UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
                                   (Mark One)

              |X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2005

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

      For the transition period from _________________ to _________________

                        Commission file number 001-12536

                             SECURED SERVICES, INC.
        (Exact name of small business issuer as specified in its charter)

           Delaware                                       11-2964894
(State or other jurisdiction of              (IRS Employer Identification No.)
 incorporation or organization)


                         110 Williams Street, 14th Floor
                            New York, New York 10038

                    (Address of principal executive offices)
                                 (212) 227-9696
                           (Issuer's telephone number)

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable  date: As of November 21, 2005 the issuer
had  outstanding  18,405,040  shares of its common  stock,  par value $.0001 per
share.

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).   |_| Yes   |X| No

Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|

<PAGE>


                                TABLE OF CONTENTS

                               FORM 10-QSB REPORT

                               September 30, 2005

<TABLE>
<CAPTION>

PART I - FINANCIAL INFORMATION
                                                                                              PAGE
<S>                                                                                              <C>

     Item 1. Financial Statements

              Condensed Consolidated Balance Sheets
                  September 30, 2005 (unaudited) and December 31, 2004........................    2

              Condensed Consolidated Statements of Operations and Comprehensive Income
                  (Loss) for the nine and three months ended September 30, 2005 and 2004
                  (unaudited).................................................................    3

              Condensed Consolidated Statement of Changes in Stockholders' Equity
                  for the nine months ended September 30, 2005 (unaudited)....................    4

              Condensed Consolidated Statements of Cash Flows
                  for the nine months ended September 30, 2005 and 2004 (unaudited)...........    5

              Notes to Condensed Consolidated Financial Statements (unaudited)................    7

     Item 2. Management's Discussion and Analysis or Plan of Operation........................   17

     Item 3. Controls and Procedures..........................................................   23

PART II - OTHER INFORMATION


     Item 2. Unregistered Sales of Equity Securities and Use of Proceeds......................   24


     Item 6. Exhibits.........................................................................   25

SIGNATURES....................................................................................   26

</TABLE>


<PAGE>


PART I - FINANCIAL INFORMATION.

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
              SEPTEMBER 30, 2005 (Unaudited) AND DECEMBER 31, 2004
<TABLE>
<CAPTION>
                                                                                               September 30,    December 31,
                                            ASSETS                                                 2005             2004
                                            ------                                             -----------      -----------
<S>                                                                                              <C>              <C>
Current assets:
     Cash and cash equivalents                                                                   $ 980,083       $1,607,777
     Certificate of deposit                                                                        294,301          218,051
     Accounts receivable, net of allowance for doubtful
         accounts of $114,903 and $93,750                                                          463,980          518,183
     Note receivable - employee                                                                     38,000           38,000
     Due from stockholder                                                                           34,000           32,800
     Prepaid expenses and other current assets                                                     290,139          123,357
                                                                                               -----------      -----------
              Total current assets                                                               2,100,503        2,538,168

Loans receivable from related parties, net of allowance of $1,596,179 and
         and $600,000                                                                                   --          945,281
Computer equipment, net of accumulated depreciation of $120,739 and                                149,285          146,656
         $61,258
Goodwill                                                                                         7,542,276        2,808,429
Other intangible assets, net of accumulated amortization of $885,289
         and $387,777                                                                            3,185,954          717,465
                                                                                               -----------      -----------
              Totals                                                                           $12,978,018       $7,155,999
                                                                                               ===========       ==========

                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of notes payable                                                             $318,881         $355,494
     Accounts payable                                                                              431,274          328,314
     Accrued expenses                                                                            1,631,549        1,127,905
     Deferred revenues                                                                             476,935          108,173
     Loan payable to stockholders                                                                  291,189
                                                                                               -----------      -----------
              Total current liabilities                                                          3,149,828        1,919,886

Convertible debentures, net of debt discount of $516,952                                         6,483,048
Dividends payable in common stock                                                                   61,250           30,000
Notes payable, net of current portion                                                                               230,735
                                                                                               -----------      -----------

