UNITEDSTATESSECURITIES AND EXCHANGECOMMISSIONWashington, D.C.20549

|  |
|--|
|  |  |  |  |
|  |

FORM10-Q

|  |
|--|
|  |  |  |  |
|  |

|        |                                                                                       |
|--------|---------------------------------------------------------------------------------------|
|   | QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 |

For the quarterly period ended March  31,2006

OR

|        |                                                                                        |
|--------|----------------------------------------------------------------------------------------|
|   | TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 |

For the transition period from             to             

Commission file number333-119127

|  |
|--|
|  |  |  |  |
|  |

ALLIEDSECURITY HOLDINGS LLC

(Exact name ofRegistrant as specified in itscharter)

|                                                                               |  |                                                |  |  |  |  |
|-------------------------------------------------------------------------------|--|------------------------------------------------|--|--|--|--|
| Delaware(State or other jurisdiction of incorporation ororganization)         |  | 20-1379003 (I.R.S. EmployerIdentification No.) |
| 3606Horizon Drive King of Prussia, PA (Address ofprincipal executive offices) |  | 19406 (ZipCode)                                |
|                                                                               |

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

NotApplicableFormer name, former address and formerfiscal year, if changed since lastreport.

Indicate by check mark whether Registrant(1) has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days.

Yes             No

Indicate by check mark whether the registrant isa large accelerated filer, an accelerated filer, or a non-acceleratedfiler. See definition of ‘‘accelerated filer and largeaccelerated filer’’ in Rule 12b-2 of the ExchangeAct.

Large accelerated filer           Accelerated filer           Non-accelerated filer

Indicate by check mark whether the Registrant isa shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes             No 

As ofMay  15,  2006, there were 1,092,086 vested and unvestedClass A, Class B and Class C unitsoutstanding.

----

ALLIEDSECURITY HOLDINGS LLCTABLE OFCONTENTS

|         |  |                                                                                                    |  |         |        |        |  |  |  |  |
|---------|--|----------------------------------------------------------------------------------------------------|--|---------|--------|--------|--|--|--|--|
|    |  |                                                                                               |  | PAGENO. |
| PARTI.  |  | FINANCIALINFORMATION                                                                               |  |    |   |   |
| Item1.  |  | FinancialStatements                                                                                |  |    | 1      |   |
|    |  | Consolidated BalanceSheets as of March 31, 2006 (Unaudited) andDecember 31,2005                    |  |    | 1      |   |
|    |  | Consolidated Statements ofOperations for the Three months ended March 31, 2006 and2005 (Unaudited) |  |    | 2      |   |
|    |  | ConsolidatedStatements of Cash Flows for the Three months ended March31, 2006 and 2005(Unaudited)  |  |    | 3      |   |
|    |  | Notes to ConsolidatedFinancial Statements(Unaudited)                                               |  |    | 4      |   |
| Item2.  |  | Management’s Discussion and Analysis of FinancialCondition and Results ofOperations          |  |    | 15     |   |
| Item3.  |  | Quantitative and Qualitative Disclosures About MarketRisk                                          |  |    | 22     |   |
| Item 4. |  | ControlsandProcedures                                                                              |  |    | 22     |   |
| PARTII. |  | OTHERINFORMATION                                                                                   |  |    |   |   |
| Item 1. |  | LegalProceedings                                                                                   |  |    | 25     |   |
| Item1A. |  | Risk Factors                                                                                       |  |    | 25     |   |
| Item2.  |  | Unregistered Sales of Equity Securities and Use ofProceeds                                         |  |    | 25     |   |
| Item 5. |  | OtherInformation                                                                                   |  |    | 25     |   |
| Item6.  |  | Exhibits                                                                                           |  |    | 25     |   |
|    |  | SIGNATURES                                                                                         |  |    | 26     |   |
|         |

----

PARTI.    FINANCIAL INFORMATIONItem 1.    FinancialStatements

Allied Security Holdings LLCConsolidatedBalance Sheets(Dollars in thousands, except unitdata)

|                                                                                                                                             |  |               |         |                  |  |        |         |         |  |  |
|---------------------------------------------------------------------------------------------------------------------------------------------|--|---------------|---------|------------------|--|--------|---------|---------|--|--|
|                                                                                                                                        |  | March31, 2006 |         | December 31,2005 |
|                                                                                                                                        |  | (Unaudited)   |         |             |
| Assets                                                                                                                                      |  |          |    |             |  |   |    |    |
| Currentassets:                                                                                                                              |  |          |    |             |  |   |    |    |
| Cash and cashequivalents                                                                                                                    |  | $             | 23,566  |             |  | $      | 10,710  |    |
| Restrictedcash                                                                                                                              |  |          | 9,379   |             |  |   | 10,402  |    |
| Accountsreceivable, net of allowance for doubtful accounts of $1,417 and $1,877as of March  31,  2006 and December  31,  2005,respectively  |  |          | 115,346 |             |  |   | 135,461 |    |
| Other                                                                                                                                       |  |          | 6,001   |             |  |   | 8,454   |    |
| Totalcurrentassets                                                                                                                          |  |          | 154,292 |             |  |   | 165,027 |    |
| Property andequipment,net                                                                                                                   |  |          | 23,396  |             |  |   | 23,013  |    |
| Goodwill                                                                                                                                    |  |          | 343,917 |             |  |   | 345,567 |    |
| Otherintangible assets,net                                                                                                                  |  |          | 73,036  |             |  |   | 78,366  |    |
| Deferred financingfees, net                                                                                                                 |  |          | 10,827  |             |  |   | 11,406  |    |
| Otherassets                                                                                                                                 |  |          | 389     |             |  |   | 394     |    |
| Totalassets                                                                                                                                 |  | $             | 605,857 |             |  | $      | 623,773 |    |
| Liabilitiesand members'equity                                                                                                               |  |          |    |             |  |   |    |    |
| Currentliabilities:                                                                                                                         |  |          |    |             |  |   |    |    |
| Currentmaturities of long-termdebt                                                                                                          |  | $             | 11,250  |             |  | $      | 5,668   |    |
| Insurancepremiumfinancing                                                                                                                   |  |          | 2,348   |             |  |   | 5,869   |    |
| Accountspayable                                                                                                                             |  |          | 3,850   |             |  |   | 8,423   |    |
| Accruedexpenses                                                                                                                             |  |          | 19,638  |             |  |   | 20,177  |    |
| Interestpayable                                                                                                                             |  |          | 4,269   |             |  |   | 9,433   |    |
| Accruedclaimsreserves                                                                                                                       |  |          | 26,578  |             |  |   | 26,125  |    |
| Accruedpayroll and related payrolltaxes                                                                                                     |  |          | 43,707  |             |  |   | 41,600  |    |
| Accruedterminationcosts                                                                                                                     |  |          | 1,316   |             |  |   | 1,580   |    |
| Advancepayments                                                                                                                             |  |          | 16,075  |             |  |   | 14,536  |    |
| Due toaffiliates                                                                                                                            |  |          | 8,137   |             |  |   | 10,217  |    |
| Totalcurrentliabilities                                                                                                                     |  |          | 137,168 |             |  |   | 143,628 |    |
| Seniorterm loan                                                                                                                             |  |          | 180,082 |             |  |   | 187,582 |    |
| Seniorsubordinatednotes                                                                                                                     |  |          | 178,247 |             |  |   | 178,187 |    |
| Due toaffiliates                                                                                                                            |  |          | 4,981   |             |  |   | 4,865   |    |
| Otherlong-termliabilities                                                                                                                   |  |          | 2,011   |             |  |   | 1,624   |    |
| ClassA units subject to put rights: 22,317 units authorized, issued andoutstanding                                                          |  |          | 6,218   |             |  |   | 5,819   |    |
| ClassB units subject to put rights: 46,097 units authorized, issued andoutstanding                                                          |  |          | 2,995   |             |  |   | 2,430   |    |
| Members'equity:                                                                                                                             |  |          |    |             |  |   |    |    |
| Units:                                                                                                                                      |  |          |    |             |  |   |    |    |
| ClassA, 9,477,683 units authorized, 868,668 units issued andoutstanding                                                                     |  |          | 131,618 |             |  |   | 131,618 |    |
| ClassB, 153,903 units authorized, 31,530 units issued andoutstanding                                                                        |  |          | 20      |             |  |   | 20      |    |
| Class C,300,000 units authorized, 123,474 and 124,074 units issued andoutstanding as of March  31,  2006 and December31,  2005,respectively |  |          | 61      |             |  |   | 56      |    |
| Additionalpaid-incapital                                                                                                                    |  |          | — |             |  |   | — |    |
| Accumulateddeficit                                                                                                                          |  |          | (37,501 | )           |  |   | (32,011 | )  |
| Accumulatedother comprehensiveloss                                                                                                          |  |          | (43     | )           |  |   | (45     | )  |
| Totalmembers'equity                                                                                                                         |  |          | 94,155  |             |  |   | 99,638  |    |
| Totalliabilities and members'equity                                                                                                         |  | $             | 605,857 |             |  | $      | 623,773 |    |
|                                                                                                                                             |

