loan and 4.25% if it is a term loan. Eachbase rate loan initially bore interest at a rate per annum equal to thebase rate plus 3.50% if it is a revolving loan and 3.50%if it is a term loan. Upon a payment default, interest will accrue at2.00% over the applicable margin for both the Eurodollar andbase rate loans and the overdue amounts will accrue interest at2.00% over the applicable margin for base rate loans. TheCompany must pay a commitment fee of 0.75% on the unused portionof its revolver commitments. The interest rates and commitment fee maydecrease in the future based on the Company’s historicalleverage ratios. The Company’s obligation under the CreditFacility are guaranteed by each of the Company’s domesticsubsidiaries. The Company’s obligations under the CreditFacility and the obligations of our subsidiary guarantors under theGuarantee and Collateral Agreement are secured by a first priority lienon substantially all of our, and each subsidiary guarantor’s,present and future tangible and intangible assets, including, withoutlimitation, all goods, payment receivables, deposit accounts, generalintangibles, intellectual property and all of the equity interests ofeach of the subsidiary guarantors and 66% of the equityinterests in 

F-17

----

AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

each of our, or any subsidiaryguarantor’s foreign subsidiaries. Such obligations are alsosecured by a pledge of the Company’s membership interests ownedby SpectaGuard Holding Corporation. The revolving commitments terminateand all outstanding revolving loans are required to be repaid on thefifth anniversary of the closing date of the Barton Acquisition. Theterm loans were initially repayable in 24 consecutive quarterlyinstallments. The Company is permitted to make voluntary prepayments,as long as it gives the administrative agent notice. The Company isrequired to make mandatory prepayments on the term loans in certaincircumstances. The proceeds from such mandatory prepayments are appliedto the term loans in reverse order of maturity and may not bereborrowed.

The Credit Facility contains affirmative and negativecovenants including (i) the payment of all material obligations; (ii)the maintenance of organizational existences, including, but notlimited to, maintaining the Company’s property and insurance;(iii) compliance with all material contractual obligations andrequirements of law; (iv) subject to customary exceptions, limitationson the incurrence of indebtedness, which permit only certain limitedindebtedness; (v) subject to customary exceptions, limitations oncreation and existence of liens; (vi) limitations on certainfundamental changes to the Company’s corporate structure andnature of its business, including mergers; (vii)  subject tocustomary exceptions, limitations on asset sales; (viii) limitations onrestricted payments; (ix) limitations on capital expenditures; (x)subject to customary exceptions, limitations on any investments,provided that certain ‘‘permittedacquisitions’’ are allowed; (xi) limitations on optionalprepayments and modifications of certain debt instruments: (xii)subject to customary exceptions, limitations on transactions withaffiliates; (xiii) limitations on entering into certain swapagreements; (xiv) limitations on any material changes in theCompany’s equity structure or the equity structure of any of theCompany’s subsidiaries; (xv) limitations on negative pledgeclauses or clauses restricting subsidiary distributions; (xvi)limitations on sale-leaseback transactions; and (xvii) limitations onchanges to the Company’s fiscal year. The Company was incompliance with all such covenants at December  31,2005.

The Credit Facility contains financial covenants requiringthe Company to maintain as at the last day of any period of fourconsecutive fiscal quarters: (i) a maximum senior consolidated debtratio; (ii)  a maximum total consolidated leverage ratio; (iii) aminimum consolidated interest coverage ratio; and (iv) a maximumcapital expenditure limit. The Credit Facility contains customaryevents of default. The Company was in compliance with all suchcovenants at December  31,  2005.

The issuers of theNotes are the Company and Allied Security Finance Corp. as co-issuers.The Notes mature on July  15,  2011. Interest on the Notesis paid on January  15 and July  15 of each year,commencing January  15,  2005. The Notes areunconditionally guaranteed, jointly and severally, by our existing andfuture domestic subsidiaries that guarantee the Credit Facility. TheNotes and the guarantees are unsecured senior subordinated obligationsof us and our guarantors. They rank behind all of our and ourguarantors’ current and future indebtedness other than tradepayables, except indebtedness that expressly provides that it is notsenior to the Notes and the guarantees. We may redeem some or all ofthe Notes as set forth in the indenture governing the Notes. Theindenture restricts our ability and the ability of our restrictedsubsidiaries to, among other things, incur or guarantee additionaldebt; pay dividends and make distributions; make certain investments;repurchase stock; incur liens; enter into certain transactions withaffiliates; enter into certain sale and leaseback transactions; mergeor consolidate; and transfer or sell assets. These covenants aresubject to important exceptions and qualifications.