              Total liabilities                                                                  9,694,126        2,180,621
                                                                                               -----------      -----------
Commitments and contingencies
Stockholders' equity:
     Preferred stock; par value $.0001 per share;  5,000,000 shares  authorized;
         2,000,000 shares of Series A convertible preferred
         stock issued and outstanding                                                                  200              200
         4,170 shares of Series B convertible preferred
         stock issued and outstanding at September 30, 2005
     Common stock, par value $.0001 per share; 50,000,000 shares                                         -                -
         authorized; 18,405,040 and 17,378,836 shares issued and outstanding                         1,840            1,738
     Additional paid-in capital                                                                 19,621,031       12,465,943
     Treasury stock, 111 shares at cost                                                               (128)               -
     Subscriptions receivable for 768,000 shares                                                  (453,813)        (576,000)
     Accumulated deficit                                                                       (15,800,901)      (6,953,151)
     Accumulated other comprehensive income  (loss)                                                (84,337)          36,648
                                                                                               -----------      -----------
              Total stockholders' equity                                                         3,283,892        4,975,378
                                                                                               -----------       ----------
              Totals                                                                           $12,978,018       $7,155,999
                                                                                               ===========       ==========
</TABLE>

See Notes to Unaudited Condensed Consolidated Financial Statements.

                                       2
<PAGE>

                     SECURED SERVICES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                         AND COMPREHENSIVE INCOME (LOSS)
             NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                Nine Months            Nine Months           Three Months         Three Months
                                                    Ended                 Ended                  Ended                Ended
                                             September 30, 2005      September 30, 2004    September 30, 2005   September 30, 2004
                                             ------------------     ------------------    ------------------    ------------------
<S>                                                  <C>                   <C>                     <C>                   <C>
Revenues - sales and services                        $2,497,286            $1,355,441              $652,158              $418,513

Cost of revenues                                      1,598,538               502,737               438,351               155,190
                                                   ------------          ------------           -----------           -----------

Gross profit                                            898,748               852,704               213,807               263,323
                                                   ------------          ------------           -----------           -----------

Operating expenses:
     Selling, general and administrative              5,213,517             3,134,831             1,688,782             1,256,514
     Research and development                         1,524,585               762,287               556,338               428,299
     Depreciation of computer equipment                  59,481                28,833                25,377                12,026
     Amortization of intangible assets                  497,511               180,000               339,269                60,000
     Restructuring charges                              315,134                                     315,134
     Charge for impairment of loans to
         related parties                                996,179                   --                250,537                    --
                                                   ------------          ------------           -----------           -----------
     Totals                                           8,606,407             4,105,951             3,175,437             1,756,839
                                                   ------------          ------------           -----------           -----------

Loss from operations                                 (7,707,659)           (3,253,247)           (2,961,630)           (1,493,516)

Other income (expense):
     Other income, net                                  110,010                30,130                51,918                16,391
     Loss from loan guarantee                          (218,051)                                   (218,051)
     Cost of terminated acquisitions                   (550,000)                                    (27,483)                   --
     Interest expense                                  (279,539)              (34,910)             (196,088)               (9,929)
                                                    -----------           -----------           -----------           -----------
Net loss                                             (8,645,239)           (3,258,027)           (3,351,334)           (1,487,054)
Preferred stock dividend requirements                   202,511                90,000               142,511                30,000
                                                    -----------           -----------           -----------           -----------
Net loss applicable to common stock                 $(8,847,750)          $(3,348,027)          $(3,493,845)          $(1,517,054)
                                                    ===========           ===========           ===========           ===========

Loss per common share - basic and diluted                $(0.49)               $(0.25)               $(0.19)               $(0.09)
                                                         ======                ======                ======                ======

Weighted average common shares outstanding           17,883,989            13,163,669            18,269,823            17,225,409
                                                    ===========           ===========           ===========           ===========
Comprehensive income (loss)
     Net loss                                       $(8,645,239)          $(3,258,027)          $(3,351,334)          $(1,487,054)
     Other comprehensive loss -
         foreign currency translation adjustment       (120,985)               (5,094)              (58,406)               (9,549)
                                                   ------------          ------------           -----------           -----------
Comprehensive loss                                  $(8,766,224)          $(3,263,121)          $(3,409,740)          $(1,496,603)
                                                    ===========           ===========           ===========           ===========
</TABLE>

See Notes to Unaudited Condensed Consolidated Financial Statements.

