UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM10-Q

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|   | QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE     SECURITIES EXCHANGEACT OF 1934 |

For the quarterly period ended June30, 2005

OR

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|   | TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE     SECURITIES EXCHANGE ACT OF1934 |

For the transition period from__________ to __________

Commission file number 333-119127

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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

NotApplicable

Former name, former address and formerfiscal year, if changed since last report.

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

Yes               No   

Indicate by check mark whether the Registrant is anaccelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes               No   

Indicate the number of shares outstanding of each of theissuer's classes of common stock, as of the latest practicabledate.

As of June 30, 2005, there were 1,106,362 vestedand unvested Class A, Class B and Class C unitsoutstanding.

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ALLIED SECURITY HOLDINGSLLC

TABLE OFCONTENTS

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|---------|--|----------------------------------------------------------------------------------------------------------|--|--------|--|--|--|--|--|--|
|    |  |                                                                                                     |  | PAGE   |
| PARTI   |  | FINANCIALINFORMATION                                                                                     |  |   |
| Item1.  |  | Financial Statements                                                                                     |  | 3      |
|    |  | ConsolidatedBalance Sheets at June 30, 2005 (Unaudited) and December 31,2004                             |  | 3      |
|    |  | ConsolidatedStatements of Operations for the Three and Six Months ended June 30,2005 and 2004(Unaudited) |  | 4      |
|    |  | ConsolidatedStatements of Cash Flows for the Six Months ended June 30, 2005 and2004 (Unaudited)          |  | 5      |
|    |  | Notes toConsolidated Financial Statements(Unaudited)                                                     |  | 6      |
|    |  |                                                                                                     |  |   |
| Item2.  |  | Management'sDiscussion and Analysis of Financial Condition and Results ofOperations                      |  | 19     |
| Item 3. |  | Quantitativeand Qualitative Disclosures About MarketRisk                                                 |  | 29     |
| Item 4. |  | Controls andProcedures                                                                                   |  | 29     |
|    |  |                                                                                                     |  |   |
| PARTII  |  | OTHER INFORMATION                                                                                        |  |   |
| Item1.  |  | Legal Proceedings                                                                                        |  | 32     |
| Item2.  |  | Unregistered Sales of Equity Securities and Use ofProceeds                                               |  | 32     |
| Item 3. |  | Defaults UponSenior Securities                                                                           |  | 32     |
| Item4.  |  | Submission of Matters to a Vote of UnitHolders                                                           |  | 32     |
| Item 5. |  | OtherInformation                                                                                         |  | 32     |
| Item6.  |  | Exhibits                                                                                                 |  | 33     |
|    |  |                                                                                                     |  |   |
|    |  | SIGNATURES                                                                                               |  | 34     |
|    |  |                                                                                                     |  |   |
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2

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PART I: FINANCIALINFORMATION Item 1: Financial Statements

Allied SecurityHoldings LLC Consolidated Balance Sheets(Dollars inthousands, except unitdata)

|                                                                                                                                           |  |              |         |                  |  |        |         |         |  |  |
|-------------------------------------------------------------------------------------------------------------------------------------------|--|--------------|---------|------------------|--|--------|---------|---------|--|--|
|                                                                                                                                      |  | June30, 2005 |         | December 31,2004 |
|                                                                                                                                      |  | (Unaudited)  |         |             |
| **Assets**                                                                                                                                |  |
| Currentassets:                                                                                                                            |  |
| Cash and cashequivalents                                                                                                                  |  | $            | 31,374  |             |  | $      | 11,008  |    |
| Restrictedcash                                                                                                                            |  |         | 4,382   |             |  |   | 7,951   |    |
| Accountsreceivable, net of allowance for doubtful accounts of $1,970 and $1,393as of June 30, 2005, and December 31, 2004,respectively    |  |         | 118,295 |             |  |   | 129,729 |    |
| Prepaidexpenses and other currentassets                                                                                                   |  |         | 3,042   |             |  |   | 3,797   |    |
| Prepaid insurancepremium                                                                                                                  |  |         | 1,029   |             |  |   | 7,206   |    |
| Totalcurrentassets                                                                                                                        |  |         | 158,122 |             |  |   | 159,691 |    |
|                                                                                                                                      |  |         |    |             |  |   |    |    |
| Propertyand equipment,net                                                                                                                 |  |         | 21,157  |             |  |   | 20,838  |    |
| Goodwill                                                                                                                                  |  |         | 347,365 |             |  |   | 347,766 |    |
| Otherintangible assets,net                                                                                                                |  |         | 89,024  |             |  |   | 99,683  |    |
| Deferred financingfees, net                                                                                                               |  |         | 12,608  |             |  |   | 12,897  |    |
| Otherassets                                                                                                                               |  |         | 402     |             |  |   | 489     |    |
| Totalassets                                                                                                                               |  | $            | 628,678 |             |  | $      | 641,364 |    |
| **Liabilitiesand members' equity**                                                                                                        |  |
| Currentliabilities:                                                                                                                       |  |
| Currentmaturities of long-termdebt                                                                                                        |  | $            | 5,000   |             |  | $      | 16,000  |    |
| Insurancefinancing                                                                                                                        |  |         | — |             |  |   | 6,246   |    |
| Accountspayable                                                                                                                           |  |         | 5,030   |             |  |   | 4,046   |    |
| Accruedexpenses                                                                                                                           |  |         | 23,069  |             |  |   | 26,353  |    |
| Interestpayable                                                                                                                           |  |         | 9,384   |             |  |   | 9,438   |    |
| Accrued claimsreserves                                                                                                                    |  |         | 27,667  |             |  |   | 25,511  |    |
| Accruedpayroll and related payrolltaxes                                                                                                   |  |         | 48,698  |             |  |   | 40,227  |    |
| Accruedterminationcosts                                                                                                                   |  |         | 2,781   |             |  |   | 6,110   |    |
| Advancepayments                                                                                                                           |  |         | 12,536  |             |  |   | 13,460  |    |
| Due toaffiliates                                                                                                                          |  |         | 9,484   |             |  |   | — |    |
| Totalcurrentliabilities                                                                                                                   |  |         | 143,649 |             |  |   | 147,391 |    |
|                                                                                                                                      |  |         |    |             |  |   |    |    |
| Seniorterm loan                                                                                                                           |  |         | 195,750 |             |  |   | 190,000 |    |
| Seniorsubordinatednotes                                                                                                                   |  |         | 178,073 |             |  |   | 177,966 |    |
| Due toaffiliates                                                                                                                          |  |         | 4,479   |             |  |   | 13,323  |    |
| Otherlong-termliability                                                                                                                   |  |         | 1,351   |             |  |   | 1,473   |    |
| Class A unitssubject to put rights: 22,317 units authorized, issued andoutstanding                                                        |  |         | 2,710   |             |  |   | 2,710   |    |
| Members'equity:                                                                                                                           |  |
| Units:                                                                                                                                    |  |
| ClassA, 9,500,000 units authorized, 868,668 units issued andoutstanding                                                                   |  |         | 131,618 |             |  |   | 131,618 |    |
| Class B,200,000 units authorized, 77,627 units issued andoutstanding                                                                      |  |         | 50      |             |  |   | 50      |    |
| Class C, 300,000units authorized, 137,750 units and 122,750 issued and outstanding asof June 30, 2005, and December 31, 2004,respectively |  |         | 54      |             |  |   | 44      |    |
| Additionalpaid-in capital                                                                                                                 |  |         | 393     |             |  |   | 393     |    |
| Accumulateddeficit                                                                                                                        |  |         | (29,428 | )           |  |   | (23,641 | )  |
| Accumulatedother comprehensiveincome                                                                                                      |  |         | (21     | )           |  |   | 37      |    |
| Totalmembers'equity                                                                                                                       |  |         | 102,666 |             |  |   | 108,501 |    |
| Totalliabilities and members'equity                                                                                                       |  | $            | 628,678 |             |  | $      | 641,364 |    |
|                                                                                                                                           |

SeeAccompanying Notes to Unaudited Consolidated FinancialStatements

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Allied Security Holdings LLCConsolidated Statements of Operations(Dollars inthousands)(Unaudited)

|                                      |  |                   |         |                 |  |             |         |             |  |        |         |         |  |        |         |         |  |  |
|--------------------------------------|--|-------------------|---------|-----------------|--|-------------|---------|-------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                 |  | Threemonths ended |         | Six monthsended |
|                                 |  | June30,2005       |         | June 30,2004    |  | June30,2005 |         | June30,2004 |
| Revenues                             |  | $                 | 276,412 |            |  | $           | 176,241 |        |  | $      | 550,595 |    |  | $      | 347,264 |    |
| Costofrevenues                       |  |              | 235,109 |            |  |        | 148,508 |        |  |   | 472,175 |    |  |   | 295,108 |    |
|                                 |  |              | 41,303  |            |  |        | 27,733  |        |  |   | 78,420  |    |  |   | 52,156  |    |
|                                 |  |              |    |            |  |        |    |        |  |   |    |    |  |   |    |    |
| Branchand corporate overheadexpenses |  |              | 23,794  |            |  |        | 16,241  |        |  |   | 47,712  |    |  |   | 32,673  |    |
| Depreciationandamortization          |  |              | 8,436   |            |  |        | 5,385   |        |  |   | 16,780  |    |  |   | 10,557  |    |
| Operatingincome                      |  |              | 9,073   |            |  |        | 6,107   |        |  |   | 13,928  |    |  |   | 8,926   |    |
|                                 |  |              |    |            |  |        |    |        |  |   |    |    |  |   |    |    |
| Interestexpense,net                  |  |              | 9,870   |            |  |        | 5,806   |        |  |   | 19,715  |    |  |   | 11,628  |    |
| Netincome(loss)                      |  | $                 | (797    | )          |  | $           | 301     |        |  | $      | (5,787  | )  |  | $      | (2,702  | )  |
|                                      |