The CreditFacility and the Notes are guaranteed by each of the Company’scurrent and future domestic subsidiaries. These guarantees are jointand several obligations of the domestic subsidiaries. The Company had anon-guarantor subsidiary located in the United Kingdom, which generatedless than one percent of the Company’s consolidated revenues andheld less than one percent of the Company’s consolidated assetsas of December  31,  2005. In July  2005, the Companyceased all of its foreign operations.

F-18

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

On May  10,  2005, theCompany executed Amendment No. 1 to the Credit Facility. Amendment No.1 contains the following terms and provisions, among others: (i) forthe Senior Term Loan, the interest rate applicable to Eurodollar rateloans was decreased from LIBOR plus 4.25% to LIBOR plus3.75% (with a step down to LIBOR plus 3.50% when theCompany’s leverage ratio is below 3.5x); (ii) the basket forpermitted acquisitions was increased from $30,000,000 to $60,000,000;(iii) cash expenditures for permitted acquisitions was added as adeduction to the calculation of ‘‘excess cashflow’’; (iv) mandatory principal repayment of the SeniorTerm Loan was decreased for fiscal years 2005 and 2006; and (v) thesub-limit for letter of credit availability under the Revolver wasincreased from $40,000,000 to $50,000,000.

The Revolveravailability is reduced by outstanding letters of credit, which totaled$24,659,000 as of December  31,  2005. For the Revolver,each Eurodollar rate loan bears interest at a rate per annum equal tothe Eurodollar rate for such day plus 4.50%. Each base rate loanbears interest at a rate per annum equal to the base rate plus3.50%. Amounts outstanding on the Revolver are due onAugust  2,  2009. As of December  31,  2005,the outstanding Revolver balance, excluding the outstanding letters ofcredit, was zero.

Based on the borrowing rates currentlyavailable for loans with similar terms and maturities, the fair valueof the long-term debt approximated its carrying value atDecember  31,  2005 and 2004, respectively.

TheCredit Facility requires an excess cash flow calculation commencingwith the fiscal year ending December  31,  2005. If suchexcess cash flow exists as defined in the Credit Facility, prepaymentof the Senior Term Loans is required no later than five days after theearlier of (i) the date on which the financial statements are requiredto be delivered to the lenders, and (ii) the date such financialstatements are actually delivered. We anticipate making an excess cashflow prepayment of the Term Loans of approximately $668,000 on or aboutMarch  31,  2006.

In the ordinary course of business,the Company enters into short-term financing agreements in order tofund its business insurance policy premiums. On August13,  2004, the Company entered into such a financing agreementwith Cananwill, Inc. for a total amount of $11,242,000. Payments weredue in equal monthly installments through May  1,  2005 andbore an annual interest rate of 2.99%. As of May1,  2005, this financing agreement, including accrued interest,was repaid in full. On August  15, 2005, the Company entered intosuch a financing agreement with Cananwill, Inc. for a total amount of$10,564,000. Payments are due in equal monthly installments throughMay  1,  2006 and bear an annual interest rate of4.99%. As of December  31,  2005, the remainingbalance of this agreement including accrued interest was$5,869,000.

Debt maturities for the subsequent five years andthereafter are as follows (inthousands):

|            |
|------------|
|            |  |  |  |  |  |  |
| 2006       |  | $ | 11,537 |   |
| 2007       |  |   | 30,000 |   |
| 2008       |  |   | 30,000 |   |
| 2009       |  |   | 30,000 |   |
| 2010       |  |   | 97,582 |   |
| Thereafter |  |   | 178,187 |   |
| Total      |  | $ | 377,306 |   |
|            |

F-19

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

10.    ContingentLiabilities

In the normal course of operations, various legalclaims are filed against the Company. The Company has reserved forcertain of these claims based upon insurance coverages andmanagement's judgment (in some cases after receipt of the adviceof counsel). In the opinion of management, the ultimate outcome ofthese actions is not expected to have a material adverse effect on theconsolidated financial position, results of operations, or cash flowsof the Company.