                                       3
<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                      NINE MONTHS ENDED SEPTEMBER 30, 2005
                                   (Unaudited)
<TABLE>
<CAPTION>
--------------------------- --------------------- --------------------- ----------------------- -------------- ----------

                                  SERIES A             SERIES B                                  ADDITIONAL
                                CONVERTIBLE           CONVERTIBLE                                 PAID-IN      TREASURY
                              PREFERRED STOCK       PREFERRED STOCK          COMMON STOCK          CAPITAL       STOCK
--------------------------- --------------------- --------------------- ----------------------- -------------- ----------
                              SHARES     AMOUNT     SHARES     AMOUNT      SHARES     AMOUNT
--------------------------- --------------------- --------------------- ----------------------- -------------- ----------
<S>              <C>        <C>          <C>        <C>       <C>       <C>           <C>        <C>           <C>
Balance, January 1, 2005    2,000,000    $200                           17,378,836    $1,738     $12,465,943
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Preferred stock and
warrants issued in
connection with
acquisition                                         4,170                                          5,204,539
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Subscriptions paid
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Shares issued upon
exercise of warrants                                                         4,000                     6,000
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Dividends declared on
preferred stock
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Warrants issued in
exchange for services                                                                                  6,450
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Warrants issued in
connection with debt
financing, including
charge for beneficial
conversion rights of
$286,712                                                                                             626,069
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Shares issued for payment
of accrued dividends on
preferred stock                                                            261,196        26         171,235
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Shares issued in exchange
for services                                                               185,000        18         276,841
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Shares sold through
private placement, net of
expenses                                                                   576,008        58         863,954
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Shares repurchased                                                                                               $(128)
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Net loss
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Foreign currency
translation adjustments
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------
Balance, September 30,
2005                        2,000,000    $200       4,170       $-      18,405,040    $1,840     $19,621,031     $(128)
                            =========    ====       =====       ==      ==========    ======     ===========     ======
--------------------------- ---------- ---------- ---------- ---------- ------------ ---------- -------------- ----------

<CAPTION>
---------------------------  --------------- -------------- -------------- -----------
                                                             ACCUMULATED
                                                                OTHER
                             SUBSCRIPTIONS    ACCUMULATED   COMPREHENSIVE
                               RECEIVABLE       DEFICIT     INCOME (LOSS)     TOTAL
---------------------------  --------------- -------------- -------------- -----------

---------------------------  --------------- -------------- -------------- -----------
<S>              <C>            <C>           <C>               <C>         <C>
Balance, January 1, 2005        $(576,000)    $(6,953,151)      $36,648     $4,975,378
---------------------------  --------------- -------------- -------------- -----------
Preferred stock and
warrants issued in
connection with
acquisition                                                                  5,204,539
---------------------------  --------------- -------------- -------------- -----------
Subscriptions paid                122,187                                      122,187
---------------------------  --------------- -------------- -------------- -----------
Shares issued upon
exercise of warrants                                                             6,000
---------------------------  --------------- -------------- -------------- -----------
Dividends declared on
preferred stock                                  (171,261)                    (171,261)
---------------------------  --------------- -------------- -------------- -----------
Warrants issued in
exchange for services                                                            6,450
---------------------------  --------------- -------------- -------------- -----------
Warrants issued in
connection with debt
financing, including
charge for beneficial
conversion rights of
$286,712                                                                       626,069
---------------------------  --------------- -------------- -------------- -----------
Shares issued for payment
of accrued dividends on
preferred stock                                                                171,261
---------------------------  --------------- -------------- -------------- -----------
Shares issued in exchange
for services                                                                   276,859
---------------------------  --------------- -------------- -------------- -----------
Shares sold through
private placement, net of
expenses                                                                       864,012
---------------------------  --------------- -------------- -------------- -----------
Shares repurchased                                                                (128)
---------------------------  --------------- -------------- -------------- -----------
Net loss                                       (8,645,239)                  (8,645,239)
---------------------------  --------------- -------------- -------------- -----------
Foreign currency
translation adjustments                                       (120,985)       (120,985)
---------------------------  --------------- -------------- -------------- -----------
Balance, September 30,
2005                            $(453,813)   $(15,769,651)    $(84,337)     $3,315,142
                                ==========   =============    =========     ==========
---------------------------  --------------- -------------- -------------- -----------
</TABLE>

See Notes to Unaudited Condensed Consolidated Financial Statements.