SeeAccompanying Notes to Unaudited Consolidated FinancialStatements

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Allied Security Holdings LLCConsolidated Statement of Cash Flows(Dollars inthousands)(Unaudited)

|                                                                                 |  |                 |         |             |  |        |         |         |  |  |
|---------------------------------------------------------------------------------|--|-----------------|---------|-------------|--|--------|---------|---------|--|--|
|                                                                            |  | Sixmonths ended |
|                                                                            |  | June30,2005     |         | June30,2004 |
| **Cash flows from operatingactivities**                                         |  |
| Netloss                                                                         |  | $               | (5,787  | )      |  | $      | (2,702  | )  |
| Adjustmentsto reconcile net loss to net cash provided by operatingactivities:   |  |            |    |        |  |   |    |    |
| Depreciationandamortization                                                     |  |            | 16,780  |        |  |   | 10,557  |    |
| Noncashinterestexpense                                                          |  |            | 1,953   |        |  |   | 2,750   |    |
| Changesin assets and liabilities (net of impact of acquiredbusinesses):         |  |            |    |        |  |   |    |    |
| Accounts receivable,net                                                         |  |            | 11,434  |        |  |   | (3,354  | )  |
| Other currentassets and liabilities,net                                         |  |            | 20,078  |        |  |   | 8,362   |    |
| Accounts payableand accruedexpenses                                             |  |            | (4,220  | )      |  |   | (369    | )  |
| Advancepayments                                                                 |  |            | (924    | )      |  |   | 4,072   |    |
| Non-competepayments                                                             |  |            | (200    | )      |  |   | (200    | )  |
| Other                                                                           |  |            | 44      |        |  |   | — |    |
|     Netcash provided by operatingactivities                 |  |            | 39,158  |        |  |   | 19,116  |    |
|                                                                            |  |            |    |        |  |   |    |    |
| **Cashflows from investing activities**                                         |  |
| Purchases ofproperty andequipment                                               |  |            | (6,483  | )      |  |   | (4,237  | )  |
| Considerationreceived (paid) for acquisition of businesses, net of cashacquired |  |            | 120     |        |  |   | (13,530 | )  |
| Netcash used in investingactivities                                             |  |            | (6,363  | )      |  |   | (17,767 | )  |
|                                                                            |  |            |    |        |  |   |    |    |
| **Cashflows from financing activities**                                         |  |
| Repayment ofterm loan                                                           |  |            | (5,250  | )      |  |   | (3,558  | )  |
| Proceedsfrom issuance ofdebt                                                    |  |            | — |        |  |   | 7,500   |    |
| Contributedcapital                                                              |  |            | 5       |        |  |   | — |    |
| Insurancefinancingpayments                                                      |  |            | (6,246  | )      |  |   | (3,303  | )  |
| Financingfees                                                                   |  |            | (880    | )      |  |   | (235    | )  |
| Netcash (used in)/provided by financingactivities                               |  |            | (12,371 | )      |  |   | 404     |    |
|                                                                            |  |            |    |        |  |   |    |    |
| Effectof foreign currency rates on cash and cashequivalents                     |  |            | (58     | )      |  |   | — |    |
|                                                                            |  |            |    |        |  |   |    |    |
| Netchange in cash and cashequivalents                                           |  |            | 20,366  |        |  |   | 1,753   |    |
| Cash andcash equivalents at beginning ofperiod                                  |  |            | 11,008  |        |  |   | 8,102   |    |
| Cashand cash equivalents at end ofperiod                                        |  | $               | 31,374  |        |  | $      | 9,855   |    |
|                                                                                 |

SeeAccompanying Notes to Unaudited Consolidated FinancialStatements

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

1.    Organization and Basis of Presentation

SpectaGuardAcquisition LLC ("SpectaGuard"), awholly-owned subsidiary of Allied Security Holdings LLC (together withits subsidiaries, the "Company"), was formedon February 19, 2003, as a result of the purchase transaction by andamong MacAndrews & Forbes Holdings Inc., formerly known as MafcoHoldings Inc. ("Mafco"), and certain of itsrelated parties, as well as management of SpectaGuard'spredecessor. As a result of this transaction, Mafco has a controllinginterest in the Company. Prior to this transaction, the Company alsooperated under the name SpectaGuard Acquisition("Predecessor Company"). These financialstatements include the results of operations since the Mafcoacquisition of SpectaGuard and reflect all purchase accountingadjustments required as of that date.

On August 2, 2004,simultaneous with the acquisition of Barton Protective ServicesIncorporated ("Barton"), the members ofSpectaGuard became the members of the Company through the contributionof their Class A, Class B, and Class C units, as applicable, ofSpectaGuard in exchange for an identical number of Class A, Class B andClass C units, as applicable, of the Company. Allied Security HoldingsLLC has no independent assets or operations other than its ownership ofall of the membership units of SpectaGuard.

The Company providespremium contract security officer services to commercial organizationsthroughout the United States and toll collection services to the Stateof Florida Department of Transportation("FDOT"). The consolidated financialstatements of the Company include the accounts of the Company and itswholly-owned subsidiaries, which are (i) Effective Management ServicesLLC, (ii) Allied Security LLC, (iii) Allied Security LP, (iv)Professional Security Bureau LLC ("PSB"),which was acquired on December 19, 2003 (see Note 4), (v) BartonProtective Services LLC, which was formed in connection with theacquisition of Barton on August 2, 2004 (see Note 4), (vi) SpectaGuard,(vii) AlliedBarton Security Services LLC, and (viii) AlliedBartonSecurity Services LP. All significant intercompany transactions havebeen eliminated in consolidation.

The Company operates under thenames of "Allied Security" and"Barton Protective Services" nationally, aswell as under the commonly known name of"AlliedBarton", and also as"SpectaGuard" and "ProfessionalSecurity Bureau" in the northeast region of the UnitedStates. The Company's wholly-owned international subsidiary isnot significant to the Company's consolidated financialstatements. In July 2005, the Company ceased all of its foreignoperations.

2.    Summary of Significant AccountingPolicies

Basis of Presentation

The Company hasprepared the accompanying unaudited consolidated financial statementsin accordance with U.S. generally accepted accounting principles forinterim financial statements. The consolidated balance sheet as of June30, 2005, consolidated statements of operations for the three and sixmonths ended June 30, 2005 and 2004, and the consolidated statements ofcash flows for the six months ended June 30, 2005 and 2004 areunaudited, but include all adjustments, consisting only of normalrecurring 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, 2004 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").

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

Results for any interim period are notnecessarily indicative of results for any future interim period or forthe entire year. The accompanying financial statements should be readin conjunction with the financial statements and notes thereto includedin our Annual Report for the year ended December 31, 2004 furnished tothe SEC on a Form 8-K and filed with the SEC on a Special Report onForm 10-K, each on March 31, 2005.

Cash and CashEquivalents

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

Restricted Cash

Restricted cash includes balances ondeposit with the Company's insurance carrier to payworkers' compensation claims.

Accounts Receivable

The Company's customers are located primarily throughout theUnited States. The Company grants credit to its customers and generallydoes not require collateral. The Company maintains an allowance fordoubtful accounts based on prior experience which management believesto be sufficient to cover potential credit losses. Such amounts arecharged against the allowance for doubtful accounts when the Companyconcludes that the balances will not be recoverable.

Propertyand Equipment

Property and equipment are recorded at cost.Leasehold improvements are amortized over the respective lives of theleases or the 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 – 3 to 5years; office furniture, fixtures and equipment – 5 years.

Goodwill and Intangible Assets

Under Statement of FinancialAccounting Standards ("SFAS") No. 142,goodwill and intangible assets with indefinite lives are not amortized;rather, they are tested for impairment on at least an annual basis.Additionally, intangible assets with finite lives continue to beamortized over their useful lives.

SFAS No. 142 requires atwo-step impairment test for goodwill. The first step is to compare thecarrying value of the Company's assets to their fair value. Ifthe fair value exceeds the carrying value, no further work is requiredand no impairment loss is recognized. If the carrying value exceeds thefair value then the second step is required to be completed, whichinvolves allocating the fair value to each asset and liability, withthe excess being implied goodwill. An impairment loss occurs if theamount of the recorded goodwill exceeds the implied goodwill. Thedetermination of the fair value is based, among other things, onestimates of future operating performance. We are required to completean impairment test for goodwill and record any resulting impairmentlosses annually. Changes in market conditions, among other factors, mayhave an impact on these estimates. We completed our required annualimpairment test in the fourth quarter of 2004 and determined that therewas no impairment.

Customer lists are amortized using thestraight-line method over 6 years. Covenants not-to-compete are beingamortized using the straight-line method over 5 years. We performperiodic analyses and adjust through accelerated amortization anyimpairment of customer lists.

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

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.

Revenue Recognition

TheCompany recognizes revenue in the period in which services areprovided. Advance payments represent amounts received from customers inadvance of performing the related services.

FinancialInstruments

The carrying value of short-term financialinstruments, such as cash equivalents, accounts receivable, accountspayable and accrued expenses, approximates their fair value based onthe short-term maturities of these instruments.

Use ofEstimates

The preparation of consolidated financial statementsin conformity with U.S. generally accepted accounting principlesrequires management to make estimates and assumptions that affect thereported amounts of certain assets, liabilities, revenues and expensesand the disclosure of certain contingent assets and liabilities. Actualresults may differ from such estimates.

Reclassification

Certain amounts reported in prior periods have been reclassified toconform with the current year financial statement presentation.

Statement of Cash Flows

The following noncash transactionshave been excluded from the consolidated statement of cash flows forthe six months ended June 30, 2005 (inthousands):

|                                        |  |                 |      |         |  |  |
|----------------------------------------|--|-----------------|------|---------|--|--|
|                                   |  | Sixmonths ended |
|                                   |  | June 30,2005    |
| Barton Acquisition goodwilladjustments |  | $               | (281 | )  |
|                                        |

Cash interestpaid during the six months ended June 30, 2005 and June 30, 2004, wasapproximately $18,116,000 and $8,921,000, respectively.

3.    Mafco Acquisition

On February 19, 2003, Mafco,through its wholly-owned subsidiary SpectaGuard Holding Corporation,acquired the Predecessor Company, which included SpectaGuard and itswholly owned subsidiaries, for approximately $263,588,000. Thispurchase was funded through borrowings of $151,156,000 and cashcontributions of $116,915,000 recorded as follows: $112,983,000 fromMafco and its related parties for Class A Units, $2,307,000 from OCMSpecta Holdings Inc. ("OCM") for Class AUnits, $1,538,000 from Blackstone SG Mezzanine Corp.("Blackstone") for Class A units, and $87,000from members of the Company's senior management for Class B andClass C units (See Note 11).

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

In connection with this transaction, asyndication of lending institutions underwrote $125,000,000 of SeniorSecured Credit Facilities (the "Refinanced Senior SecuredCredit Facilities"). The Refinanced Senior Secured CreditFacilities consisted of (i) a $20,000,000 5-year Revolving CreditFacility (the "Refinanced Revolver") and (ii)a $105,000,000 7-year Senior Term Loan Facility (the"Refinanced Senior Term Loan"). In addition,the Company issued at a discount Senior Subordinated Notes (the"Refinanced Senior Subordinated Notes") toaffiliates of OCM and Blackstone with an aggregate face value of$50,000,000 for net proceeds of $46,156,000 (See Note 7).

TheCompany allocated the purchase price to the assets acquired andliabilities assumed based upon the fair value at the date ofacquisition. The cost of the acquisition was approximately $263,588,000and is allocated as follows (inthousands):

|                            |  |        |         |         |  |  |
|----------------------------|--|--------|---------|---------|--|--|
| Currentassets              |  | $      | 55,705  |    |
| Property andequipment      |  |   | 9,913   |    |
| Goodwill                   |  |   | 192,459 |    |
| Customerlist               |  |   | 73,643  |    |
| Otherassets                |  |   | 144     |    |
| Currentliabilities         |  |   | (57,041 | )  |
| Other long-termliabilities |  |   | (11,235 | )  |
|                       |  | $      | 263,588 |    |
|                            |

4.    Acquisitions

On December 19, 2003, the Company acquired all of the outstandingcommon shares of PSB (the "PSB Acquisition").The Company allocated the purchase price to the assets acquired andliabilities assumed based upon the fair value at the date ofacquisition. The cost of the acquisition was subject to a workingcapital purchase price adjustment settled in 2004 for $100,000. Thecost of the acquisition was approximately $45,766,000 and is allocatedas follows (inthousands):

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

Thispurchase was funded through borrowings of $40,500,000 (see Note 7) andcash contributions of $7,500,000 recorded as follows: $6,651,000 fromMafco and its related parties, $173,000 from OCM, $107,000 fromBlackstone and $569,000 from members of the Company's seniormanagement in each case in exchange for Class A units (see Note11).