11.    Comprehensive Income(Loss)

Comprehensive income (loss) is defined as net income(loss) and other changes in members’ equity (deficit) fromtransactions and other events from sources other than members. Areconciliation of net income (loss) to other comprehensive income(loss) is as follows (inthousands):

|                                                    |
|----------------------------------------------------|
|                                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                               |  | YearendedDecember 31,2005 |  | Year endedDecember31,2004 |  | Period fromFebruary19throughDecember31,2003 |  | (Predecessor)Period fromJanuary 1through February 182003 |
| Net income(loss)                                   |  | $ | (1,754 | )  |  | $ | (23,390 | )  |  | $ | 2,034 |   |  | $ | (9,775 | )  |
| Changein fair value of interest rate swapcontracts |  |   | — |   |  |   | — |   |  |   | — |   |  |   | (352 | )  |
| Realizationof loss on hedgeinstruments             |  |   | — |   |  |   | — |   |  |   | — |   |  |   | 5,064 |   |
| Foreigncurrency translationadjustments             |  |   | (82 | )  |  |   | 37 |   |  |   | — |   |  |   | — |   |
| Comprehensiveincome(loss)                          |  | $ | (1,836 | )  |  | $ | (23,353 | )  |  | $ | 2,034 |   |  | $ | (5,063 | )  |
|                                                    |

12.    IncomeTaxes

The members of the Company have elected to be treated as apartnership for both federal and state income tax purposes. Inaccordance with applicable regulations, taxable income or loss of theCompany is required to be reported in the income tax returns of theCompany's members in accordance with the Company’sOperating Agreement, dated as of August  2,  2004 (the‘‘Operating Agreement’’). The OperatingAgreement enables the Company to make distributions to each member tosatisfy their respective tax liability arising in connection with theirrespective ownership interest in the Company. Accordingly, no provisionfor income taxes has been made in the Company's consolidatedfinancial statements. These distributions were $1,500,000 in 2005 and$0 for 2004. The Company paid an additional $233,000 tax distributionin January of 2006. Due principally to differences in depreciation andamortization, taxable income may vary substantially from income or lossreported for financial statement purposes.

Under the PredecessorCompany, Effective Holdings Inc. and its subsidiaries and ASAcquisition Inc. and its subsidiaries, all of which corporations wereconverted to limited liability companies, were taxed under Subchapter Cof the Internal Revenue Code. The effective tax rate for thePredecessor Company differed from the federal statutory rate dueprimarily to state taxes, nondeductible items, and operating resultsnot taxed at the corporate level.

13.    EmployeePostretirement Plan

The Company sponsors a 401(k) retirementplan that allows eligible employees to contribute a portion of theircompensation through payroll deductions in accordance with specifiedguidelines. The Company matches a percentage of the employees’contributions up to certain limits. Expenses related to this planamount to $603,000, $124,000 and $0 for the years ended December31,  2005, 2004 and 2003,respectively.

F-20

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

14.    Units Subject to Put Rights andMembers' Equity

The capital structure of the Companyconsists of three classes of units which are designated as Class AUnits, Class B Units, and Class C Units (collectively,‘‘Units’’). The Company is authorized toissue up to 10,000,000 Units. The Units do not have any voting approvalor consent rights. Class A and Class B Units represent vested ownershipinterests in the Company. Class C Units generally vest 50% basedon passage of time (‘‘Time Based’’) and50% based on achievement of defined performance targets(‘‘Performance-Based’’) over periodsranging from three to five years.

Pursuant to the OperatingAgreement, cash distributions may be made to the members in thefollowing order and priority: (i) among the Units in proportion to, andto the extent of, initial contributed capital attributable to the Units(excluding any capital attributable to unvested Class C Units) untilall initial contributed capital has been returned, and (ii) anyremaining balance, to the members in proportion to their ownershippercentage.

Upon formation of the Company on February19,  2003, initial capital contributed was approximately$116,915,000. This consisted of $112,983,000 (739,733 Class A Units)from Mafco and its affiliates, $2,307,000 (19,584 Class A Units subjectto put rights) from OCM, $1,538,000 (13,056  Class A Unitssubject to put rights) from Blackstone, and $50,000 (77,627 Class BUnits of which 46,097 are subject to put rights) from members of theCompany's senior management. The Class A and Class B Unitssubject to put rights for both OCM, Blackstone and Mr.Albert  Berger are classified as temporary equity, outside ofmembers’ equity. Members of senior management also contributed$37,000 for 110,000 unvested Class C Units.