                                       4
<PAGE>



                     SECURED SERVICES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                              September 30, 2005  September 30, 2004
                                                              ------------------  ------------------
Operating activities:
<S>                                                                <C>             <C>
     Net loss                                                      $(8,645,239)    (3,258,027)
     Adjustments to reconcile net loss to net cash used in
         operating activities:
         Depreciation of computer equipment                             59,481         28,833
         Amortization of intangible assets                             497,511        180,000
         Amortization of debt discount                                  60,869
         Charge for impairment of loans to related parties             996,179
         Provision for bad debts                                        51,162         43,200
         Deferred revenues                                             368,762         94,814
         Common stock and warrants issued for services                 283,309         62,800
         Changes in operating assets and liabilities:
                  Accounts receivable                                   42,479       (128,859)
                  Prepaid expenses and other current assets           (105,095)       (45,415)
                  Accounts payable                                    (337,753)       162,177
                  Accrued expenses                                     503,644        926,545
                                                                   -----------    -----------
                       Net cash used in operating activities        (6,224,691)    (1,933,932)
                                                                   -----------    -----------

Investing activities:
     Cash paid for acquisition of
         Chameleon Communications Technology Inc.                   (1,147,000)
     Purchase of intangible asset                                                    (200,000)
     Purchase of certificate of deposit                                (76,250)
     Loans to related parties, net                                     (30,898)      (677,546)
     Loan to employee                                                                 (38,000)
     Purchases of computer equipment                                   (43,782)       (87,158)
                                                                   -----------    -----------
                      Net cash used in investing activities         (1,297,930)    (1,002,704)
                                                                   -----------    -----------

Financing activities:

     Proceeds from issuance of convertible debenture                 7,000,000
     Repayments of note payable                                     (1,267,348)      (259,617)
     Proceeds from loan payable to stockholders                        339,320        250,050
     Repayment of loan payable to stockholder                          (48,131)      (250,050)
     Proceeds from exercise of warrants                                  6,000
     Purchase of treasury stock                                           (128)
     Proceeds from subscriptions receivable for common stock           122,187        391,100
     Proceeds from private placements of common stock, net             864,012      6,621,780
                                                                   -----------    -----------
                       Net cash provided by financing activities     7,015,912      6,753,263
                                                                   -----------    -----------

Effect of foreign currency translation on cash                        (120,985)        (4,994)
                                                                   -----------    -----------

Net increase (decrease) in cash and cash equivalents                  (627,694)     3,811,633

Cash and cash equivalents, beginning of period                      $1,607,777       $203,677
                                                                   -----------    -----------

Cash and cash equivalents, end of period                              $980,083     $4,015,310
                                                                   ===========    ===========
</TABLE>

See Notes to Unaudited Condensed Consolidated Financial Statements.

                                       5


<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 2005 and 2004
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                    September 30, 2005   September 30, 2004
                                                                    ------------------   ------------------
Supplementary disclosure of cash flow information:

<S>                                                                      <C>                  <C>
         Interest paid                                                   $ 51,130             $ 34,910
                                                                         ========             ========

</TABLE>

See Notes to Unaudited Condensed Consolidated Financial Statements.

                                       6


<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of presentation and going concern matters:

         In the opinion of  management,  the  accompanying  unaudited  condensed
         consolidated  financial statements reflect all adjustments,  consisting
         of normal recurring accruals, necessary to present fairly the financial
         position of Secured  Services,  Inc. ("SSI") and its subsidiaries  (the
         "Company")  as of September  30,  2005,  and the  Company's  results of
         operations  for the nine and three months ended  September 30, 2005 and
         2004,  changes  in  stockholders'  equity  for the  nine  months  ended
         September  30, 2005 and cash flows for the nine months ended  September
         30, 2005 and 2004.  Information included in the condensed  consolidated
         balance sheet as of December 31, 2004 has been derived from the audited
         balance  sheet of the Company as of December  31, 2004  included in the
         Company's  Annual  Report on Form  10-KSB (the  "10-KSB")  for the year
         ended  December  31,  2004 that was  previously  filed  with the United
         States Securities and Exchange Commission (the "SEC").  Pursuant to the
         rules and  regulations  of SEC,  certain  information  and  disclosures
         normally included in financial  statements  prepared in accordance with
         accounting  principles  generally  accepted  in the  United  States  of
         America  have  been  condensed  in  or  omitted  from  these  financial
         statements.   Accordingly,   these  unaudited  condensed   consolidated
         financial  statements  should be read in  conjunction  with the audited
         consolidated financial statements included in the 10-KSB.

         The results of operations for the nine and three months ended September
         30, 2005 are not  necessarily  indicative of the results to be expected
         for the year ending December 31, 2005 or any other subsequent period.

         Going Concern Uncertainty

         The accompanying  condensed consolidated financial statements have been
         prepared  assuming that the Company will  continue as a going  concern.
         However, as shown in the accompanying  condensed consolidated financial
         statements,  the  Company  only  generated  revenues  of  approximately
         $2,497,000 and  $1,355,000 and it incurred net losses of  approximately
         $8,645,000 and $3,258,000 and had cash flow deficiencies from operating
         activities of  approximately  $6,225,000  and  $1,934,000  for the nine
         months ended September 30, 2005 and 2004,  respectively.  These matters
         raise  substantial  doubt about the Company's  ability to continue as a
         going concern.

         Management  believes that, in the absence of a substantial  increase in
         revenues from sales and services,  it is probable that the Company will
         continue  to incur  losses  and  negative  cash  flows  from  operating
         activities  through at least  September  30,  2006 and that the Company
         will require new capital funding by the first week of December, 2005 to
         maintain a minimum level of operations and continue as a going concern.
         If the  Company is unable to meet its  revenue  and cash goals and also
         renegotiate the terms of its outstanding  loan agreements or obtain new
         equity or debt funding,  until it can market its  products,  expand its
         customer base and achieve profitability and positive cash flows, it may
         have to curtail or terminate  some, or all, of its planned  operations.
         The accompanying  condensed  consolidated  financial  statements do not
         include   any   adjustments   relating   to  the   recoverability   and
         classification or recorded assets,  or the amounts and  classifications
         of liabilities  that might be necessary in the event the Company cannot
         continue as a going concern.

Note 2 - Business operations:

         The Company is an information security company,  which provides Secured
         User  Management  Software  for the entire  enterprise.  The  Company's
         customers manage complex  application access for employees,  suppliers,
         and their  customers.  Customers must manage  operational risk and meet
         regulatory compliance requirements.  Customers work within a complex IT
         infrastructure  developed  over  decades  and  made  up  of  mainframe,
         client/server and web-based applications.

         The  Company's  revenues are derived  primarily  from its core product,
         Identiprise(TM) and associated services.  The Identiprise(TM)  software
         platform  was  designed  from its  inception  to provide  comprehensive

                                       7


<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


         Secured  User  Management  across  the  corporation.   The  Identiprise
         software  platform  enables  users to have secure  access to  corporate
         applications with one unique organizational  identifier while providing
         a detailed audit of all their activities. Functionality of the software
         platform includes:

            o     Consolidated  user  account  creation  or deletion to assigned
                  applications.

            o     Simplified and distributed administration.

            o     Detailed  usage  logs  for  risk   management  and  compliance
                  reporting.

            o     Rapid  installation  and  implementation   without  impact  to
                  applications.

            o     Significantly reduced user management costs.

         The Company's Advanced User Security Group provides project management,
         training and services to ensure a non-disruptive, on-time and on-budget
         installation of the Secured User Management solution. Services include:

            o     Understanding their regulatory and security requirements.

            o     Setting appropriate policies.

            o     Developing plans and budgets to support the  implementation of
                  an enterprise wide Secured User Management solution.