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

In connection with the PSB Acquisition,two former owner/executives entered into covenant-not-to-competeagreements with the Company. The terms of the agreements are five yearsfrom December 19, 2003. In consideration for these individuals enteringinto these agreements, the Company will pay $2,250,000 in the aggregateto these individuals over the term of the agreements. Payments underthe covenant not-to-compete agreements are subordinated to theCompany's New Credit Facility (as hereinafter defined) (see Note7) and have been recorded at the discounted present value of theliability. Covenants not-to-compete are being amortized over thebenefit period of five years and are included in the caption as otherlong-term liability on the accompanying consolidated balancesheets.

As a result of this transaction, the Company adopted aformal plan (the "PSB Plan") to terminatecertain PSB employees and exit duplicative PSB office facilities. ThePSB Plan includes severance-related benefits for approximately 120 PSBemployees. The PSB Plan also includes lease termination costs in orderto exit 14 PSB office facilities. The Company recorded a total reserveof $1,276,000 related to the PSB Plan as a part of the purchase priceallocation above. The PSB Plan was complete as of December 31, 2004,other than the payment of the remaining liability. As of June 30, 2005,$868,000 of payments have been made related to the PSB Plan.

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

On March 19, 2004, the Company acquired (the"SSI Acquisition") certain assets of SecuritySystems, Inc. ("SSI"). Prior to the SSIAcquisition, SSI provided contract security officer services to variouscorporate customers and universities in the Boston Metropolitan area.The Company allocated the purchase price to the assets acquired andliabilities assumed based upon the fair value at the date ofacquisition. The cost of the acquisition was subject to revenue relatedpurchase price adjustments, of which $719,000 has been settled as ofDecember 31, 2004 and any remaining adjustment will be settled in2005.

The estimated cost of the acquisition was $10,574,000 andis allocated as follows (inthousands):

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

Thispurchase was funded through borrowings of $7,500,000 (see Note7).

10

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

On August 2, 2004, the Company acquiredBarton (the "Barton Acquisition"). Bartonprovides premium contract security officer services to commercialorganizations throughout the United States and toll collection servicesto the FDOT. The Company preliminarily allocated the purchase price tothe assets acquired and liabilities assumed based upon the fair valueat the date of acquisition. The estimated cost of the acquisition wasapproximately $180,913,000 and is allocated as follows (inthousands):

|                       |  |        |         |         |  |  |
|-----------------------|--|--------|---------|---------|--|--|
| Currentassets         |  | $      | 50,677  |    |
| Property andequipment |  |   | 7,335   |    |
| Goodwill              |  |   | 118,072 |    |
| Customerlist          |  |   | 40,536  |    |
| Otherassets           |  |   | 246     |    |
| Currentliabilities    |  |   | (35,953 | )  |
|                  |  | $      | 180,913 |    |
|                       |

Thispurchase was funded as part of the borrowings of a $210,000,000 NewSenior Term Loan (as hereinafter defined) and $180,000,000 aggregateprincipal amount of Notes (as hereinafter defined) (see Note 7). TheBarton Acquisition and related financing transactions are referred tocollectively as the "Transactions".

Asa result of the Barton Acquisition, the Company adopted a formal plan(the "Barton Plan") to terminate certainBarton employees and exit duplicative Barton office facilities. TheBarton Plan initially included severance-related benefits forapproximately 246 Barton employees. The Barton Plan also initiallyincluded lease termination costs in order to exit 21 Barton officefacilities. The Company initially recorded a total reserve ofapproximately $6,135,000 related to the Barton Plan as part of thepurchase price allocation above. As of June 30, 2005, approximately$1,203,000 of payments have been made related to the Barton Plan. Inthe first six months of 2005, the Company revised its estimate ofcertain lease termination and severance costs and reduced thecorresponding liability by $2,437,000. The Company expects to completethe Barton Plan by August 2005, although payments will continuesubsequent to this date for the remaining liability.

Inconnection with the Barton Acquisition, the Company deposited$9,000,000 into an escrow account pursuant to the Escrow Agreemententered into contemporaneously with the Barton Acquisition among theCompany, then current shareholders of Barton and the escrow agent. Thefunds will remain in the escrow account until March 31, 2006 and anyremaining balance not distributed pursuant to the Escrow Agreement willthereafter be remitted to the former Barton shareholders.

Thefollowing table shows the activity for the accrued termination costsfor the above acquisitions (inthousands):

|           |  |                               |       |          |  |             |      |                           |  |        |        |         |  |        |       |        |  |  |
|-----------|--|-------------------------------|-------|----------|--|-------------|------|---------------------------|--|--------|--------|---------|--|--------|-------|--------|--|--|
|      |  | Balanceas of December 31,2004 |       | Payments |  | Adjustments |      | Balance as ofJune 30,2005 |
| Lease     |  | $                             | 4,103 |     |  | $           | (546 | )                    |  | $      | (1,270 | )  |  | $      | 2,287 |   |
| Severance |  |                          | 2,007 |     |  |        | (346 | )                    |  |   | (1,167 | )  |  |   | 494   |   |
| Total     |  | $                             | 6,110 |     |  | $           | (892 | )                    |  | $      | (2,437 | )  |  | $      | 2,781 |   |
|           |

11

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

5.    Goodwill and Other IntangibleAssets

Goodwill is deemed to have an indefinite life and is notamortized, but is subject to annual impairment tests.

The changein carrying amount of goodwill for the six months ended June 30, 2005is as follows (inthousands):

|                                |  |        |         |         |  |  |
|--------------------------------|--|--------|---------|---------|--|--|
| Balanceas of December 31, 2004 |  | $      | 347,766 |    |
| BartonAcquisitionadjustments   |  |   | (401    | )  |
| Balance as ofJune 30,2005      |  | $      | 347,365 |    |
|                                |

Thegoodwill adjustment related to the Barton Acquisition in 2005 ispreliminary and is subject to final purchase price allocationsubsequent to June 30, 2005.

Gross carrying amounts andaccumulated amortization for identifiable intangible assets as of June30, 2005 and December 31, 2004 are as follows (inthousands):

|                             |  |                     |         |                         |  |              |         |                  |  |        |         |         |  |        |         |         |  |  |
|-----------------------------|--|---------------------|---------|-------------------------|--|--------------|---------|------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                        |  | GrossCarryingAmount |         | AccumulatedAmortization |
|                        |  | June30, 2005        |         | December 31, 2004       |  | June 30,2005 |         | December 31,2004 |
| Amortized intangibleassets: |  |                |    |                    |  |         |    |             |  |   |    |    |  |   |    |    |
| Customerlists               |  | $                   | 125,865 |                    |  | $            | 125,865 |             |  | $      | (38,031 | )  |  | $      | (27,542 | )  |
| Covenantsnot-to-compete     |  |                | 1,700   |                    |  |         | 1,700   |             |  |   | (510    | )  |  |   | (340    | )  |
| Total                       |  | $                   | 127,565 |                    |  | $            | 127,565 |             |  | $      | (38,541 | )  |  | $      | (27,882 | )  |
|                             |

Amortizationexpense for the six months ended June 30, 2005 and June 30, 2004 wasapproximately $10,659,000 and $7,166,000, respectively.

Estimated annual aggregate amortization expense for the current yearand the subsequent five years is as follows (in thousands):

|                                      |  |   |        |        |  |  |
|--------------------------------------|--|---|--------|--------|--|--|
| For the year ended December 31, 2005 |  | $ | 21,317 |   |
| For the year ended December 31,2006  |  | $ | 21,317 |   |
| For the year ended December31, 2007  |  | $ | 21,317 |   |
| For the year endedDecember 31, 2008  |  | $ | 21,317 |   |
| For the yearended December 31, 2009  |  | $ | 10,355 |   |
| For theyear ended December 31, 2010  |  | $ | 4,060  |   |
|                                      |

6.    Deferred FinancingFees

The Company amortizes deferred financing fees to interestexpense using the effective interest method over the term of theirrespective financing agreements in relation to the Notes and the NewSenior Term Loan, which mature between June 2010 and July 2011 (seeNote 7).

Amortization of deferred financing fees for the sixmonths ended June 30, 2005 and June 30, 2004 was approximately$1,129,000 and $933,000, respectively.

12

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

The estimated annual aggregateamortization expense, which will be included in interest expense, forthe current year and the subsequent five years is as follows fordeferred financing fees (in thousands):

|                                      |  |   |       |        |  |  |
|--------------------------------------|--|---|-------|--------|--|--|
| For the year ended December 31, 2005 |  | $ | 2,289 |   |
| For the year ended December 31,2006  |  | $ | 2,347 |   |
| For the year ended December31, 2007  |  | $ | 2,346 |   |
| For the year endedDecember 31, 2008  |  | $ | 2,233 |   |
| For the yearended December 31, 2009  |  | $ | 2,132 |   |
| For theyear ended December 31, 2010  |  | $ | 1,622 |   |
|                                      |

7.    Debt

The Company's debt is summarized as follows atJune 30, 2005 and December 31, 2004 (inthousands):

|                                                                                       |  |              |         |                   |  |        |         |         |  |  |
|---------------------------------------------------------------------------------------|--|--------------|---------|-------------------|--|--------|---------|---------|--|--|
|                                                                                  |  | June30, 2005 |         | December 31, 2004 |
| NewSenior Term Loan, variable rate interest (6.85% at June 30,2005), due June 30,2010 |  | $            | 200,750 |              |  | $      | 206,000 |    |
| 11.375%Senior Subordinated Notes, due July 15,2011                                    |  |         | 178,073 |              |  |   | 177,966 |    |
| 2.99%fixed rate insurance premium financing, due through May 1,2005                   |  |         | — |              |  |   | 6,246   |    |
|                                                                                  |  |         | 378,823 |              |  |   | 390,212 |    |
| Lesscurrentmaturities                                                                 |  |         | (5,000  | )            |  |   | (22,246 | )  |
|                                                                                  |  | $            | 373,823 |              |  | $      | 367,966 |    |
|                                                                                       |

Inconnection with the February 19, 2003 formation of the Company, theCompany entered into a $125,000,000 Refinanced Senior Secured CreditFacility. The Refinanced Senior Secured Credit Facility consisted of(i) a $20,000,000 5-year Refinanced Revolver and (ii) a $105,000,0007-year Refinanced Senior Term Loan. The Refinanced Senior SecuredCredit Facility was amended on May 2, 2003 (the "FirstAmended Refinanced Credit Facility") to reduce theRefinanced Senior Term Loan to $95,000,000. As a result of the FirstAmended Refinanced Credit Facility, an additional 67,778 Class A Unitswere issued for $10,000,000 to reduce the principal amount of theRefinanced Senior Term Loan (see Note 11). The Refinanced Senior TermLoan bore interest on the outstanding principal balance at a rate equalto the three-month LIBOR (with a floor limit of 2.50%) plus a5.00% margin.