On May2,  2003, 67,778 Class A Units were issued for $10,000,000 toreduce the principal amount outstanding under the Refinanced SeniorTerm Loan (see Note 9). Of these units, 1,562 units were subject to putrights and had a fair value of $230,000.

On December19,  2003, 50,834 Class A Units were issued for $7,500,000related to the PSB Acquisition (see Note 4). Of these units, 1,894units were subject to put rights and had a fair value of$279,000.

On December  31,  2003, 7,500 unvestedClass C Units were issued to an executive for approximately$2,000.

On December  31,  2003, 13,083 Time-BasedClass C Units and 13,083 Performance-Based Class C Unitsvested.

On June  1,  2004, 7,500 unvested Class CUnits were issued to an executive for approximately $5,000, 3,750 ofwhich were subsequently repurchased from the employee as ofDecember  31,  2004.

On August  2,  2004,7,500 Class C Units were issued, of which 750 units were immediatelyvested, to an executive for approximately $5,000.

OnAugust  2,  2004, a direct subsidiary of Mafco acquired allof the shares of Blackstone. As a result, the put rights associatedwith the 13,779 Class A Units were canceled. The Class A Units formerlyheld by Blackstone are now held by Mafco’s indirect subsidiary,SpectaGuard Holding Two Corporation.

On October  5,2004, 2,250 unvested Performance-Based Class C Units were forfeited and2,250 Time-Based Class C Units vested due to an employmenttermination.

On December  31,  2004, 3,750 unvestedPerformance-Based Class C Units were forfeited due to an employmenttermination.

On December  31,  2004, 13,083Time-Based Class C Units and 13,383 Performance-Based Class C Unitsvested.

F-21

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

On March  9,  2005, 7,500unvested Class C Units were issued to an executive for approximately$5,000.

On May  17,  2005, 7,500 unvested Class CUnits were issued to an executive for approximately $5,000.

OnAugust  2,  2005, 675 Time-Based Class C Unitsvested.

On November  4,  2005, 3,000 unvestedPerformance-Based Class C Units were forfeited and 3,000 Time-BasedClass C Units vested due to an employment termination.

OnDecember  6,  2005, 2,500 unvested Class C Units wereissued to an executive for approximately $1,667.

OnDecember  31,  2005, 12,501 Time-Based Class C Unitsvested, and 13,176 Performance-Based Class Units were forfeited andcanceled due to the Company not achieving its Performance Goals forfiscal 2005.

The Operating Agreement includes put rights issuedto OCM that give OCM the option to cause the Company to purchase all ofthe Class A Units subject to put rights held by them at specifiedperiods of time, the earliest of which is 2007, at an estimated fairvalue at the time the put right is exercised. In 2005, the Companyrecorded the estimated increase in the redemption amount of such ClassA Units subject to put rights of $3,109,000 as a reduction ofmembers’ equity.

Pursuant to the Operating Agreement,Albert Berger, the Chairman of the Company as of December31,  2005, has the right to cause the Company to purchase all,but not less than all, of his outstanding Class B Units during a 90 dayperiod beginning on February  19,  2006 in accordance witha specified calculation as defined in the Operating Agreement. The putright valued at $2,430,000 expires at the end of the 90 day period. Mr.Berger has indicated that he will not exercise the put. As ofDecember  31,  2005, the Company recorded the estimatedincrease in the redemption amount of such Class B Units subject to putrights of $2,430,000 as a reduction of members’ equity. Therewere no new Class B Units issued in 2004 or2005.

15.    Related Party Transactions

In connectionwith the Mafco acquisition, senior management of the Company canceledtheir vested options in the Predecessor Company. The Company'smajority member, SpectaGuard Holding Corporation, is obligated toreturn to members of senior management the amount of deferred paymenttotaling $16,251,000 including estimated taxes, in periods ranging fromthree to five years. This amount has been recorded at its present valueand is included on the accompanying consolidated balance sheets in dueto affiliates. The Company is obligated to reimburse SpectaGuardHolding Corporation for all costs and expenses incurred in connectionwith its performance under the Amended and Restated ManagementAgreement between SpectaGuard and SpectaGuard Holding Corporation datedas of August  2,  2004 including amounts of such deferredpayments to senior management.