SeeAccompanying Notes

1

----

Allied Security HoldingsLLCConsolidated Statements of Operations(Dollars inthousands)(Unaudited)

|                                      |  |                            |         |         |  |        |         |         |  |  |
|--------------------------------------|--|----------------------------|---------|---------|--|--------|---------|---------|--|--|
|                                 |  | Threemonths ended March31, |
| 2006                                 |  | 2005                       |
| Revenues                             |  | $                          | 284,459 |    |  | $      | 274,183 |    |
| Costofrevenues                       |  |                       | 245,400 |    |  |   | 237,066 |    |
|                                 |  |                       | 39,059  |    |  |   | 37,117  |    |
| Branchand corporate overheadexpenses |  |                       | 24,326  |    |  |   | 23,918  |    |
| Depreciationandamortization          |  |                       | 8,711   |    |  |   | 8,344   |    |
| Operatingincome                      |  |                       | 6,022   |    |  |   | 4,855   |    |
| Interest expense,net                 |  |                       | 10,315  |    |  |   | 9,845   |    |
| Netloss                              |  | $                          | (4,293  | )  |  | $      | (4,990  | )  |
|                                      |

SeeAccompanying Notes

2

----

Allied Security HoldingsLLCConsolidated Statement of Cash Flows(Dollars inthousands)(Unaudited)

|                                                                               |  |                            |         |         |  |        |         |         |  |  |
|-------------------------------------------------------------------------------|--|----------------------------|---------|---------|--|--------|---------|---------|--|--|
|                                                                          |  | Threemonths ended March31, |
|                                                                          |  | 2006                       |         | 2005    |
| Cashflows from operatingactivities                                            |  |                       |    |    |  |   |    |    |
| Netloss                                                                       |  | $                          | (4,293  | )  |  | $      | (4,990  | )  |
| Adjustmentsto reconcile net loss to net cash provided by operatingactivities: |  |                       |    |    |  |   |    |    |
| Depreciationandamortization                                                   |  |                       | 8,711   |    |  |   | 8,344   |    |
| Noncashinterestexpense                                                        |  |                       | 923     |    |  |   | 994     |    |
| Changes inassets and liabilities (net of impact of acquiredbusinesses):       |  |                       |    |    |  |   |    |    |
| Accountsreceivable,net                                                        |  |                       | 20,115  |    |  |   | 8,225   |    |
| Othercurrent assets and liabilities,net                                       |  |                       | 3,831   |    |  |   | 17,437  |    |
| Accountspayable and accruedexpenses                                           |  |                       | (8,424  | )  |  |   | (6,274  | )  |
| Advancepayments                                                               |  |                       | 1,539   |    |  |   | 2,247   |    |
| Non-competepayments                                                           |  |                       | (112    | )  |  |   | (100    | )  |
| Other                                                                         |  |                       | — |    |  |   | 15      |    |
| Netcash provided by operatingactivities                                       |  |                       | 22,290  |    |  |   | 25,898  |    |
| Cashflows from investingactivities                                            |  |                       |    |    |  |   |    |    |
| Purchases ofproperty andequipment                                             |  |                       | (3,764  | )  |  |   | (2,784  | )  |
| Netcash used in investingactivities                                           |  |                       | (3,764  | )  |  |   | (2,784  | )  |
| Cashflows from financingactivities                                            |  |                       |    |    |  |   |    |    |
| Repayment of seniorterm loan                                                  |  |                       | (1,918  | )  |  |   | (4,000  | )  |
| Insurancepayments, net                                                        |  |                       | (3,521  | )  |  |   | (3,748  | )  |
| Membertaxdistributions                                                        |  |                       | (233    | )  |  |   | — |    |
| Deferredfinancingfees                                                         |  |                       | — |    |  |   | (123    | )  |
| Netcash used in financingactivities                                           |  |                       | (5,672  | )  |  |   | (7,871  | )  |
| Effectof foreign currency rates on cash and cashequivalents                   |  |                       | 2       |    |  |   | (22     | )  |
| Netchange in cash and cashequivalents                                         |  |                       | 12,856  |    |  |   | 15,221  |    |
| Cash andcash equivalents at beginning ofperiod                                |  |                       | 10,710  |    |  |   | 11,008  |    |
| Cashand cash equivalents at end ofperiod                                      |  | $                          | 23,566  |    |  | $      | 26,229  |    |
|                                                                               |

SeeAccompanying Notes

3

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

1.   Organization andBasis of Presentation

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’’).