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

TheCompany issued $50,000,000 face value Refinanced Senior SubordinatedNotes at a $3,844,000 discount in connection with its February 19, 2003formation. The terms of the Refinanced Senior Subordinated Notesincluded 12.00% annual cash interest and 3.00% PIK(paid-in-kind) interest. Interest was payable quarterly. At itselection, the Company could have paid the PIK interest, or added it tothe principal balance as new Refinanced Senior Subordinated Notes. TheRefinanced Senior Subordinated Notes were due June 30, 2010. The debtdiscount was being amortized to interest expense over the term of theRefinanced Senior Subordinated Notes.

13

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

In connection with the PSB Acquisition onDecember 19, 2003, the First Amended Refinanced Credit Facility wasamended and restated (the "Second Amended RefinancedCredit Facility"). The Second Amended Refinanced CreditFacility provided for an add-on Refinanced Senior Term Loan in theamount of $30,000,000 and an additional $10,000,000 in RefinancedRevolver availability resulting in total availability under theRefinanced Revolver of up to $30,000,000. Other terms of the SecondAmended Refinanced Credit Facility were substantially identical to theFirst Amended Refinanced Credit Facility.

Also as a result ofthe PSB Acquisition, the Company issued an additional $10,500,000 inRefinanced Senior Subordinated Notes. The terms included 12.00%annual cash interest and 4.25% PIK interest payable quarterly.At its election, the Company could have paid the PIK interest, or addedit to the principal balance as new Refinanced Senior SubordinatedNotes. The Refinanced Senior Subordinated Notes were due June 30,2010.

On March 19, 2004, in connection with the SSI Acquisition,the Company issued a $7,500,000 add-on term loan which was permitted asa delayed draw in the Second Amended Refinanced Credit Facility.

Simultaneous with the closing of the Barton Acquisition on August 2,2004, the Company entered into a new senior secured credit facility(the "New 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 New Credit Facility on May 10, 2005("Amendment No. 1") modifying certain of itsterms. The New Credit Facility initially provided for (i) a$210,000,000 six-year term loan facility (the "New SeniorTerm Loan") and (ii) a $50,000,000 five-year revolvingloan (the "New 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 initial borrowings under theNew Credit Facility, together with the net proceeds from the Notes, tofinance the purchase price for Barton, to repay amounts outstandingunder the Refinanced Credit Facility, to redeem the then outstandingRefinanced Senior Subordinated Notes and to pay related fees, expensesand redemption premiums. As of August 2, 2004 and prior to givingeffect to the Transactions, the Company had $125,000,000 in term loansoutstanding under the Refinanced Credit Facility, which term loansprovided for interest at a rate of 7.50% per annum at such date.The Company had $61,900,000 principal outstanding, including PIKinterest, of Refinanced Senior Subordinated Notes as of August 2, 2004prior to redemption of the Refinanced Senior Subordinated Notes.

For the New Senior Term Loan, each eurodollar rate loan initiallybore interest at a rate per annum equal to the eurodollar rate for suchday plus 4.25%. Each base rate loan initially bore interest at arate per annum equal to the base rate plus 3.25%. Amendment No.1, as further described below, reduced each of these interest rates by0.5%.

The New Revolver initially included a sub-limit ofup to $40,000,000 of letter of credit availability, which was increasedsubsequently to $50,000,000 on May 10, 2005 pursuant to Amendment No.1. The New Revolver availability is reduced by outstanding letters ofcredit, which totaled $23,849,000 as of June 30, 2005. For the NewRevolver, each eurodollar rate loan bears interest at a rate per annumequal to the eurodollar rate for such day plus 4.50%. Each baserate loan bears interest at a rate per annum equal to the base rateplus 3.50%. Amounts outstanding on the New Revolver are due onAugust 2, 2009. As of June 30, 2005, the outstanding New Revolverbalance, excluding the outstanding letters of credit, was zero.

The Company's assets were pledged as collateral for theRefinanced Credit Facility. The Company's assets are pledged ascollateral for the New Credit Facility.

14

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

The New Credit Facility and the Notes areguaranteed by each of the Company's current and future domesticsubsidiaries. These guarantees are joint and several obligations of thedomestic subsidiaries. The Company has a non-guarantor subsidiarylocated in the United Kingdom, which generates less than one percent ofthe Company's consolidated revenues and holds less than onepercent of the Company's consolidated assets as of June 30, 2005.In July 2005, the Company ceased all of its foreign operations.

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

Based on theborrowing rates currently available for loans with similar terms andmaturities, the fair value of the long-term debt approximated itscarrying value at June 30, 2005.

The New Credit Facility and theNotes contain various financial and other covenants. The Company was incompliance with all such covenants at June 30, 2005.

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 into such a financingagreement with Cananwill, Inc. for a total amount of $11,242,000.Payments were due in equal monthly installments through May 1, 2005 andbore an annual interest rate of 2.99%. As of June 30, 2005, thisfinancing agreement, including accrued interest, was repaid in full. InAugust 2005, the Company expects to enter a new financing agreementwith Cananwell under similar terms as the previous financingagreement.

Debt maturities for the remaining portion of thecurrent year and the subsequent five years and thereafter are asfollows (inthousands):

|            |  |        |         |        |  |  |
|------------|--|--------|---------|--------|--|--|
| 2005       |  | $      | 2,500   |   |
| 2006       |  |   | 5,000   |   |
| 2007       |  |   | 30,000  |   |
| 2008       |  |   | 30,000  |   |
| 2009       |  |   | 30,000  |   |
| 2010       |  |   | 103,250 |   |
| Thereafter |  |   | 178,073 |   |
| Total      |  | $      | 378,823 |   |
|            |

15

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

8.    Contingent Liabilities

In the normal course of operations, various legal claims are filedagainst the Company. The Company has reserved for certain of theseclaims based upon insurance coverages and management's judgment(in some cases after receipt of the advice of counsel). In the opinionof management, the ultimate outcome of these actions is not expected tohave a material adverse effect on the consolidated financial position,results of operations, or cash flows of the Company.

9.    Comprehensive Income (Loss)

Comprehensive income(loss) is defined as net income (loss) and other changes inmembers' equity (deficit) from transactions and other events fromsources other than members. A reconciliation of net income (loss) toother comprehensive income (loss) is as follows (inthousands):

|                                        |  |                  |      |                |  |             |         |              |  |        |        |         |  |        |         |         |  |  |
|----------------------------------------|--|------------------|------|----------------|--|-------------|---------|--------------|--|--------|--------|---------|--|--------|---------|---------|--|--|
|                                   |  | Threemonthsended |      | Sixmonthsended |
|                                   |  | June30,2005      |      | June 30,2004   |  | June30,2005 |         | June 30,2004 |
| Net income(loss)                       |  | $                | (797 | )         |  | $           | 301     |         |  | $      | (5,787 | )  |  | $      | (2,702  | )  |
| Foreigncurrency translationadjustments |  |             | (36  | )         |  |        | — |         |  |   | (58    | )  |  |   | — |    |
| Comprehensiveincome(loss)              |  | $                | (833 | )         |  | $           | 301     |         |  | $      | (5,845 | )  |  | $      | (2,702  | )  |
|                                        |

10.    Income Taxes

The members of the Company have elected to betreated as a partnership for both federal and state income taxpurposes. In accordance with applicable regulations, taxable income orloss of the Company is required to be reported in the income taxreturns of the Company's members in accordance with theCompany's Operating 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 liabilities arising in connection withtheir respective ownership interest in the Company. Accordingly, noprovision for income taxes has been made in the Company'sconsolidated financial statements. Due principally to differences indepreciation and amortization, taxable income may vary substantiallyfrom income reported for financial statement purposes.

Under thePredecessor Company, Effective Holdings Inc. and its subsidiaries andAS Acquisition Inc. and its subsidiaries, all of which werecorporations that were converted to limited liability companies, weretaxed under Subchapter C of the Internal Revenue Code. The effectivetax rate for the Predecessor Company differed from the federalstatutory rate due primarily to state taxes, nondeductible items, andoperating results not taxed at the corporate level.

11.    Units Subject to Put Rights and Members' Equity

Thecapital structure of the Company consists of three classes of unitswhich are designated as Class A Units, Class B Units, and Class C Units(collectively, "Units"). The Company isauthorized to issue up to 10,000,000 Units. The Units do not have anyvoting approval or consent rights. Class A and Class B Units representvested ownership interests in the Company. Class C Units generally vest50% based on passage of time ("TimeBased") and 50% based on achievement of definedperformance targets ("Performance-Based")over periods ranging from three to five years.

Pursuant to theOperating Agreement, cash distributions may be made to the members inthe following order and priority: (i) among the Units in proportion to,and to the extent of, initial contributed capital attributable to theUnits (excluding any capital attributable to unvested Class C Units)until all initial contributed capital has been returned, and (ii) anyremaining balance, to the members in proportion to their ownershippercentage.

16

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

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 andits affiliates, $2,307,000 (19,584 Class A Units subject to put rights)from OCM, $1,538,000 (13,056 Class A Units subject to put rights) fromBlackstone, and $50,000 (77,627 Class B Units) from members of theCompany's senior management. The Class A Units subject to putrights for both OCM and Blackstone are classified as a liability,outside of members' equity. Members of senior management alsocontributed $37,000 for 110,000 unvested Class C Units.

On May2, 2003, 67,778 Class A Units were issued for $10,000,000 to reduce theprincipal amount outstanding under the Refinanced Senior Term Loan (seeNote 7). Of these units, 1,562 units were subject to put rights and hada fair value of $230,000.

On December 19, 2003, 50,834 Class AUnits were issued for $7,500,000 related to the PSB Acquisition (seeNote 4). Of these units, 1,894 units were subject to put rights and hada fair value of $279,000.

As of December 31, 2003, 7,500unvested Class C Units were issued to an executive for approximately$2,000.

On December 31, 2003, 13,083 Time-Based Class C Unitsand 13,083 Performance-Based Class C Units vested.

On June 1,2004, 7,500 unvested Class C Units were issued to an executive forapproximately $5,000, 3,750 of which were subsequently repurchased fromthe employee as of December 31, 2004.

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

On August 2, 2004, adirect subsidiary of Mafco acquired all of the shares of Blackstone. Asa result, the put rights associated with the 13,779 Class A Units werecanceled. The Class A Units formerly held by Blackstone are now held byMafco's indirect subsidiary, SpectaGuard Holding TwoCorporation.

On October 5, 2004, 2,250 unvestedPerformance-Based Class C Units were forfeited and 2,250 Time-BasedClass C Units vested due to an employment termination.