Mr. Berger’s employmentagreement was amended on February  17,  2006. The amendmentmodifies the payment terms applicable to a special payment payable toMr.  Berger in the approximate amount of $7,000,000 (with agross-up payment to the extent that the special payment is taxed at arate higher than the highest federal capital gains rate) previouslypayable to Mr.  Berger on February  19,  2006.Specifically, the amendment modifies the timing of the payment suchthat $1,000,000 of the special payment was paid to Mr.  Berger onFebruary  17,  2006 and the balance of the special paymentis payable on April  28,  2006 (in each instance, with agross-up payment to the extent that the special payment is taxed at arate higher than the highest federal capital gainsrate).

F-22

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AlliedSecurity Holdings LLCNotes to Consolidated FinancialStatements (Continued) December 31,2005

Gryphon Investors, Inc.(‘‘Gryphon’’) charged the PredecessorCompany an administrative fee for management services that Gryphonperformed on behalf of the Predecessor Company. The total expenseincurred by the Predecessor Company related to this fee for the periodfrom January  1,  2003 through February  18,2003 was approximately $96,000 which has been included in branch andcorporate overhead expenses on the consolidated statements ofoperations.

The Predecessor Company reimbursed Gryphon forcertain costs that Gryphon incurred in connection with its services tothe Predecessor Company. The amount reimbursed for the period fromJanuary  1,  2003 through February  18,  2003was $92,000.

The Predecessor Company had a note receivable froman executive and stockholder in the amount of approximately $268,000plus interest payable of 10%. The loan was settled andsubsequently paid on February  19,  2003 in conjunctionwith the sale of the Predecessor Company. (See Note 4.)

Mafco isthe controlling stockholder of each of Revlon, Inc. and Panavision Inc.and as of December  31,  2005, beneficially ownedapproximately 38% of the outstanding common stock of M & FWorldwide. As of December  31,  2005 a subsidiary of Mafcowas the managing member of AM General LLC. The rates charged for theseservices were competitive with industry rates for similarly situatedsecurity firms.

During fiscal 2005 and fiscal 2004, we providedcontract security officer services to Revlon, Inc. and itssubsidiaries. For fiscal 2005 and fiscal 2004, we received aggregatepayments from Revlon, Inc. for such services of $1,010,000 and$400,000, respectively.

During fiscal 2005 and fiscal 2004, weprovided contract security officer services to Panavision Inc. and itssubsidiaries. For fiscal 2005 and fiscal 2004, we received aggregatepayments from Panavision Inc. for such services of $150,000 and$140,000, respectively.

During fiscal 2005 and fiscal 2004, weprovided contract security officer services to M & F WorldwideCorp. and its subsidiaries. For fiscal 2005 and fiscal 2004, wereceived aggregate payments from M & F Worldwide Corp. for suchservices of $510,000 and $270,000, respectively.

During fiscal2005, we provided contract security officer services to AM General LLCand its subsidiaries. For fiscal 2005, we received aggregate paymentsfrom AM General LLC for such services of $600,000.

16.    Leases

The Company has commitments under operatingleases for certain equipment and facilities used in its operations.Total rental expense for the years ended December  31,2005 and 2004, the period from February  19,  2003 throughDecember  31,  2003, and for the period from January1,  2003 through February  18,  2003, wasapproximately $6,673,000, $5,171,000, $3,085,000, and $402,000,respectively. Future minimum rental payments required under thoseoperating leases that have an initial or remaining noncancelable leaseterm in excess of one year are as follows (inthousands):

|            |  |        |        |        |  |  |
|------------|--|--------|--------|--------|--|--|
| 2006       |  | $      | 7,519  |   |
| 2007       |  |   | 5,285  |   |
| 2008       |  |   | 3,575  |   |
| 2009       |  |   | 2,265  |   |
| 2010       |  |   | 1,467  |   |
| Thereafter |  |   | 510    |   |
| Total      |  | $      | 20,621 |   |
|            |