On August  2,  2004, simultaneous with theacquisition of Barton 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, (v) Barton Protective Services LLC,which was formed in connection with the Barton Acquisition onAugust  2,  2004, (vi) SpectaGuard Acquisition LLC,(vii)  AlliedBarton Security Services LLC, (viii) AlliedBartonSecurity Services LP, and (ix) Allied Security Finance Corp.All significant intercompany transactions have been eliminated inconsolidation.

The Company operates under the names 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.

2.   Summaryof Significant Accounting Policies

Basis ofPresentation

The Company has prepared the accompanying unauditedconsolidated financial statements in accordance with U.S. generallyaccepted accounting principles for interim financial statements. Theconsolidated balance sheet as of March  31,  2006,consolidated statements of operations for the three months endedMarch  31,  2006 and 2005, and the consolidated statementsof cash flows for the three months ended March  31,  2006and 2005 are unaudited, but include all adjustments, consisting only ofnormal recurring adjustments, that we consider necessary for a fairpresentation of the financial position, operating results and cashflows for the periods presented. The consolidated balance sheet atDecember  31,  2005 has been derived from audited financialstatements.

Although we believe that the disclosures in thesefinancial statements are adequate to make the information presented notmisleading, certain information and footnote information normallyincluded in financial statements prepared in accordance with U.S.generally accepted accounting principles have been omitted pursuant tothe rules and regulations of the Securities and Exchange Commission(‘‘SEC’’).

Results for any interimperiod are not necessarily indicative of results for any future interimperiod or for the entire year. The accompanying financial statementsshould be read in conjunction with the financial statements and notesthereto included in our Annual Report for the year endedDecember  31,  2005 filed with the SEC on Form 10-K onMarch  31,  2006.

4

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

Cash and Cash Equivalents

Cash andcash equivalents include cash on hand and investments with originalmaturities of three months or less.

Restricted Cash

Restricted cash includes balances on deposit with theCompany’s insurance carrier to pay workers’ compensationclaims.

Accounts Receivable

The Company's customersare located throughout the United States. The Company grants credit toits customers 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.

Property andEquipment

Property and equipment are recorded at cost. Leaseholdimprovements are amortized over the respective lives of the leases orthe service lives of the improvements, whichever is shorter.Depreciation of property and equipment is computed using thestraight-line method over the estimated useful lives of the assets. Theuseful lives are as follows: leasehold improvements – up to 10years; uniforms – 3 years; computer equipment – 1 to 5years; office furniture, fixtures and equipment – 5years.

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 are amortized over their useful lives.

SFAS No.142 requires a two-step impairment test for goodwill. The first step isto compare the carrying amount of the reporting unit's assets tothe fair value of the reporting unit. If the fair value exceeds thecarrying value, no further work is required and no impairment loss isrecognized. If the carrying amount exceeds the fair value then thesecond step is required to be completed, which involves allocating thefair value of the reporting unit to each asset and liability, with theexcess being implied goodwill. An impairment loss occurs if the amountof the recorded goodwill exceeds the implied goodwill. Thedetermination of the fair value of our reporting unit is based, amongother things, on estimates of future operating performance of thereporting unit being valued. We are required to complete an impairmenttest for goodwill and record any resulting impairment losses annually.Changes in market conditions, among other factors, may have an impacton these estimates.

Customer lists are amortized using thestraight line method over six years. We perform periodic analyses andadjust through accelerated amortization any impairment of customerlists. None of the currently held customer lists have requiredaccelerated amortization adjustments to date. Covenants not-to-competeare amortized using the straight-line method over five years.

5

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

Long-Lived Assets

The Company hasadopted Statement of 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.

Use of Estimates

The preparation ofconsolidated 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.

Statement of Cash Flows

The following noncashtransactions have been excluded from the consolidated statement of cashflows for the three months ended March  31,  2006 andMarch  31,  2005 (inthousands):

|                                                                    |  |                            |         |         |  |   |         |         |  |  |
|--------------------------------------------------------------------|--|----------------------------|---------|---------|--|---|---------|---------|--|--|
|                                                               |  | Threemonths ended March31, |
|                                                               |  | 2006                       |         | 2005    |
| Mafcogoodwilladjustments                                           |  | $                          | (1,650  | )  |  | $ | — |    |
| Bartongoodwilladjustments                                          |  | $                          | — |    |  | $ | (1,294  | )  |
| Increasein redemption amount of Class A Units subject to putrights |  | $                          | 399     |    |  | $ | — |    |
| Increase inredemption amount of Class B Units subject to putrights |  | $                          | 565     |    |  | $ | — |    |
|                                                                    |

Cashinterest paid during the three months ended March  31,2006 and March  31,  2005 was approximately $14,672,000 and$14,167,000, respectively.

6

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

3.   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 the carryingamount of goodwill for the three months ended March  31,2006 is as follows (inthousands):

|                                |  |        |         |         |  |  |
|--------------------------------|--|--------|---------|---------|--|--|
| Balanceas of December  31,2005 |  | $      | 345,567 |    |
| Mafco Acquisitionadjustments   |  |   | (1,650  | )  |
| Balanceas of March  31,2006    |  | $      | 343,917 |    |
|                                |

Grosscarrying amounts and accumulated amortization for intangible assets asof March  31,  2006 and December  31,  2005 areas follows (inthousands):

|                             |  |                     |         |                         |  |              |         |                 |  |        |         |         |  |        |         |         |  |  |
|-----------------------------|--|---------------------|---------|-------------------------|--|--------------|---------|-----------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                        |  | GrossCarryingAmount |         | AccumulatedAmortization |
|                        |  | March31,2006        |         | December 31,2005        |  | March31,2006 |         | December31,2005 |
| Amortized intangibleassets: |  |                |    |                    |  |         |    |            |  |   |    |    |  |   |    |    |
| Customerlists               |  | $                   | 125,865 |                    |  | $            | 125,865 |            |  | $      | (53,764 | )  |  | $      | (48,519 | )  |
| Covenantsnot-to-compete     |  |                | 1,700   |                    |  |         | 1,700   |            |  |   | (765    | )  |  |   | (680    | )  |
| Total                       |  | $                   | 127,565 |                    |  | $            | 127,565 |            |  | $      | (54,529 | )  |  | $      | (49,199 | )  |
|                             |

Thevalue of the customer lists acquired is being amortized using thestraight-line method over six years. Covenants not-to-compete are beingamortized using the straight-line method over fiveyears.

Amortization expense for the three months endedMarch  31,  2006 and March  31,  2005 wasapproximately $5,330,000 and $5,329,000, respectively.