OnDecember 31, 2004, 3,750 unvested Performance-Based Class C Units wereforfeited due to an employment termination.

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

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

OnMay 17, 2005, 7,500 unvested Class C Units were issued to an executivefor approximately $5,000.

The Operating Agreement includes putrights issued to OCM that give OCM the option to cause the Company topurchase all of the Class A Units subject to put rights held by them atspecified periods of time, the earliest of which is 2007, at anestimated fair value at the time the put right is exercised. As of June30, 2005, no fair value adjustments to the Class A redemption amountswere required.

Pursuant to the Operating Agreement, a member ofsenior management has the right to cause the Company to purchase all,but not less than all, of his outstanding Class B Units during a 90 dayperiod beginning on February 19, 2006 in accordance with a specifiedcalculation as defined in the Operating Agreement. There were no newClass B Units issued in 2004 or 2005. As of June 30, 2005, noadjustments to the Class B redemption amounts were required.

17

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AlliedSecurity Holdings LLC Notes to Consolidated Financial Statements(Unaudited) June 30, 2005

12.    Related Party Transactions

In connection with the Mafco acquisition, senior management of theCompany canceled 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 payments totaling $15,730,000 in periods ranging from three tofive years from the Mafco acquisition date. This amount has beenrecorded at its present value and is included on the accompanyingconsolidated balance sheets in due to affiliates. The Company isobligated to reimburse SpectaGuard Holding Corporation for all costsand expenses incurred in connection with its performance under theAmended and Restated Management Agreement between SpectaGuard andSpectaGuard Holding Corporation, dated as of August 2, 2004, includingamounts of such deferred payments to senior management.

13.    Leases

The Company has commitments under operatingleases for certain equipment and facilities used in its operations.Total rental expense for the six months ended June 30, 2005 and June30, 2004 was approximately $4,459,000 and $2,478,000,respectively.

18

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Item2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIALCONDITION AND RESULTS OF OPERATIONS

Thediscussion and analysis of financial condition and results ofoperations are based upon financial statements which have been preparedin accordance with U.S. generally accepted accounting principles, andshould each be read together with the applicable consolidated financialstatements, the notes to those financial statements and the otherfinancial information appearing elsewhere in this Report on Form10-Q.

This discussion contains certain statements of aforward-looking nature that involve risks and uncertainties. As aresult of many factors, including those set forth under the sectionentitled "Risk Factors" in our filings withthe SEC, actual results may differ materially from those anticipated bysuch forward-looking statements. See "Forward LookingStatements."

Overview

We offer premiumcontract security officer services to quality-conscious customers inseven vertical markets throughout the United States: high-rise officebuildings, corporate complexes, shopping malls, financial institutions,universities, hospitals and industrial 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 reportingpotential or actual security threats. In addition, we provide contractemployees for toll collection services to the FDOT. As of December 31,2004, we employed approximately 37,300 security officers and tollcollectors. As of December 31, 2004, we provided contract securityofficer services to over 2,000 clients, including more than 100 of theFortune 500 companies, in 41 states and the District of Columbia.

Revenues

We generate revenues primarily fromcustomer contracts pursuant to which we provide security officerservices at agreed upon hourly billing rates to customers such asproperty management companies, corporations, financial institutions,universities, mall management companies and hospitals. Our standardcustomer contract is a one-year contract that can be terminated byeither the customer or us on 30 days' notice at any time. We havefound that we generally have been successful in extending thesecontracts and negotiating favorable adjustments to billing rates.Revenues from our contracts with the FDOT are generated insubstantially the same manner in which we generate revenues from oursecurity officers.

Cost of Revenues

Our largestoperating expenses are payroll, payroll taxes and employee-relatedbenefits. We believe that we have higher wages and related payrolltaxes and benefits costs than others in our industry due to our focuson attracting and retaining a highly qualified workforce. Our expensesalso include workers' compensation and general liability costs.The major components of cost of revenues are affected by general wageinflation, payroll tax increases and insurance premiums and relatedclaim costs. Billing rate increases are generally passed on annually tocustomers in order to offset many of these costs.

Acquisitionby Mafco

On February 19, 2003, Mafco, through its wholly-ownedsubsidiary SpectaGuard Holding Corporation, acquired the PredecessorCompany, which included SpectaGuard and its wholly owned subsidiaries,from Gryphon Partners II, L.P. and other minority owners forapproximately $263.6 million. The purchase was funded throughborrowings of $151.2 million and cash contributions of $116.9 millionrecorded as follows: $113.0 million from Mafco and its related partiesfor Class A Units, $2.3 million from OCM Specta Holdings Inc.("OCM") for Class A Units, $1.5 million fromBlackstone SG Mezzanine Corp. ("Blackstone")for Class A Units, and $0.1 million from members of our seniormanagement for Class B and Class C Units.

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In connection with this transaction, asyndication of lending institutions underwrote $125,000,000 of SeniorSecured Credit Facilities (the "Refinanced Senior SecuredCredit Facilities"). The Refinanced Senior Secured CreditFacilities consisted of (i) a $20,000,000 5-year Revolving CreditFacility (the "Refinanced Revolver") and (ii)a $105,000,000 7-year Senior Term Loan Facility (the"Refinanced Senior Term Loan"). In addition,we issued at a discount Senior Subordinated Notes (the"Refinanced Senior Subordinated Notes") toaffiliates of OCM and Blackstone with an aggregate face value of$50,000,000 for net proceeds of $46,156,000.

The BartonAcquisition

On May 12, 2004, SpectaGuard, BPS LLC, a newlyformed Delaware limited liability company and wholly-owned subsidiaryof SpectaGuard, Barton and Barton's shareholders (the"Barton Shareholders") entered into anAgreement and Plan of Merger (the "MergerAgreement"), pursuant to which we acquired Barton (the"Barton Acquisition") through the merger ofBarton with and into BPS LLC, with BPS LLC as the surviving limitedliability company. Upon completion of the Barton Acquisition, on August2, 2004, all Barton Shareholders, holders of vested stock options andholders of phantom stock units received merger consideration in anaggregate amount of $181.0 million in cash, and BPS LLC changed itsname to Barton Protective Services LLC. Also in connection with theclosing of the Barton Acquisition, the members of SpectaGuard becamethe members of Allied Security Holdings LLC (and Allied SecurityHoldings LLC became the sole member of SpectaGuard) through thecontribution of their Class A, Class B, and Class C units, asapplicable, of SpectaGuard in exchange for an identical number of ClassA, Class B and Class C units, as applicable, of Allied SecurityHoldings LLC. The SpectaGuard Operating Agreement then in effect wasterminated and the members of Allied Security Holdings LLC entered intothe current Operating Agreement, which contains provisionssubstantially similar to the SpectaGuard Operating Agreement. TheBarton Acquisition and the related financing transactions are referredto collectively as the "Transactions".

Simultaneous with the closing of the Barton Acquisition on August 2,2004, we entered into a new senior secured credit facility (the"New Credit Facility"). The New CreditFacility was amended on May 10, 2005 to modify certain of its terms.The New Credit Facility initially provided for (i) a $210.0 millionsix-year senior term loan (the "New Senior TermLoan") and (ii) a $50.0 million five-year revolver (the"New Revolver") with certain sub-limits forletters of credit and swingline loans. In addition, we issued $180.0million in aggregate principal amount of senior subordinated notes (the"Notes") which mature on July 15, 2011. Weused initial borrowings under the New Credit Facility, together withthe net proceeds from the offering of the Notes, to finance thepurchase price for Barton, to repay amounts outstanding under theRefinanced Senior Secured Credit Facility, to redeem the thenoutstanding Refinanced Senior Subordinated Notes and to pay relatedfees, expenses and redemption premiums. We drew down the full amount ofthe New Senior Term Loan and none of the New Revolver in connectionwith the Transactions. As of August 2, 2004 and prior to giving effectto the Transactions, we had $125.0 million in term loans outstandingunder the Refinanced Senior Secured Credit Facility, which term loansprovided for interest at a rate of 7.50% per annum at such date.The Refinanced Senior Subordinated Notes comprised $50.0 millionaggregate face value of senior subordinated notes due June 30, 2010which provided for cash interest at 12.00% per annum and PIKinterest at 3.00% per annum, each payable quarterly, and $10.5million aggregate face value of senior subordinated notes due June 30,2010 which provided for cash interest at 12.00% per annum andPIK interest at 4.25% per annum, each payable quarterly. We had$61.9 million principal outstanding, including PIK interest, ofRefinanced Senior Subordinated Notes as of August 2, 2004 prior to theredemption of the Refinanced Senior Subordinated Notes.

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On May 10, 2005, the Company executed anamendment ("Amendment No. 1") to its NewCredit Facility. Amendment No. 1 contains the following terms andprovisions, among others: (i) for the New Senior Term Loan, theinterest rate applicable to eurodollar rate loans was decreased fromLIBOR plus 4.25% to LIBOR plus 3.75% (with a step down toLIBOR plus 3.50% when the Company's leverage ratio isbelow 3.5x); (ii) the basket for permitted acquisitions was increasedfrom $30.0 million to $60.0 million; (iii) cash expenditures forpermitted acquisitions was added as a deduction to the calculation of"excess cash flow"; (iv) mandatory principalrepayment of the New Senior Term Loan was decreased for fiscal years2005 and 2006; and (v) the sublimit for letter of credit availabilityunder the New Revolver was increased from $40.0 million to $50.0million.

Acquisition of Certain Assets and Liabilities ofSecurity Systems, Inc.

On March 19, 2004, we acquired certainassets and liabilities of SSI, including the rights to perform underSSI's customer contracts, for $10.6 million, subject to certainpost-closing adjustments, a portion of which was settled in September2004. Prior to the SSI Acquisition, SSI was a provider of high-qualitycontract security services to universities and corporate customersprimarily in Boston. The SSI Acquisition was funded through theissuance of a $7.5 million term loan which was permitted as a delayeddraw under the Refinanced Senior Secured Credit Facility.

Inconnection with the SSI Acquisition, we implemented a cost reductionplan to reduce headcount in corporate and branch administrativefunctions and exit duplicative facilities, which was completed as ofMarch 31, 2004.

Acquisition of Professional Security Bureau,Ltd.

On December 19, 2003, we acquired all of the outstandingcommon shares of the predecessor company of PSB. The cost of theacquisition was subject to a working capital purchase price adjustment,which was settled in February 2004. The cost of the acquisition(exclusive of financing costs) was approximately $45.8 million.

The PSB Acquisition was funded through aggregate borrowings of $40.5million and cash contributions of $7.5 million. The Refinanced SeniorSecured Credit Facility was amended and restated to provide for anadditional $30.0 million senior term loan and an additional $10.0million of availability under the revolving credit facility. Inaddition, we issued $10.5 million of additional Refinanced SeniorSubordinated Notes due June 30, 2010 to OCM, Blackstone and BlackstoneHoldings. The Refinanced Senior Secured Credit Facility and theRefinanced Senior Subordinated Notes were refinanced as part of theTransactions. See "The BartonAcquisition."