F-23

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ALLIEDSECURITY HOLDINGS LLC

SCHEDULE II — VALUATIONAND QUALIFYINGACCOUNTS

|                                                      |  |                             |         |                                     |  |            |        |                        |  |        |        |         |  |        |        |        |  |  |
|------------------------------------------------------|--|-----------------------------|---------|-------------------------------------|--|------------|--------|------------------------|--|--------|--------|---------|--|--------|--------|--------|--|--|
|                                                 |  | BalanceatBeginning ofPeriod |         | AdditionsChargedtoCosts andExpenses |  | Deductions |        | Balance atEndof Period |
|                                                 |  |                        |         | (InThousands)                       |  |       |
| Period fromJanuary  1,  2003 to February  18,2003:   |  |                        |    |                                |  |       |   |                   |  |   |   |    |  |   |   |   |
| Allowancefor doubtfulaccounts                        |  | $                           | 1,706   |                                |  |       | 160    |                   |  |   | (6     | )  |  | $      | 1,860  |   |
| Periodfrom February  19,  2003 to December  31,2003: |  |                        |    |                                |  |       |   |                   |  |   |   |    |  |   |   |   |
| Allowancefor doubtful accounts (a)                   |  | $                           | — |                                |  |       | 1,502  |                   |  |   | (219   | )  |  | $      | 1,283  |   |
| Yearended December  31,2004:                         |  |                        |    |                                |  |       |   |                   |  |   |   |    |  |   |   |   |
| Allowancefor doubtfulaccounts                        |  | $                           | 1,283   |                                |  |       | 648    |                   |  |   | (538   | )  |  | $      | 1,393  |   |
| Yearended December  31,2005:                         |  |                        |    |                                |  |       |   |                   |  |   |   |    |  |   |   |   |
| Allowancefor doubtfulaccounts                        |  | $                           | 1,393   |                                |  |       | 806    |                   |  |   | (322   | )  |  | $      | 1,877  |   |
|                                                      |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                             |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a) | Beginningbalance is $0 as a result of a change in ownership related to the Mafcoacquisition as discussed in Note 1 to the Consolidated FinancialStatements. |

F-24

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SIGNATURES

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized on this31st day of March, 2006.

|  | ALLIED SECURITYHOLDINGS LLC |
|--|-----------------------------|

|  | By: /s/ William c. Whitmore,Jr. |
|--|---------------------------------|

|  | William C. Whitmore,Jr.Chairman, President and Chief Executive Officer |
|--|------------------------------------------------------------------------|

Pursuantto the requirements of the Securities Exchange Act of 1934, this reporthas been signed below by the following persons on behalf of theregistrant and in the capacities and on the datesindicated:

|                             |  |                                                                                      |  |                |
|-----------------------------|--|--------------------------------------------------------------------------------------|--|----------------|
| Signature                   |  | Title                                                                                |  | Dates          |
|                             |
| /s/William C. Whitmore, Jr. |  | Chairman,President, Chief Executive Officer and Manager (Principal ExecutiveOfficer) |  | March 31,2006  |
|                             |
| William C. Whitmore,Jr.     |
|                             |
| /s/ William A.Torzolini     |  | SeniorVice President and Chief Financial Officer (Principal FinancialOfficer)        |  | March 31, 2006 |
|                             |
| William A. Torzolini        |
|                             |
| /s/ FrankJ. Conforti        |  | Directorof Accounting(Principal Accounting Officer)                                  |  | March 31,2006  |
|                             |
| Frank J. Conforti           |
|                             |
| /s/ Albert J. Berger        |  | Manager                                                                              |  | March 31,2006  |
|                             |
| AlbertJ. Berger             |
|                             |
| /s/ Ronald O.Perelman       |  | Manager                                                                              |  | March 31,2006  |
|                             |
| Ronald O.Perelman           |
|                             |
| /s/ Floyd I. Clarke         |  | Manager                                                                              |  | March 31,2006  |
|                             |
| FloydI. Clarke              |
|                             |
| /s/ Donald G.Drapkin        |  | Manager                                                                              |  | March 31,2006  |
|                             |
| Donald G.Drapkin            |
|                             |
| /s/ Todd J. Slotkin         |  | Manager                                                                              |  | March 31,2006  |
|                             |
| Todd J.Slotkin              |
|                             |
| /s/ John M. Keane           |  | Manager                                                                              |  | March 31,2006  |
|                             |
| John M.Keane                |
|                             |
| /s/ Michael J.Regan         |  | Manager                                                                              |  | March 31,2006  |
|                             |
| Michael J.Regan             |
|                             |
| /s/ John A. Fry             |  | Manager                                                                              |  | March 31,2006  |
|                             |
| John A.Fry                  |
|                             |
| /s/ Ray Wirta               |  | Manager                                                                              |  | March 31,2006  |
|                             |
| RayWirta                    |
|                             |

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