         As part of the Company's overall operations described above,  Chameleon
         Communications  Technology,  Inc. ("Chameleon"),  which was acquired on
         June 14,  2005  (see Note 3) and is  located  in  Seattle,  Washington,
         enables  the secure  convergence  of wired and  wireless  IP  networks,
         supplying a secure  network  operating  platform to  broadband  service
         providers and  enterprises  which enables the integration of WiFi/WiMAX
         into their networks and service  delivery  platforms for data, VoIP and
         video. The software provides a comprehensive  collection of services to
         secure,  manage and simplify the use of wireless  communications across
         disparate networks.

         By deploying the Chameleon Broadband Suite,  Telecommunications service
         providers  leverage  Chameleon's  software  to  use  emerging  wireless
         broadband technologies to cost effectively extend service areas, and to
         tightly integrate wireless broadband services with existing back office
         systems to enable seamless operations and customer support. Enterprises
         and  government  agencies  leverage  Chameleon  Technology  software to
         secure  inherently  insecure  wireless  networks  for local and  remote
         access to sensitive,  mission critical data,  enabling mobility of data
         resources and the accompanying gains in productivity.

         The Company's products are generally sold on a perpetual license basis.
         Customers  enter into an annual  support  agreement for their  software
         license  at the time of  initial  purchase  and  typically  renew  this
         support agreement annually. The support agreement entitles customers to
         software  upgrades and support.  The  Company's  professional  services
         group provides  customers  with project  management,  architecture  and
         design, custom development services and training.

Note 3 - Business acquisitions:

         On June 14, 2005 (the "Effective  Date"),  the Company  acquired all of
         the business and assets of Chameleon by merger (the  "Chameleon  Merger
         Transaction")  and closed on the private  placement  of  $7,000,000  of
         debentures  and  warrants to  Midsummer  Investment,  Ltd. and Islandia
         L.P.,  both  institutional  buyers and  accredited  investors  (each an
         "Investor")  (the  "Debenture  Transaction")  pursuant to a  Securities
         Purchase  Agreement (the  "Debenture  Agreement")  dated as of June 13,
         2005 (see Notes 6 and 7). The Company received  $7,000,000 in cash from
         Midsummer  Investment Ltd.  (including  $3,000,000  initially placed in
         escrow), and paid $1,000,000 to the stockholders of Chameleon.

                                       8
<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


         The  consideration  for the Chameleon Merger  Transaction  consisted of
         $1,147,000 in cash, 1-year  non-interest  bearing promissory notes (the
         "Chameleon  Merger  Notes")  in  the  aggregate   principal  amount  of
         $1,000,000 convertible at the option of the holders into 834,000 shares
         of our common stock after 360 days,  $5,000,000 of our Series B Shares,
         consisting of 4,170 Series B Shares  convertible  into 4,170,000 shares
         of common stock (the "Chameleon  Merger Shares"),  and four-year common
         stock  purchase  warrants  to purchase  1,876,500  shares of our common
         stock at an  exercise  price of  approximately  $1.28  per  share  (the
         "Chameleon Merger Warrants"). The Chameleon Merger Notes, the Chameleon
         Merger  Warrants  and the  Chameleon  Merger  Shares are all subject to
         anti-dilution  adjustments.  The consideration for the Chameleon Merger
         Transaction  was  determined  in  "arms-length"  negotiations  and  the
         transaction was unanimously  approved by the Boards of Directors of the
         parties involved.

         In  September  2005,  upon  release of  $3,000,000  from escrow and the
         completion of the  Debenture  Transaction,  the Chameleon  Merger Notes
         were paid in full.

         The  components  of the  purchase  price,  which  includes  $147,000 of
         closing costs, and preliminary  allocation of the purchase price to the
         acquired assets is summarized below:

         Purchase price:

         Estimated fair value of preferred stock
            and warrants issued                         $5,204,539
         Notes payable                                   1,000,000
         Cash                                            1,147,000
                                                        ----------
             Total consideration                        $7,351,539
                                                        ==========

         Allocation of purchase price:

         Contracts and customer relationships           $  556,000
         Developed technology                            2,410,000
         Goodwill                                        4,727,347
         Accounts receivable                                39,438
         Other current assets                               34,639
         Equipment                                          18,328
         Accounts payable                                 (434,213)
                                                        ----------
             Net assets acquired                        $7,351,539
                                                        ==========

         As  explained  above,  the  Company  completed  the  merger,  which was
         accounted  for as a purchase,  on June 14,  2005.  The  purchase  price
         allocation  was based on  preliminary  information  as to,  among other
         things, the fair value of the preferred stock issued by the Company and
         the  fair  value  of  the  identifiable  assets  acquired.   The  final
         valuations may differ and, accordingly,  the amounts actually allocated
         to the  identifiable  assets,  goodwill  and certain  other  assets and
         liabilities may differ from those shown above.