Estimatedannual aggregate amortization expense for the remainder of the currentyear and each of the remaining four years is as follows (inthousands):

|      |  |   |        |        |  |  |
|------|--|---|--------|--------|--|--|
| 2006 |  | $ | 15,987 |   |
| 2007 |  | $ | 21,317 |   |
| 2008 |  | $ | 21,317 |   |
| 2009 |  | $ | 10,356 |   |
| 2010 |  | $ | 4,059  |   |
|      |

4.   AccruedTermination Costs

On December  19,  2003, theCompany acquired all of the outstanding common shares of PSB (the‘‘PSB Acquisition’’). As a result of thePSB Acquisition, the Company adopted a formal plan (the‘‘PSB Plan’’) to terminate certain PSBemployees and exit duplicative PSB office facilities. The PSB Planincludes 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. The PSB Plan was complete as of December  31,2004, other than the payment of the remaining liability which totaled$175,000 at March  31,  2006. As of March  31,2006, $979,000 of payments have been made related to the PSBPlan.

7

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

On August  2,  2004, theCompany acquired all of the oustanding common shares of Barton (the‘‘Barton Acquisition’’). 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. In 2005, the Company revised itsestimate of certain lease termination and severance costs and reducedthe corresponding liability by $2,437,000. As of March31,  2006, approximately $2,557,000 of payments have been maderelated to the Barton Plan. The Barton Plan was complete as ofAugust  2005, other than the payment of the remaining liabilitywhich totals $1,141,000 as of March  31,  2006.

Thefollowing table shows the activity for the three months endedMarch  31,  2006 for the accrued termination costs for theabove acquisitions (inthousands):

|                                |  |        |       |           |  |        |     |         |  |        |       |         |  |  |
|--------------------------------|--|--------|-------|-----------|--|--------|-----|---------|--|--------|-------|---------|--|--|
|                           |  | Lease  |       | Severance |  | Total  |
| Balanceas of December  31,2005 |  | $      | 1,310 |      |  | $      | 270 |    |  | $      | 1,580 |    |
| Payments                       |  |   | (166  | )    |  |   | (98 | )  |  |   | (264  | )  |
| Balanceas of March  31,2006    |  | $      | 1,144 |      |  | $      | 172 |    |  | $      | 1,316 |    |
|                                |

5.   PriorAcquisition Indemnity Agreements

In connection with the PSBAcquisition, the Company deposited $3,000,000 into an escrow accountpursuant to the Indemnity Escrow Agreement entered intocontemporaneously with the PSB Acquisition among the Company, thencurrent shareholders of PSB and the escrow agent. The funds depositedby the Company into an escrow account in connection with the PSBAcquisition were disbursed to the former PSB shareholders in accordancewith the Indemnity Escrow Agreement on April  20,2006.

In connection with the Barton Acquisition, the Companydeposited $9,000,000 into an escrow account pursuant to the IndemnityEscrow Agreement entered into contemporaneously with the BartonAcquisition among the Company, then current shareholders of Barton andthe escrow agent. The funds will be remitted to the former Bartonshareholders in accordance with the Escrow Agreement, except for escrowfunds subject to outstanding claims for indemnification from thesellers.

6.   Deferred Financing Fees

Deferredfinancing fees are being amortized to interest expense using theeffective interest method over the term of their respective financingagreements in relation to the Notes and the Senior Term Loans, whichmature between June  2010 and July  2011 (see Note7).

Amortization of deferred financing fees for the three monthsended March  31,  2006 and March  31,  2005 wasapproximately $579,000 and $582,000,respectively.

8

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

The estimated annual aggregate amortizationexpense, which will be included as interest expense, for the remainderof the current year and the remaining five years is as follows (inthousands):

|      |  |   |       |        |  |  |
|------|--|---|-------|--------|--|--|
| 2006 |  | $ | 1,764 |   |
| 2007 |  | $ | 2,340 |   |
| 2008 |  | $ | 2,221 |   |
| 2009 |  | $ | 2,114 |   |
| 2010 |  | $ | 1,609 |   |
| 2011 |  | $ | 779   |   |
|      |

7.   Debt

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

|                                                                                                                                           |  |               |         |                  |  |        |         |         |  |  |
|-------------------------------------------------------------------------------------------------------------------------------------------|--|---------------|---------|------------------|--|--------|---------|---------|--|--|
|                                                                                                                                      |  | March31, 2006 |         | December 31,2005 |
| SeniorTerm Loan, variable rate interest (effective rate 8.28% atMarch  31,  2006 and December  31,  2005,respectively), due June  30,2010 |  | $             | 191,332 |             |  | $      | 193,250 |    |
| 11.375%Senior Subordinated Notes, due July  15,2011                                                                                       |  |          | 178,247 |             |  |   | 178,187 |    |
| 4.99%fixed rate insurance premium financing, due through May1,2006                                                                        |  |          | 2,348   |             |  |   | 5,869   |    |
|                                                                                                                                      |  |          | 371,927 |             |  |   | 377,306 |    |
| Lesscurrentmaturities                                                                                                                     |  |          | (13,598 | )           |  |   | (11,537 | )  |
|                                                                                                                                      |  | $             | 358,329 |             |  | $      | 365,769 |    |
|                                                                                                                                           |

Simultaneouswith the closing of the Barton Acquisition on August  2,2004, the Company entered into a senior secured credit facility (the‘‘Credit Facility’’) with Bear StearnsCorporate Lending Inc., as Administrative Agent, and a syndicate oflenders arranged by Bear, Stearns & Co. Inc. The Company executedan amendment to the Credit Facility on May  10,  2005(‘‘Amendment No. 1’’) modifying certain ofits terms. The Credit Facility initially provided for (i) a$210,000,000 six-year term loan facility (the ‘‘SeniorTerm Loan’’) and (ii) a $50,000,000 five-year revolvingloan (the ‘‘Revolver’’) with certainsub-limits for letters of credit and swingline loans. In addition, theCompany issued $180,000,000 in aggregate principal amount of seniorsubordinated notes (the ‘‘Notes’’), at adiscount of $2,118,600 and bearing interest of 11.375%, whichmature on July  15,  2011. The Company used initialborrowings under the Credit Facility, together with the net proceedsfrom the Notes, to finance the purchase price for Barton, to repayamounts outstanding under the previous credit facility, to redeem thethen outstanding senior subordinated notes and to pay related fees,expenses and redemption premiums.