In connection with the PSBAcquisition, the Company adopted a formal plan (the "PSBPlan") to terminate certain PSB employees and exitduplicative PSB office facilities. The PSB Plan includesseverance-related benefits for approximately 120 PSB employees. The PSBPlan also includes lease termination costs in order to exit 14 PSBoffice facilities. The Company recorded a total reserve of $1,276,000related to the PSB Plan as a part of the purchase price allocationabove. The PSB Plan was complete as of December 31, 2004, other thanthe payment of the remaining liability. As of June 30, 2005, $868,000of payments have been made related to the PSB Plan.

Basis ofPresentation and Critical Accounting Policies

Revenues

We record revenues on an accrual basis.Billings are based on client contracts, which generally include amarkup on wages paid or a stated bill rate for hours worked. The vastmajority of customers are billed a rate for hours worked, which ratestake account of both wages and benefits. In certain cases, clientsrequire specific items be excluded from the billed rate, such asmedical benefits, vehicle leases and maintenance. In those cases, theseitems are billed separately, in certain cases with a negotiated markupand in other instances at cost as incurred. Clients are billed on aweekly, biweekly, monthly or quarterly basis.

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Cost of Revenues

Thedirect cost of revenues is primarily comprised of direct labor, relatedpayroll taxes, medical and life benefits and workers'compensation and liability insurance. All security officers and accountmanager payroll and payroll related expenses are classified as cost ofrevenues. Wages paid include regular pay, bonus, overtime, vacation,training, holiday and sick time. The total hours paid normally exceedtotal hours billed mainly due to overtime and training time, which isgenerally not billable. Medical benefit costs are based on self-insuredplans, which cover the majority of our workforce, and premium-basedplans. The self-insured medical costs are recorded by applying internalestimates based on actual claims history. The premium-based plan costsare charged based on actual premiums paid. Workers' compensationand liability insurance costs are recorded by applying historical ratesbased on actual claims history and premium and administrative costs.The estimated charge covers all premiums, loss fund payments, claimsand administrative costs. These charges are monitored closely againstestablished reserves.

Branch and Corporate OverheadExpense

Branch overhead expense includes all salaries,salary-related expenses, benefits and travel and entertainment costspaid to branch-level employees. Branch administrative personneltypically include division presidents, vice president/general managers,district managers, security directors and administrative staff. Otherprimary branch overhead expenses include rent, classifiedadvertisements, office expenses and bad debt reserves. Corporateoverhead expense includes all expenses related to our headquarters,salaries and related expenses, including benefits, commissions,bonuses, travel and entertainment costs, rent, sales and marketingcosts, professional and consulting fees, and office expenses.

Depreciation and Amortization Expense

Depreciationexpense consists of the depreciation of uniforms, furniture andfixtures, computers, automotive equipment and leasehold improvements.Amortization consists of the amortization of the value of the customerlists related to the Mafco, Barton, PSB and SSI transactions. It alsoincludes the amortization of covenants not-to-compete. In accordancewith the provisions of SFAS No. 142, "Goodwill andIntangible Assets" ("SFAS No.142"), we do not amortize goodwill.

Interest Expense

Interest expense consists of thecost of interest related to our senior long-term debt, seniorsubordinated notes and related discount, revolving line of credit andinsurance premium financing. It also includes amortization of deferredfinancing fees and the accretion of liabilities related to due toaffiliates and covenants not-to-compete.

CriticalAccounting Policies

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 primarily located throughout the United States. We grantcredit to our customers and generally do not require collateral. Wemaintain an allowance for doubtful accounts, which management believesto be sufficient to cover potential credit losses. Management reviewsthe components of the accounts receivable balance on a monthly basisand performs additional detail review on a quarterly basis. Thisprocess includes an analysis of specific reserves required based uponknown credit collection issues and potential reserve adjustments basedon our experience of historical write-off amounts.

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Insurance Reserves.    Wemaintain insurance coverage for workers' compensation, medicalclaims and general liability. The Company has reserved for certain ofthese claims based upon insurance coverages and management'sjudgment (in some cases after receipt of the advice of counsel).Management reviews these estimates on a quarterly basis based uponcurrently available information and adjusts the reserves accordingly.In the opinion of management, our insurance reserves are sufficient tocover the ultimate outcome of these claims.

Goodwill andIntangible Assets.    Under SFAS No. 142, we do not amortizegoodwill and intangible assets with indefinite lives; rather, they aretested for impairment on at least an annual basis. Additionally,intangible assets with finite lives continue to be amortized over theiruseful lives.

SFAS No. 142 requires a two-step impairment testfor goodwill. The first step is to compare the carrying value of theassets to their fair value. If the fair value exceeds the carryingvalue, no further work is required and no impairment loss isrecognized. If the carrying value exceeds the fair value then thesecond step is required to be completed, which involves allocating thefair value of each asset and liability, with the excess being impliedgoodwill. An impairment loss occurs if the amount of the recordedgoodwill exceeds the implied goodwill. Our determination of the fairvalue is based, among other things, on estimates of future operatingperformance. We are required to complete an impairment test forgoodwill and record any resulting impairment losses at least annually.Changes in market conditions, among other factors, may have an impacton these estimates. We completed our required annual impairment test inthe fourth quarter of 2004 and determined that there was no impairmentfor fiscal 2004.

We perform periodic analyses and adjust throughaccelerated amortization any impairment of customer lists.

Historical Results of Operations of the Company

Three months ended June 30, 2005 compared to three monthsended June 30, 2004

Revenues.    Revenues increasedby $100.2 million, or 56.9%, to $276.4 million for the threemonths ended June 30, 2005 from $176.2 million for the three monthsended June 30, 2004. This increase is primarily attributable to theBarton Acquisition which resulted in an additional $95.2 million ofrevenues for the three months ended June 30, 2005.

Cost ofRevenues.    Cost of revenues increased by $86.6 million, or58.3%, to $235.1 million for the three months ended June 30,2005 from $148.5 million for the three months ended June 30, 2004. Theincrease was mainly the cost associated with increased revenuesattributable to the Barton Acquisition. Cost of revenues as apercentage of revenues increased to 85.1% for the three monthsended June 30, 2005 from 84.3% for the three months ended June30, 2004. The increase was due mainly to increased business insurancecosts. This increase was partially offset as a result of the Companysettling certain outstanding unclaimed property matters for $0.5million less than it expected.

Branch and Corporate OverheadExpenses.    Branch and corporate overhead expenses increased by$7.6 million, or 46.9%, to $23.8 million for the three monthsended June 30, 2005 from $16.2 million for the three months ended June30, 2004. The increase in overhead expenses is primarily the result ofthe Barton Acquisition. As a percentage of revenues, branch andcorporate overhead expenses decreased to 8.6% for the threemonths ended June 30, 2005 from 9.2% for the three months endedJune 30, 2004. This decrease is primarily the result of the achievementof planned cost savings related to the integration of the BartonAcquisition.

Depreciation andAmortization.    Depreciation and amortization increased by $3.0million to $8.4 million for the three months ended June 30, 2005 from$5.4 million for the three months ended June 30, 2004. This increase isprimarily the result of an increase in amortization expense of $1.7million due to increased customer list values resulting from the BartonAcquisition and increased depreciation of uniforms due to additionalsecurity officers resulting from the Barton Acquisition.

Operating Income.    Operating income increased by $3.0million to $9.1 million for the three months ended June 30, 2005 from$6.1 million for the three months ended June 30, 2004. This increase isprimarily related to increased revenues resulting from the BartonAcquisition.

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Interest Expense,Net.    Interest expense, net increased $4.1 million to $9.9million for the three months ended June 30, 2005 from $5.8 million forthe three months ended June 30, 2004. This increase is due to higherdebt balances as a result of the Transactions.

Income TaxExpense (Benefit).    Our members have elected to be treated asa partnership for both federal and state income tax purposes. Inaccordance with applicable regulations, our taxable income or loss isreported in the income tax returns of our members in accordance withour Operating Agreement. Accordingly, we do not have income tax expense(benefit). In lieu of paying income taxes, we pay distributions to ourmembers with respect to income tax that they owe on earnings that areallocated to them in accordance with our Operating Agreement.

Net Income (Loss).    Net income (loss) decreased by $1.1million to a net loss of $(0.8) million for the three months ended June30, 2005 from net income of $0.3 million for the three months endedJune 30, 2004, as a result of the items described above.

Six months ended June 30, 2005 compared to six months endedJune 30, 2004

Revenues.    Revenues increased by$203.3 million, or 58.5%, to $550.6 million for the first sixmonths of 2005 from $347.3 million for the first six months of 2004.This increase is primarily attributable to the Barton and SSIAcquisitions which resulted in an additional $193.9 million of revenuesfor the first six months of 2005.

Cost ofRevenues.    Cost of revenues increased by $177.1 million, or60.0%, to $472.2 million for the first six months of 2005 from$295.1 million for the first six months of 2004. The increase wasmainly the cost associated with increased revenues attributable to theBarton and SSI Acquisitions. Cost of revenues as a percentage ofrevenues increased to 85.8% for the first six months of 2005from 85.0% for the first six months of 2004. The increase wasdue mainly to increased business insurance costs. This increase waspartially offset as a result of the Company settling certainoutstanding unclaimed property matters for $0.5 million less than itexpected.

Branch and Corporate OverheadExpenses.    Branch and corporate overhead expenses increased by$15.0 million, or 45.9%, to $47.7 million for the first sixmonths of 2005 from $32.7 million for the first six months of 2004. Theincrease in overhead expenses is primarily the result of the BartonAcquisition. As a percentage of revenues, branch and corporate overheadexpenses decreased to 8.7% for the first six months of 2005 from9.4% for the first six months of 2004. This decrease isprimarily the result of the achievement of planned cost savings relatedto the integration of the Barton and SSI Acquisitions.

Depreciation and Amortization.    Depreciation andamortization increased by $6.2 million to $16.8 million for the firstsix months of 2005 from $10.6 million for the first six months of 2004.This increase is primarily the result of an increase in amortizationexpense of $3.5 million due to increased customer list values resultingfrom the Barton and SSI Acquisitions and increased depreciation ofuniforms due to additional security officers resulting from the Bartonand SSI Acquisitions.

Operating Income.    Operatingincome increased by $5.0 million to $13.9 million for the first sixmonths of 2005 from $8.9 million for the first six months of 2004. Thisincrease is primarily related to increased revenues resulting from theBarton and SSI Acquisitions.

Interest Expense,Net.    Interest expense, net increased $8.1 million to $19.7million for the first six months of 2005 from $11.6 million for thefirst six months of 2004. This increase is due to higher debt balancesas a result of the Transactions.

Income Tax Expense(Benefit).    Our members have elected to be treated as apartnership for both federal and state income tax purposes. Inaccordance with applicable regulations, our taxable income or loss isreported in the income tax returns of our members in accordance withour Operating Agreement. Accordingly, we do not have income tax expense(benefit). In lieu of paying income taxes, we pay distributions to ourmembers with respect to income tax that they owe on earnings that areallocated to them in accordance with our Operating Agreement.