         The summarized unaudited pro forma financial  information for the three
         months ended September 30, 2004 and the nine months ended September 30,
         2005  and  2004  that  follows  assumes  the   acquisitions  of  Cybrix
         Corporations  assets  ("Cybrix") on November 1, 2004 (see Note 3 in the
         10-KSB) and Chameleon on June 14, 2005 were  consummated  on January 1,
         2004.

                                       9
<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                 For the                   For the
                                           Nine Months Ended          Three Months Ended
                                             September 30,               September 30,
                                         2005            2004                2004
                                    -------------------------------------------------------

<S>                                     <C>             <C>                      <C>
Revenues                               $  2,540,681    $  2,291,718           $    790,384
Cost of revenues                          1,600,637       1,088,225                405,788
                                    -------------------------------------------------------
Gross profit                                940,044       1,203,493                384,596
Operating expenses                        9,083,907       5,611,246              2,218,491
                                    -------------------------------------------------------
Loss from operations                     (8,143,863)     (4,407,753)            (1,833,895)
Other expense                             1,363,167         713,720                226,390
                                    -------------------------------------------------------
Net loss                               $ (9,507,030)   $ (5,121,473)          $ (2,060,285)
                                    =======================================================
Net loss applicable to common stock    $ (9,878,280)   $ (5,492,723)          $ (2,184,035)
                                    =======================================================

Loss per share - basic and diluted          $ (0.55)        $ (0.42)               $ (0.13)
                                    =======================================================
Weighted average common shares
   outstanding                           17,883,989      13,163,669             17,225,409
                                    =======================================================

</TABLE>


         The acquisitions were accounted for as purchases and, accordingly,  the
         Company's  condensed   consolidated   financial  statements  have  only
         included the results of  operations of Cybrix from November 1, 2004 and
         Chameleon   from  June  14,  2005,  the  dates  of   acquisition.   The
         identifiable   intangible   assets   that  arose  from  the   Chameleon
         acquisition are being amortized on the straight-line  method over three
         years.

Note 4 - Earnings (loss) per common share:

         The Company  presents  "basic" earnings (loss) per common share and, if
         applicable,  "diluted"  earnings  per  common  share  pursuant  to  the
         provisions of Statement of Financial  Accounting Standards ("SFAS") No.
         128,  "Earnings per Share".  Basic earnings  (loss) per common share is
         calculated by dividing net income or loss applicable to common stock by
         the weighted  average number of common shares  outstanding  during each
         period. The calculation of diluted earnings per common share is similar
         to that of basic  earnings per common  share,  except that the weighted
         average number of common shares outstanding is increased to include the
         number of additional  common shares that would have been outstanding if
         all potentially dilutive common shares, such as those issuable upon the
         exercise  of  stock   options  and  warrants  and  the   conversion  of
         outstanding  convertible  debentures and preferred  stock,  were issued
         during the period, with appropriate  adjustments for the application of
         the treasury stock method with respect to options and warrants  assumed
         to  have  been  exercised  and the  elimination  of any  dividends  and
         interest on the preferred shares and convertible  debentures assumed to
         have been converted from net income or loss.

         Since the  Company had net losses for the nine and three  months  ended
         September  30,  2005 and 2004,  the  assumed  effects  of the  issuance
         potentially  dilutive  securities shown below into an equivalent number
         of shares of common stock would have been anti-dilutive.