9

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

The Credit Facility contains affirmativeand negative covenants including (i) the payment of all materialobligations; (ii) the maintenence of organizational existences,including, but not limited to, maintaining the Company’sproperty and insurance; (iii) compliance with all material contractualobligations and requirements of law; (iv) subject to customaryexceptions, limitations on the incurrence of indebtedness, which permitonly certain limited indebtedness; (v) subject to customary exceptions,limitations on creation and existence of liens; (vi) limitations oncertain fundamental changes to the Company’s corporate structureand nature 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 as of March  31,2006.

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 as of March  31,  2006.

The Revolveravailability is reduced by outstanding letters of credit, which totaled$24,899,000 as of March  31,  2006. For the Revolver, eacheurodollar rate loan bears interest at a rate per annum equal to theeurodollar 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 March  31,  2006, theoutstanding Revolver balance, excluding the outstanding letters ofcredit, was zero.

Based on the borrowing rates currentlyavailable for loans with similar terms and maturities, the  fairvalue of the long-term debt approximated its carrying value as ofMarch  31,  2006 and December  31,  2005,respectively.

The Credit Facility requires an excess cash flowcalculation commencing with the fiscal year ending December31,  2005. If such excess cash flow exists as defined in theCredit Facility, prepayment of the Senior Term Loans is required nolater than five days after the earlier of (i) the date on which thefinancial statements are required to be delivered to the lenders, and(ii) the date such financial statements are actually delivered. We madean excess cash flow prepayment of the Term Loans of approximately$668,000 on March  31,  2006.

In the ordinary courseof business, the Company enters into short-term financing agreements inorder to fund 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 intoanother 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 March  31,  2006, the remaining balanceof this agreement including accrued interest was$2,348,000.

10

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

Debt maturities for the remainder of thecurrent year and the remaining five years are as follows (inthousands):

|       |  |        |         |        |  |  |
|-------|--|--------|---------|--------|--|--|
| 2006  |  | $      | 6,098   |   |
| 2007  |  |   | 30,000  |   |
| 2008  |  |   | 30,000  |   |
| 2009  |  |   | 30,000  |   |
| 2010  |  |   | 97,582  |   |
| 2011  |  |   | 178,247 |   |
| Total |  | $      | 371,927 |   |
|       |

8.   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.

9.   Comprehensive Loss

Comprehensiveloss is defined as net loss and other changes in members’ equity(deficit) from transactions and other events from sources other thanmembers. A reconciliation of net loss to other comprehensive loss is asfollows (inthousands):

|                                        |  |                            |        |         |  |        |        |         |  |  |
|----------------------------------------|--|----------------------------|--------|---------|--|--------|--------|---------|--|--|
|                                   |  | Threemonths ended March31, |
|                                   |  | 2006                       |        | 2005    |
| Netloss                                |  | $                          | (4,293 | )  |  | $      | (4,990 | )  |
| Foreigncurrency translationadjustments |  |                       | 2      |    |  |   | (22    | )  |
| Comprehensiveloss                      |  | $                          | (4,291 | )  |  | $      | (5,012 | )  |
|                                        |

10.   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 for the three months endedMarch  31,  2006 and March  31,  2005 were$233,000 and $0, respectively. Taxable income may vary substantiallyfrom income or loss reported for financial statement purposes, dueprincipally to differences in depreciation andamortization.

11.    Employee Postretirement Plan

TheCompany sponsors a qualified 401(k) retirement plan that allowseligible employees to contribute a portion of their compensationthrough payroll deductions in accordance with specified guidelines. TheCompany matches a percentage of the employees’ contributions upto certain limits. Contributions related to this plan for the threemonths ended March  31,  2006 and March  31,2005 were approximately $198,000 and $170,000,respectively.

11

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

12.   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 Units subject toput rights) from Blackstone, and $50,000 (77,627 Class B Units of which46,097 are subject to put rights) from members of the Company'ssenior management. The Class A and Class B Units subject to put rightsfor both OCM, Blackstone and Mr.  Albert  Berger, theformer Chairman of the Company, are classified as temporary equity,outside of members’ equity. Members of senior management alsocontributed $37,000 for 110,000 unvested Class CUnits.

On May  2,  2003, 67,778 Class AUnits were issued for $10,000,000 to reduce the principal amountoutstanding under the previous senior term loan. Of these units, 1,562units were subject to put rights and had a fair value of$230,000.

On December  19,  2003, 50,834Class A Units were issued for $7,500,000 related to the PSBAcquisition. Of these units, 1,894 units were subject to put rights andhad a fair value of $279,000.

On December31,  2003, 7,500 unvested Class C Units were issued to anexecutive for approximately $2,000.

On December31,  2003, 13,083 Time-Based Class C Units and 13,083Performance-Based Class C Units vested.

On June1,  2004, 7,500 unvested Class C Units were issued to anexecutive for approximately $5,000, 3,750 of which were subsequentlyrepurchased from the employee as of December  31,2004.

On August  2,  2004, 7,500 Class CUnits were issued, of which 750 units were immediately vested, to anexecutive for approximately $5,000.

On August2,  2004, a direct subsidiary of Mafco acquired all of the sharesof Blackstone. As a result, the put rights associated with the 13,779Class A Units were canceled. The Class A Units formerly held byBlackstone are now held by Mafco’s indirect subsidiary,SpectaGuard Holding Two Corporation.

On October5,  2004, 2,250 unvested Performance-Based Class C Units wereforfeited and 2,250 Time-Based Class C Units vested due to anemployment termination.

On December  31,2004, 3,750 unvested Performance-Based Class C Units were forfeited dueto an employment termination.

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

12

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

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, 3,000unvested Performance-Based Class C Units were forfeited and 3,000Time-Based Class C Units vested due to an employmenttermination.

On December  6,  2005, 2,500 unvestedClass C Units were issued to an executive for approximately$1,667.

On December  31,  2005, 12,501 Time-BasedClass C Units vested, and 13,176 Performance-Based Class Units wereforfeited and canceled due to the Company not achieving its PerformanceGoals for fiscal 2005.

On January  18,  2006, 2,400unvested Performance-Based Class C Units and 2,700 Time-Based Class CUnits were forfeited due to an employment resignation.

OnMarch  9,  2006, 1,500 unvested Performance-Based Class CUnits and 1,500 Time-Based Class C Units were forfeited due to anemployment resignation.

On March  31,  2006, 7,500unvested Class C Units were issued to an executive for approximately$5,000.

The Operating Agreement includes put rights issued to OCMthat give OCM the option to cause the Company to purchase all of theClass A Units subject to put rights held by them at specified periodsof time, the earliest of which is 2007, at an estimated fair value atthe time the put right is exercised. The Company recorded estimatedincreases in the redemption amount of such Class A Units subject to putrights as a reduction to members’ equity of $399,000 and$3,109,000 on March  31,  2006 and December31,  2005, respectively.