Net Loss.    Net loss increased by $3.1 million to a netloss of $5.8 million for the first six months of 2005 from a net lossof $2.7 million for the first six months of 2004, as a result of theitems described above.

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Supplemental Non-GAAP financialinformation

EBITDA is defined as income (loss) before interestexpense, income taxes and depreciation and amortization. EBITDA ispresented because we believe it is useful to investors as a widelyaccepted financial indicator of a company's ability to serviceand/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, or GAAP, should not be considered in isolationor as a substitute for a measure of our liquidity or performanceprepared in accordance with GAAP and is not indicative of income fromoperations as determined under GAAP. EBITDA and other non-GAAPfinancial measures have limitations which you should consider if youuse these measures to evaluate our liquidity or financial performance.EBITDA does not include interest expense, which has requiredsignificant uses of our cash in the past and will require us to expendsignificant cash resources in the future. EBITDA also does not includeincome tax expense or depreciation and amortization expense, which maybe necessary in evaluating our operating results and liquidityrequirements or those of businesses we may acquire. Our managementcompensates for these limitations by using EBITDA as a supplement toGAAP results to provide a more comprehensive understanding of thefactors and trends affecting our business or the businesses we mayacquire. Our computation of EBITDA may not be comparable to othersimilarly titled measures provided by other companies, because allcompanies do not calculate this measure in the same fashion.

Thefollowing table reconciles net income (loss), as reported in theCompany's consolidated statements of operations, toEBITDA:

|                                                     |  |                   |        |                 |  |             |        |             |  |        |        |         |  |        |        |         |  |  |
|-----------------------------------------------------|--|-------------------|--------|-----------------|--|-------------|--------|-------------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|                                                |  | Threemonths ended |        | Six monthsended |
|                                                |  | June30,2005       |        | June 30,2004    |  | June30,2005 |        | June30,2004 |
|                                                |  | (inthousands)     |
|                                                |  | (Unaudited)       |
| **Reconciliationof Net Income (Loss)to****EBITDA:** |  |              |   |            |  |        |   |        |  |   |   |    |  |   |   |    |
| Netincome(loss)                                     |  | $                 | (797   | )          |  | $           | 301    |        |  | $      | (5,787 | )  |  | $      | (2,702 | )  |
| Interestexpense, net                                |  |              | 9,870  |            |  |        | 5,806  |        |  |   | 19,715 |    |  |   | 11,628 |    |
| Depreciationand amortization                        |  |              | 8,436  |            |  |        | 5,385  |        |  |   | 16,780 |    |  |   | 10,557 |    |
| EBITDA(A)                                           |  | $                 | 17,509 |            |  | $           | 11,492 |        |  | $      | 30,708 |    |  | $      | 19,483 |    |
|                                                     |

(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". In addition, results for the six month periodended June 30, 2005 include costs that the Company does not expect toincur in the second half of 2005. Such items include payroll taxes andcosts associated with the integration of recentacquisitions:

|              |                                                                                                                                                                                                                                                                                       |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Payroll tax rates areexpected to decline over the course of the year as a result ofemployees reaching federal and state taxable wage limits. Consequently,the Company expects these taxes to be approximately $8.0 million lessin the second half of 2005 than the first half of2005. |

|              |                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Approximately $2.2 million incosts associated with the integration of the Batron Acquisition,primarily related to headcount reductions and lease terminations, areincluded in the Company's results for the first six months of2005. The integration was substantially complete as of June 30, 2005,and therefore, these integration related costs are not expected torecur in the second half of 2005. |

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Liquidity and Capital Resources

Our primary liquidity requirements are for debt service, workingcapital and capital expenditures. As of June 30, 2005, cash and cashequivalents totaled $31.4 million compared to $11.0 million at December31, 2004. Our primary source of liquidity is cash provided by operatingactivities.

Cash provided by operating activities for the firstsix months of 2005 was $39.2 million compared to $19.1 million for thefirst six months of 2004. Cash provided by operating activities wasgenerated primarily from operating income as well as improvements inworking capital, primarily accounts receivable, for the first sixmonths of 2005 compared to the first six months of 2004.

Cashused in investing activities for the first six months of 2005 was $6.4million compared to $17.8 million for the first six months of 2004,which consisted primarily of consideration paid for the SSIAcquisition. Investing activities have consisted historically ofpurchases of property and equipment, primarily uniforms. In the firstsix months of 2005, we paid $6.5 million for property and equipment ascompared to $4.2 million in the first six months of 2004. For 2005, weexpect that our capital expenditures will be approximately $13.0million, primarily for the purchase of uniforms.

Financingactivities have consisted primarily of borrowings and repayments onlong-term debt associated with acquisitions of businesses. Cash used infinancing activities for the first six months of 2005 was $12.4 millioncompared to $0.4 million provided by financing activities for the firstsix months of 2004. The change is primarily the result of scheduledterm loan principal repayments and increased insurance financingpayments in the first six months of 2005 compared to net proceeds fromthe issuance of debt and lower insurance financing payments in thefirst six months of 2004.

As of August 2, 2004 and prior togiving effect to the Transactions, no amounts under the RefinancedRevolver and $125.0 million in term loans were outstanding under theRefinanced Senior Secured Credit Facility and $61.9 million aggregateface value of Refinanced Senior Subordinated Notes were outstanding. Aspart of the Transactions, we repaid amounts outstanding under theRefinanced Senior Secured Credit Facility and redeemed the RefinancedSenior Subordinated Notes.

As of June 30, 2005 we hadapproximately $378.8 million of outstanding indebtedness, whichincludes the Notes and amounts outstanding under our New CreditFacility. In addition, as of June 30, 2005, we had $26.2 million ofunused revolver borrowing capacity under the New Credit Facility, netof the issuance of $23.8 million of outstanding letters of credit.

In lieu of paying income taxes, we may make distributions to ourmembers with respect to income tax that they owe on earnings that areallocated to them in accordance with the Company's OperatingAgreement. There were no distributions during the first six months of2004 or 2005.

Description of Indebtedness

Simultaneous with the closing of the Barton Acquisition, we enteredinto the New Credit Facility with Bear Stearns Corporate Lending Inc.,as Administrative Agent, and a syndicate of lenders arranged by Bear,Stearns & Co. Inc. The New Credit Facility was amended on May 10,2005 to modify certain of its terms as more fully described below. OurNew Credit Facility initially provided for commitments by the lendersfor original term loans of $210.0 million and of $50.0 million inrevolving loans, with certain sub-limits for letters of credit andswingline loans.

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The Company may choose eurodollar rateloans or base rate loans pricing and may elect interest periods of one,two, three or six months for eurodollar borrowings. Each eurodollarrate loan initially bore interest at a rate per annum equal to theeurodollar rate for such day plus 4.50% if it is a revolvingloan and 4.25% if it is a term loan. Each base rate loaninitially bore interest at a rate per annum equal to the base rate plus3.50% if it is a revolving loan and 3.50% if it is a termloan. Upon a payment default, interest will accrue at 2.00% overthe applicable margin for both the eurodollar and base rate loans andthe overdue amounts will accrue interest at 2.00% over theapplicable margin for base rate loans. The Company must pay acommitment fee of 0.75% on the unused portion of its revolvercommitments. The interest rates and commitment fee may decrease in thefuture based on the Company's historical leverage ratios. TheCompany's obligation under the senior secured credit facility areguaranteed by each of the Company's domestic subsidiaries. TheCompany's obligations under the senior secured credit facilityand the obligations of our subsidiary guarantors under the Guaranteeand Collateral Agreement are secured by a first priority lien onsubstantially all of our, and each subsidiary guarantor's,present and future tangible and intangible assets, including, withoutlimitation, all goods, payment receivables, deposit accounts, generalintangibles, intellectual property and all of the equity interests ofeach of the subsidiary guarantors and 66% of the equityinterests in each of our, or any subsidiary guarantor's foreignsubsidiaries. Such obligations are also secured by a pledge of theCompany's membership interests owned by SpectaGuard HoldingCorporation. The revolving commitments terminate and all outstandingrevolving loans are required to be repaid on the fifth anniversary ofthe closing date. The term loans were initially repayable in 24consecutive quarterly installments. The Company is permitted to makevoluntary prepayments, as long as it gives the administrative agentnotice. The Company is required to make mandatory prepayments on theterm loans in certain circumstances. The proceeds from such mandatoryprepayments are applied to the term loans in certain circumstances. Theproceeds from such mandatory prepayments are applied to the term loansin reverse order of maturity and may not be reborrowed.

The NewCredit Facility contains affirmative and negative covenants including(i) the payment of all material obligations; (ii) the maintenence oforganizational existences, including, but not limited to, maintainingthe Company's property insurance; (iii) compliance with allmaterial contractual obligations and requirements of law; (iv) subjectto customary exceptions, limitations on the incurrence of indebtedness,which permit only certain limited indebtedness; (v) subject tocustomary exceptions, limitations on creation and existence of liens;(vi) limitations on certain fundamental changes to the Company'scorporate structure and nature of its business, including mergers;(vii) subject to customary exceptions, limitations on asset sales;(viii) limitations on restricted payments; (ix) limitations on capitalexpenditures; (x) subject to customary exceptions, limitations on anyinvestments, 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 New CreditFacility contains financial covenants requiring the Company to maintainas at the last day of any period of four consecutive fiscal quarters:(i) a maximum senior consolidated debt ratio; (ii) a maximum totalconsolidated leverage ratio; and (iii) a minimum consolidated interestcoverage ratio. The New Credit Facility contains customary events ofdefault.

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

We drew downthe full amount of the New Senior Term Loans and none of the NewRevolver (excluding outstanding letters of credit) in connection withthe Transactions. This amount was used together with the net proceedsfrom the offering of the Notes to finance the Barton Acquisition, torepay substantially all of our then existing indebtedness and to payrelated fees, expenses and prepayment premiums.

On May 10, 2005,the Company executed Amendment No. 1 to its New Credit Facility.Amendment No. 1 contains the following terms and provisions, amongothers: (i) for the New Senior Term Loan, the interest rate applicableto eurodollar rate loans was decreased from LIBOR plus 4.25% toLIBOR plus 3.75% (with a step down to LIBOR plus 3.50%when the Company's leverage ratio is below 3.5x); (ii) the basketfor permitted acquisitions 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 NewSenior Term Loan was decreased for fiscal years 2005 and 2006; and (v)the sublimit for letter of credit availability under the New Revolverwas increased from $40.0 million to $50.0 million.

In theordinary course of business, we enter into short-term financingagreements in order to fund our business insurance policy premiums. OnAugust 13, 2004, we entered into a financing agreement with Cananwill,Inc. for a total amount of $11.2 million. Payments were due in equalmonthly installments through May 1, 2005 and bore an annual interestrate of 2.99%. As of June 30, 2005, this financing agreement,including accrued interest, was repaid in full. In August 2005, theCompany expects to enter a new financing agreement with Cananwill undersimilar terms as the previous financing agreement.