Pursuant to the OperatingAgreement, Mr.  Albert  Berger has the right to cause theCompany to purchase all, but not less than all, of his outstandingClass B Units during a 90 day period beginning on February19,  2006 in accordance with a specified calculation as definedin the Operating Agreement. The put right valued at $2,430,000 expiresat the end of the 90 day period. There were no new Class B Units issuedin 2005 or 2006. The Company recorded estimated increases in theredemption amount of such Class B Units subject to put rights as areduction to members’ equity of $565,000 and $2,430,000 onMarch  31,  2006 and December  31,  2005,respectively.

13.   Related Party Transactions

Inconnection with the Mafco acquisition, senior management of the Companycanceled their vested options in the Predecessor Company. TheCompany's majority member, SpectaGuard Holding Corporation, isobligated to return to members of senior management the amount ofdeferred payment totaling $16,251,000 including estimated taxes, inperiods ranging from three to five years from the agreement date. Thisamount has been recorded at its present value and is included on theaccompanying consolidated balance sheets in due to affiliates. OnFebruary  17,  2006, the Company made payments of$2,201,000 to members of senior management related to the deferredpayment which includes the $1,000,000 payment to Mr.  Bergerdiscussed below. 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.

13

----

AlliedSecurity Holdings LLC Notes to Consolidated FinancialStatements March  31,  2006(Unaudited)

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 paymentwas paid 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).

14.   Leases

The Company has commitments underoperating leases for certain equipment and facilities used in itsoperations. Total rental expense for the three months endedMarch  31,  2006 and March  31,  2005 wasapproximately $1,454,000 and $1,606,000,respectively.

14

----

|              |                                                                                            |
|--------------|--------------------------------------------------------------------------------------------|
| Item2.  | 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 Report on Form 10-Q.

Thisfollowing discussion contains certain statements of a forward-lookingnature that involve risks and uncertainties. As a result of manyfactors, including those set forth under the section entitled‘‘Risk Factors’’ in our filings with theSEC, actual results may differ materially from those anticipated bysuch forward-looking statements. See ‘‘StatementRegarding 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  31,  2006, we employed approximately 38,100 securityofficers and toll collectors. As of March  31,  2006, 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. Our standard customer contract is aone-year contract that can be terminated by either our customer or uson 30 days' notice at any time. Many of our larger contracts aremulti-year, 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 60% for the 12 months ended March31,  2006, which compares favorably to our industry. This allowsus to respond to our targeted customers who demand high-qualitysecurity officer 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 rate increases.

Our payrolltax expenses historically are higher in the first half of the year dueto a significant number of employees reaching their taxable wage limitsprior to the second half of the year. This seasonality, relating topayroll taxes, consistently results in higher cost of revenues in thefirst half of the year.

15

----

The Barton Acquisition

OnMay  12,  2004, SpectaGuard, BPS LLC, a newly formedDelaware limited liability company and wholly-owned subsidiary ofSpectaGuard, 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 swingline 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 previous senior secured credit facility,to redeem the then outstanding previous senior subordinated notes andto pay related fees, expenses and redemption premiums. We drew down thefull amount of the Senior Term Loan and none of the Revolver inconnection with the Transactions.

On May  10,  2005,we executed an amendment (‘‘Amendment No.1’’) to the Credit Facility. Amendment No. 1 contains thefollowing terms and provisions, among others: (i) for the Senior TermLoan, the interest rate applicable to eurodollar rate loans wasdecreased from LIBOR plus 4.25% to LIBOR plus 3.75% (witha step down to LIBOR plus 3.50% when the Company’sleverage ratio is below 3.5x); (ii) the basket for permittedacquisitions was increased from $30.0  million to $60.0million; (iii) cash expenditures for permitted acquisitions was addedas a deduction to the calculation of ‘‘excess cashflow’’; (iv) mandatory principal repayment of the SeniorTerm Loan was decreased for fiscal years 2005 and 2006; and (v) thesublimit for letter of credit availability under the Revolver wasincreased from $40.0  million to $50.0  million.

Basis of Presentation and Critical AccountingPolicies

    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.

16

----

    Cost ofRevenues

The direct cost of revenues is primarily comprised ofdirect 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 covenantsnot-to-compete.

    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.

Accounts Receivable Reserve.    Ourcustomers are located throughout the United States. We grant credit toour customers and generally do not require collateral. We maintain anallowance for doubtful accounts which management believes to besufficient to cover potential credit losses and estimated billingadjustments. Management reviews the components of their accountsreceivable balance on a monthly basis and performs additional detailreview on a quarterly basis. This process includes an analysis ofspecific reserves based upon known credit collection issues andpotential reserve adjustments.

17

----

Insurance Reserves.    Wemaintain insurance coverage, subject to certain self insuredretentions, for workers compensation, medical claims and generalliability. Reserves have been provided for certain of these claimsbased upon insurance coverages and management's judgment.Management reviews these estimates on a quarterly basis based uponcurrently available information and adjusts the reserves accordingly.In the opinion of management, we believe our insurance reserves aresufficient 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.

Customer lists are amortized using the straight line method over sixyears. We perform periodic analyses and adjust through acceleratedamortization any impairment of customer lists. None of the acquiredcustomer lists have required accelerated amortization todate.

Results of Operations

Three months endedMarch  31,  2006 compared to three months endedMarch  31,2005

Revenues.    Revenues increased by$10.3  million, or 3.8%, to $284.5  million for thethree months ended March  31,  2006 from $274.2million for the three months ended March  31,  2005. Thisincrease is primarily attributable to increased new business starts andrate increases.

Cost of Revenues.    Cost ofrevenues increased by $8.3  million, or 3.5%, to$245.4  million for the three months ended March31,  2006 from $237.1  million for the three months endedMarch  31,  2005. The increase was mainly due to the costassociated with increased revenues. Cost of revenues as a percentage ofrevenues decreased to 86.3% for the three months endedMarch  31,  2006 from 86.5% for for the three monthsended March  31,  2005. The decrease was due mainly tolower business insurance costs partially offset by increased laborcosts.

Branch and Corporate OverheadExpenses.    Branch and corporate overhead expenses increasedby    $0.4 million, or 1.7%, to $24.3  million for thethree months ended March  31,  2006 from $23.9million for the three months ended March  31,  2005. As apercentage of revenues, branch and corporate overhead expensesdecreased to 8.5% for the three months ended March31,  2006 from 8.7% for the three months endedMarch  31,  2005. This decrease is primarily the result ofthe achievement of planned cost savings related to the integration ofthe Barton Acquisition as well as a decrease in incentive-relatedcompensation partially offset by an increase in professional fees.

Depreciation and Amortization.    Depreciation andamortization increased by $0.4  million to $8.7  millionfor the three months ended March  31,  2006 from$8.3  million for the three months ended March  31,2005. This increase is primarily the result of increased uniformbalance as a result of higher purchases.

OperatingIncome.    Operating income increased by $1.1  million,or 22.4%, to $6.0  million for the three months endedMarch  31,  2006 from $4.9  million for the threemonths ended March  31,  2005. This increase was primarilyrelated to the items discussed above.

18

----

Interest Expense,Net.    Interest expense, net increased $0.5  million,or 5.1%, to $10.3  million for the three months endedMarch  31,  2006 from $9.8  million for the threemonths ended March  31,  2005. The increase was due tohigher interest rates which were partially offset by lower outstandingdebt balances.

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). In lieu ofpaying income taxes, we pay distributions to our members with respectto income tax that they owe on earnings that are allocated to them inaccordance with our Operating Agreement. Tax-related distributions paidfor the three months ended March  31,  2006 andMarch  31,  2005, were $0.2  million and $0,respectively.

Net Loss.    Net loss for the threemonths ended March  31,  2006 was $4.3  millioncompared from a net loss of $5.0  million for the month endedMarch  31,  2005, as a result of the items describedabove.

Supplemental Non – GAAP financialinformation

EBITDA is defined as net income (loss) 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 under U.S. generally acceptedaccounting principles (‘‘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 thebusinesses 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 reconciles net loss, asreported in the Company’s consolidated statements of operations,to EBITDA (inthousands):

|                                      |  |                   |        |              |  |        |        |         |  |  |
|--------------------------------------|--|-------------------|--------|--------------|--|--------|--------|---------|--|--|
|                                 |  | Threemonths ended |
|                                 |  | March31, 2006     |        | March31,2005 |
|                                 |  | (Unaudited)       |
| Reconciliationof Net loss to EBITDA: |  |              |   |         |  |   |   |    |
| Netloss                              |  | $                 | (4,293 | )       |  | $      | (4,990 | )  |
| Interestexpense, net                 |  |              | 10,315 |         |  |   | 9,845  |    |
| Depreciation andamortization         |  |              | 8,711  |         |  |   | 8,344  |    |
| EBITDA(a)                            |  | $                 | 14,733 |         |  | $      | 13,199 |    |
|                                      |

|  |
|--|
|  |  |
|  |

|           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)  | Resultsfor any interim period are not necessarily indicative of results forany future interim period or for the entire year. See also certainfactors set forth under ‘‘Forward LookingStatements’’ and additional factors set forth under thesection entitled ‘‘Risk Factors’’ in theCompany’s Annual Report on Form 10-K for the year endedDecember  31, 2005. Our payroll tax expenses historicallyare higher in the first half of the year due to a significant number ofemployees reaching their taxable wage limits prior to the second halfof the year. This seasonality, relating to payroll taxes, consistentlyresults in higher cost of revenues in the first half of theyear. |

19

----

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 the three months endedMarch  31,  2006 and March  31,  2005 was$22.3  million and $25.9  million, respectively. For thethree months ended March  31,  2006 and March31,  2005, cash provided by operating activities was generatedprimarily from operating income of $6.0  million and $4.9million, respectively, as well as favorable working capital changes,primarily in the form of accounts receivable for the three months endedMarch  31,  2006 and accrued payroll for the three monthsended March  31,  2005.

Cash used in investingactivities for the three months ended March  31,  2006 andMarch  31,  2005 was $3.8  million and $2.8million, respectively. Investing activities have historically consistedof purchases of property and equipment, primarily uniforms. For thethree months ended March  31,  2006 and 2005, we paid$3.8  million and $2.8  million for purchases of propertyand equipment, respectively. We expect $18.9  million of capitalexpenditures in 2006.

Financing activities have primarilyconsisted of borrowings and repayments on long-term debt associatedwith acquisitions of businesses. Cash used in financing activities forthe three months ended March  31,  2006 and March31,  2005 were $5.7  million and $7.9  million,respectively primarily related to insurance financing payments andscheduled repayment of term loan principal.

As of March31,  2006, we had approximately $371.9  million ofindebtedness, which includes the Notes, amounts outstanding under ourCredit Facility and insurance premium financing. In addition, as ofMarch  31,  2006, we had $25.1  million of unusedborrowing capacity under our Credit Facility, net of the issuance of$24.9  million of outstanding letters of credit.

In lieu ofpaying income taxes, we pay distributions to our members with respectto income tax that they owe on earnings that are allocated to them inaccordance with our operating agreement. Member tax distributions paidfor the three months ended March  31,  2006 andMarch  31,  2005 were approximately $0.2  million and$0, respectively.

Description ofIndebtedness

Simultaneous with the closing of the BartonAcquisition on August  2,  2004, the Company entered into asenior 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 swingline 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.

20

----

The Credit Facility contains affirmativeand negative covenants including (i) the payment of all materialobligations; (ii) the maintenence of organizational existences,including, but not limited to, maintaining the Company’sproperty and insurance; (iii) compliance with all material contractualobligations and requirements of law; (iv) subject to customaryexceptions, limitations on the incurrence of indebtedness, which permitonly certain limited indebtedness; (v) subject to customary exceptions,limitations on creation and existence of liens; (vi) limitations oncertain fundamental changes to the Company’s corporate structureand nature 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 Credit Facilitycontains financial covenants requiring the Company to maintain as atthe last day of any period of four consecutive fiscal quarters: (i) amaximum senior consolidated debt ratio; (ii) a maximum totalconsolidated leverage ratio; (iii) a minimum consolidated interestcoverage ratio; and (iv) a maximum capital expenditure limit. TheCredit Facility contains customary events of default.

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 ceasedall operations as of July  2005 and held less than one percent ofthe Company’s consolidated assets as of March  31,2006.

The Revolver availability is reduced by outstandingletters of credit, which totaled $24,899,000 as of March31,  2006. For the Revolver, each eurodollar rate loan bearsinterest at a rate per annum equal to the eurodollar rate for such dayplus 4.50%. Each base rate loan bears interest at a rate perannum equal to the base rate plus 3.50%. Amounts outstanding onthe Revolver are due on August  2,  2009. As ofMarch  31,  2006, the outstanding Revolver balance,excluding the outstanding letters of credit, was zero.

Based onthe borrowing rates currently available for loans with similar termsand maturities, the fair value of the long-term debt approximated itscarrying value at March  31,  2006 and December31,  2005, respectively.

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 Senior Term Loans isrequired no later than five days after the earlier of (i) the date onwhich the financial statements are required to be delivered to thelenders, and (ii) the date such financial statements are actuallydelivered. We made an excess cash flow prepayment of the Term Loans ofapproximately $668,000 on March  31,  2006.