Based uponour current level of operations, we believe that our existing cash andcash equivalents balances and our cash from operating activities,together with available borrowings under the New Credit Facility, willbe adequate to meet our anticipated requirements for working capital,capital expenditures, commitments and interest payments for theforeseeable future. There can be no assurance, however, that ourbusiness will continue to generate cash flow at current levels or thatcurrently anticipated improvements will be achieved. If we are unableto generate sufficient cash flow from operations to service our debt orcomply with debt covenants, we may be required to sell assets, reducecapital expenditures, refinance all or a portion of our indebtedness orobtain additional financing. Our ability to make scheduled principalpayments or to pay interest on or to refinance our indebtedness dependson our future performance and financial results, which, to a certainextent, are subject to general conditions in or affecting our industryand to general conditions and factors that are beyond our control.There can be no assurance that sufficient funds will be available toenable us to service our indebtedness, comply with debt covenants or tomake capital expenditures.

Off-Balance Sheet Arrangements

We are not currently a party to any off-balance sheetarrangements.

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Item 3.    Quantitative andQualitative Disclosures About Market Risk

We are exposed tointerest rate risk related to changes in interest rates for borrowingsunder the New Senior Term Loan and New Revolver. These borrowings bearinterest at variable rates. At June 30, 2005, a hypothetical 10%increase in interest rates applicable to our new senior secured creditfacility would have increased our annual interest expense byapproximately $1.4 million and would have decreased our annual cashflow from operations by approximately $0.8 million.

We areexposed to foreign currency exchange rate fluctuations as the financialresults of our UK foreign operations, acquired as part of the BartonAcquisition, are translated into U.S. dollars. As exchange rates vary,these results, when translated, may vary from expectations andadversely impact our financial position or results of operations. We donot enter into forward exchange contracts as a hedge against foreigncurrency exchange risk or for speculative or trading purposes. Ahypothetical 10% increase in foreign currency exchange rateswould not have a material impact on our financial position or result ofoperations as of June 30, 2005. In July 2005, the Company ceased all ofits foreign operations.

Item 4.    Controls andProcedures

(a) Disclosure Controls and Procedures.    Ourmanagement, with the participation of our Chief Executive Officer andChief Financial Officer, has evaluated the effectiveness of ourdisclosure controls and procedures (as such term is defined in Rules13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, asamended (the "Exchange Act") as of the end ofthe period 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 FinancialReporting.    There have not been any changes in our internal controlover financial reporting (as such term defined in Rule 13a-15(f) and15d-15(f) under the Exchange Act) during the period to which thisreport relates that have materially affected, or are reasonably likelyto materially affect, our internal control over financialreporting.

FORWARD LOOKING STATEMENTS

This QuarterlyReport on Form 10-Q for the period ended June 30, 2005, as well ascertain written, electronic and oral disclosures made by the Companyfrom 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 the Company's management. Suchstatements are made in reliance upon the safe harbor provisions of thePrivate Securities Litigation Reform Act of 1995. Actual results maydiffer materially from anticipated results or expectations andinvestors are cautioned not to place undue reliance on anyforward-looking statements. Statements that are not historical facts,including statements about the Company's strategy, futureoperations, financial position, estimated revenues, projected costs orthe projections, 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,""scheduled to,""anticipates" or"intends" or the negative of those terms, orother 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 the Company's actual results to differmaterially from those expressed in any forward-looking statements madeby it:

|              |                                                                                                                                                                                                                                                                |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company'sdependence on its relationships with its customers and reputation forproviding high-quality contract security services, as well as the riskthat the Company's reputation may be damaged as a result of apublicized incident or breach ofsecurity; |

|              |                                                                                                                                                                                                                                                                                                                                                |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company'sability to retain existing security officer service contracts (whichcontracts can typically be terminated by either party on 30 days'written notice and which may also be subject to periodic biddingprocedures) and to obtain new security service contracts, including ineach case on terms which are favorable to the Company; |

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|              |                                                                                                                                                                                                                                                                                                                         |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Thefailure of the FDOT to maintain its toll operator service contractswith the Company (which contracts are terminable at will by the FDOTfor any reason if in the interests of the FDOT) or the failure of theFDOT to renew such contracts when they expire in May 2006 and on termswhich are favorable to theCompany; |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company'sexposure to liability, particularly to the extent not covered byinsurance and/or where state law prohibits insurance coverage, forcertain damages arising from services it provides to its customers,including by reason of the acts or omissions of the Company'sagents or employees or with respect to events that are not within thecontrol of such agents or employees, and the Company'sindemnification obligations under certain service contracts for eventsoccurring on clientpremises; |

|              |                                                                                                                                                                                                                                                              |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company'sinability to pass cost increases to customers in light of theprice-sensitive nature of the contract security officer industry andthe fixed hourly bill rates or limited fee adjustments provided for inmany of the Company's customercontracts; |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Competitivepressures resulting from (i) new or existing security serviceproviders, some of which have greater resources than the Company and/orare willing to provide security services at lower prices, (ii)increasing consolidation in the contract security officer industry,(iii) local and regional companies that may be better able to secureand retain customers in their regions, and (iv) decreasing expendituresof client resources on quality securityservices; |

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

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

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company's failure orinability to comply with city, county, state or federal laws andregulations, including security industry-related laws and regulationsand occupational health and safety laws and regulations and, in eachcase, the costs associated with such compliance, as well as the costsof complying with new laws and regulations, changes in existing lawsand regulations or the manner in which existing laws and regulationsare interpreted; |

|              |                                                                                                                                                                               |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The risk thatnon-compliance with state security licensing regulations could resultin the Company being prohibited from operating its business in all orpart of a given state; |

|              |                                                                                                                                                                                                                                                 |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Theeffect of changes in security technology, including advances intechnology that may decrease demand for security officers, as well asthe Company's ability to acquire and effectively integrateavailable technologies into its businessmodel; |

|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | 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 risk thatcertain costs incurred during the first half of 2005, such as payrolltaxes and costs related to the integration of acquisitions, which areexpected to decline substantially during the second half of 2005, donot decline as expected; |

|              |                                                                                                                                                                                                    |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Theeffects of terrorist activity or the threat of terrorism at locationsserviced by the Company or elsewhere, including the Company'sexposure to liabilities not covered by insurance for attacks; |

|              |                                                                                                                                                                                                                                                                                                                                                                        |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company's ability toobtain insurance coverage on a cost effective basis or at all(including as a result of the possible non-renewal of the federalgovernment's Terrorism Reinsurance Act when it expires at the endof 2005, which act allows insurance carriers to seek reimbursement fromthe government for certain liabilities arising out of terroristattacks); |

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|              |                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | Theinsufficiency of the Company's existing working capital, togetherwith cash available under its New Credit Facility and anticipated cashflow from operating activities, to meet the Company's expectedoperating, capital spending and debt service requirements for theforeseeable future and the inability of the Company to comply with thefinancial covenants in the Company's financing arrangements; |

|              |                                                                                                                                                                                                                                                          |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  | The Company's level ofindebtedness, the restrictions or obligations imposed on the Company bythe New Credit Facility and the indenture governing the Notes, and theCompany's exposure to fluctuations in interest rates under theNew Credit Facility;and |

|              |                                                                                                            |
|--------------|------------------------------------------------------------------------------------------------------------|
| •  | Unanticipated internalcontrol deficiencies or weaknesses or ineffective disclosure controlsand procedures. |

In addition, the Company encourages investors toread (i) the section entitled "Risk Factors"in the Company's Registration Statement on Form S-4/A filed withthe SEC on January 10, 2005 and (ii) the summary of the Company'scritical accounting policies in Exhibit 99.1 to the Company'sCurrent Report of Form 8-K (furnished to the SEC on March 31, 2005)under the heading "Management's Discussion andAnalysis of Financial Condition and Results of Operations — Basisof Presentation and Critical Accounting Policies", as suchsummary may be modified or supplemented by reports that the Companyfiles with the SEC, including this Quarterly Report on Form 10-Q.Forward-looking statements speak only as of the date they are made, andexcept for the Company's ongoing obligations under the U.S.federal securities laws, it undertakes no obligation to publicly updateany forward-looking statements, whether as a result of new information,future events or otherwise.

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PART II.    OTHER INFORMATION

Item 1.    Legal Proceedings.

We may be held liable forthe negligent acts or misconduct of our agents or employees performedwhile on duty and in the course and scope of their employment. Weexperience a significant volume of claims and litigation 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 cangenerally be held liable for wrongful acts or omissions to act of ouragents or employees during the course, and within the scope, of theiragency or employment with us.

In addition, many of our customercontracts contain provisions whereby we are contractually obligated todefend, indemnify and hold harmless our clients. The 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 adequatelyinsures 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.

Item2.    Unregistered Sales of Equity Securities and Use ofProceeds.

The following issuance of unregistered securities wasconducted pursuant to Section 4(2) of the Securities Act:

On May17, 2005, 7,500 unvested Class C Units were issued to an executive forapproximately $5,000.

Item 3.    Defaults Upon SeniorSecurities.

None

Item 4.    Submission of Matters toa Vote of Unit Holders.

None

Item 5.    OtherInformation.

None

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Item 6. Exhibits

|            |  |                                                                                                                                                                                                          |  |  |  |  |
|------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description ofExhibit                                                                                                                                                                                    |
| 10.1       |  | AmendmentNo. 1 to the New Credit Facility, dated as of May 10, 2005(Incorporated byreference to Exhibit 10.1 to the Company'sForm 8-K filed with the SEC on May 13,2005)                                 |
| 31.1       |  | Certificationof Chief Executive Officer of Allied Security Holdings LLC pursuant toRule13a- 14(a)/15d-14(a) of the Securities Exchange Act of1934                                                        |
| 31.2       |  | Certificationof Chief Financial Officer of Allied Security Holdings LLC pursuant toRule13a- 14(a)/15d-14(a) of the Securities Exchange Act of1934                                                        |
| 32.1       |  | Certificationsof Chief Executive Officer and Chief Financial Officer of AlliedSecurityHoldings LLC pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906of the Sarbanes-Oxley Act of2002 |
|       |  |                                                                                                                                                                                                     |
|            |

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,this report has been signed below by the following persons on behalf ofthe registrant and in the capacities and on the dates indicated:

|                             |  |                                                                               |  |                 |
|-----------------------------|--|-------------------------------------------------------------------------------|--|-----------------|
| Signature                   |  | Title                                                                         |  | Dates           |
|                             |
| /s/William C. Whitmore, Jr. |  | President, Chief Executive Officer and Manager(Principal Executive Officer)   |  | August 15,2005  |
|                             |
| William C. Whitmore,Jr.     |
|                             |
| /s/ William A.Torzolini     |  | SeniorVice President and Chief Financial Officer (Principal FinancialOfficer) |  | August 15, 2005 |
|                             |
| William A. Torzolini        |
|                             |
| /s/ G.Michael Landis        |  | ChiefAccounting Officer (Principal AccountingOfficer)                         |  | August 15,2005  |
|                             |
| G. Michael Landis           |
|                             |

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