In theordinary course of business, the Company enters into short-termfinancing agreements in order to fund its business insurance policypremiums. On August  13,  2004, the Company entered intosuch a financing agreement with Cananwill, Inc. for a total amount of$11,242,000. Payments were due in equal monthly installments throughMay  1,  2005 and bore an annual interest rate of2.99%. As of May  1,  2005, this financingagreement, including accrued interest, was repaid in full. OnAugust  15,  2005, the Company entered into such afinancing 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 March  31,  2006, the remaining balanceof this agreement including accrued interest was$2,348,000.

21

----

Based upon our current level ofoperations, we believe that our existing cash and cash equivalentsbalances and our cash from operating activities, together withavailable borrowings under our Credit Facility, will be adequate tomeet our anticipated requirements for working capital, capitalexpenditures, commitments and interest payments for the foreseeablefuture. As of March  31,  2006, we do not have any materialcommitments related to capital expenditures. 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. For additional factors that may affect theCompany’s liquidity position, please see the factors set forthin the section entitled ‘‘Risk Factors’’ inthe Company’s Annual Report on Form 10-K for the year endedDecember  31,  2005.

Off-Balance SheetArrangements

We are not currently a party to any off-balancesheet arrangements.

|               |                                                            |
|---------------|------------------------------------------------------------|
| Item 3.  | Quantitativeand Qualitative Disclosures about Market Risk. |

We areexposed to interest rate risk related to changes in interest rates forborrowings under our Senior Term Loan and Revolver. These borrowingsbear interest at variable rates. At March  31,  2006, ahypothetical 10% increase in interest rates applicable to ourCredit Facility would have increased our annual interest expense byapproximately $1.6  million and would have decreased our annualcash flow from operations by approximately $1.0  million.

Item 7A of our Annual Report on Form 10-K for the year endedDecember  31,  2005 presents quantitative and qualitativedisclosures about market risk as of December  31,  2005.There have been no material changes to this disclosure as ofMarch  31,  2006.

|              |                          |
|--------------|--------------------------|
| Item4.  | 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 three months ended March31,  2006 that have materially affected, or are reasonably likelyto materially affect, our internal control over financialreporting.

22

----

Forward-Looking Statements

ThisQuarterly Report for the period ended March  31,  2006, 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, could cause our actual results to differ materially from thoseexpressed in any forward-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 on terms whichare favorable to the Company; |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | TheCompany's exposure to liability, particularly to the extent notcovered by insurance and/or where state law prohibits insurancecoverage, for certain damages arising from services it provides to itscustomers, including by reason of the acts or omissions of theCompany's agents or employees or with respect to events that arenot within the control of such agents or employees, and theCompany's indemnification obligations under certain servicecontracts for events occurring on clientpremises; |

|              |                                                                                                                                                                                                                                                              |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company's inability topass cost increases to customers in light of the price-sensitive natureof the contract security officer industry and the fixed hourly billrates or limited fee adjustments provided for in many of theCompany's customercontracts; |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Competitive pressures resultingfrom (i) new or existing security service providers, some of which havegreater resources than the Company and/or are willing to providesecurity services at lower prices, (ii) increasing consolidation in thecontract security officer industry, (iii) local and regional companiesthat may be better able to secure and retain customers in theirregions, and (iv) decreasing expenditures of client resources onquality security services; |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | TheCompany's ability to (i) attract, retain, train and managesecurity officers and administrative staff (and the costs associatedtherewith) in light of the significant number of officers the Companyrequires to operate its business and increasing demand and competitionfor such persons, and (ii) attract and retain senior operationsemployees and key executives and the potential loss of businessresulting from the departure of key employees; |

23

----

|              |                                                            |
|--------------|------------------------------------------------------------|
| •  | The effects ofwork stoppages and other labor disturbances; |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company's failure or inability tocomply with city, county, state or federal laws and regulations,including security industry-related laws and regulations andoccupational health and safety laws and regulations and, in each case,the costs associated with such compliance, as well as the costs ofcomplying with new laws and regulations, changes in existing laws andregulations or the manner in which existing laws and regulations areinterpreted; |

|              |                                                                                                                                                                               |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The risk that non-compliancewith state security licensing regulations could result in the Companybeing prohibited 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 level ofindebtedness, the restrictions or obligations imposed on the Company bythe 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 Item 7 under the heading‘‘—Basis of Presentation and Critical AccountingPolicies’’ included in our Annual Report on Form 10-K forthe year ended December  31,  2005 which we have filed withthe SEC, as such discussions may also be modified or supplemented bysubsequent reports that we file with the SEC. Forward-lookingstatements speak only as of the date they are made, and except for ourongoing obligations under the U.S. federal securities laws, weundertake no obligation to publicly update any forward-lookingstatements, whether as a result of new information, future events orotherwise.

24

----

PART II.    OTHERINFORMATION

|               |                    |
|---------------|--------------------|
| Item 1.  | Legal Proceedings. |

We may be held liable for the negligent acts or misconductof our agents or employees performed while on duty and in the courseand scope of their employment. We experience a significant volume ofclaims and litigation in the ordinary course of business asserting thatwe are liable for damages as a result of the conduct of our employeesor others. 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.

Item1A.    Risk Factors.

There were no material changesto the Company’s risk factors that were disclosed in the annualreport for the year ended December  31,  2005.

|              |                                                             |
|--------------|-------------------------------------------------------------|
| Item2.  | Unregistered Sales of Equity Securities andUse of Proceeds. |

None.

Item 5.    OtherInformation.

None.

Item6.    Exhibits.

|            |  |                                                                                                                                                                                                            |  |  |  |  |
|------------|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description of Exhibit                                                                                                                                                                                     |
| 31.1       |  | Certification ofChief Executive Officer of Allied Security Holdings LLC pursuant toRule 13a-14(a)/15d-14(a) of the Securities Exchange Act of1934                                                          |
| 31.2       |  | Certification of Chief FinancialOfficer of Allied Security Holdings LLC pursuant to Rule13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934                                                         |
| 32.1       |  | Certifications of Chief Executive Officer andChief Financial Officer of Allied Security Holdings LLC pursuant to 18U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of2002 |
|            |

25

----

SIGNATURES

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. |  | President, Chief Executive Officer, Chairman ofthe Board of Managers (Principal Executive Officer) |  | May15, 2006  |
|                             |
| William C. Whitmore,Jr.     |
|                             |
| /s/ William A.Torzolini     |  | SeniorVice President and Chief Financial Officer (Principal FinancialOfficer)                      |  | May 15, 2006 |
|                             |
| William A. Torzolini        |
|                             |
| /s/ FrankJ. Conforti        |  | CorporateController (Principal Accounting Officer)                                                 |  | May 15,2006  |
|                             |
| Frank J. Conforti           |
|                             |

26

----