                                                              September 30,
                                                          2005           2004
                                                      ------------   -----------
         Exercise of options and warrants outstanding   11,190,635     3,925,618
         Series A convertible preferred stock            2,000,000     2,000,000
         Series B convertible preferred stock            4,170,000        --
         7.5% convertible debentures                     5,837,224        --
                                                      ------------   -----------
                                          Totals        23,197,859     5,925,618
                                                      ============   ===========

                                       10


<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 5 - Related Party Transactions and Balances

         As of September 30, 2005,  the Company has made aggregate cash advances
         of $1,596,179 to related companies in which a  founder/director  of the
         Company has an ownership interest.  The related companies have used the
         funds to  pursue  litigation  and  incur  expenses  to  regain  certain
         technology    consulting    contracts,    which   they   believe   were
         misappropriated  from them.  The Company  owns  rights to purchase  the
         contracts from the related  companies in exchange for its common stock.
         Management  believes that the contracts in question are lucrative,  and
         if the related companies  prevail in the litigation,  the Company would
         seek to exercise its rights to obtain the contracts.

         Included in the advances of $1,596,179  are two notes  receivable  with
         balances  aggregating  $1,545,281  bearing  interest  at 6% per  annum.
         Interest only is payable monthly with the entire principal  balance and
         all accrued  and unpaid  interest  due on April 1, 2006.  The notes are
         collateralized  by 500,000 shares of the Company's common stock as well
         as certain other proprietary intangible assets of related companies.

         At December 31, 2004,  management  made an assessment  that the related
         companies did not have  sufficient  resources to continue  pursuing the
         litigation, and possibly will not have sufficient resources to continue
         operating  if the  litigation  process is not  decided in their  favor.
         Based on the status of the  litigation,  the Company had estimated that
         subsequent to December 31, 2004,  the related  companies  could require
         additional funds of  approximately  $300,000 to carry the litigation to
         its conclusion.

         At December 31, 2004,  the Company  established  a reserve  against the
         notes  receivable from the related parties and recorded a corresponding
         charge for  impairment  of $600,000 that reduced the net balance of the
         notes  receivable to $945,281,  which  approximated  the estimated fair
         value  at that  date of the  collateral  that  secures  the  notes.  In
         addition,  the Company  discontinued  the accrual of  interest.  In May
         2005, the Company  learned that it was not successful in all aspects of
         its case and in June 2005 the Company decided to suspend the pursuit of
         the litigation  until it can obtain further legal advice.  Based on the
         status of the  litigation  and the value of the  collateral at June 30,
         2005  and  September  30,  2005,  the  Company  established  additional
         reserves  against the notes  receivable  from the  related  parties and
         recorded   corresponding   charges  for  impairment  totaling  $945,281
         (including  $345,281 in the three months ended  September 30, 2005), to
         fully  offset the balance of the notes  receivable.  The  Company  also
         established  reserves  against  other  related  party  receivables  and
         recorded a  corresponding  charge for impairment of $50,898 in the nine
         and three months ended  September  30, 2005 to fully offset the related
         accounts receivable balance.

Note 6 - Stockholders' equity:

         Preferred stock:

         As of September  30, 2005,  the Company was  authorized  to issue up to
         5,000,000  shares of  preferred  stock  with a par value of $.0001  per
         share.  Under the  Company's  Articles of  Incorporation,  the Board of
         Directors,  within certain  limitations  and  restrictions,  can fix or
         alter  preferred  stock dividend  rights,  dividend  rates,  conversion
         rights,  voting rights and terms of  redemption,  including  redemption
         prices and liquidation preferences.

         As of  September  30,  2005,  the  Company  had  designated  and issued
         2,000,000  shares of Series A convertible  preferred  stock  ("Series A
         Shares").  Each share can be converted to one share of common stock and
         has the voting rights similar to common stock. In addition, each of the
         Series A Shares  earns a  quarterly  dividend of 6% which is payable in
         shares of the Company's common stock based on the average trading price
         of the common stock over a specified period.

         As of September 30, 2005,  the Company has  designated and issued 4,170
         shares as Series B convertible  preferred stock (the "Series B Shares")
         in connection with the Chameleon acquisition.  These shares and related
         warrants  were valued  initially and  preliminary  at  $5,204,539.  The
         Series B Shares:  (i) rank pari passu with the Series A Shares,  except
         that the Series A Shares are  entitled to a preference  on  liquidation
         with  respect to certain  property;  (ii) are  entitled  to  cumulative
         dividends at 7.5% per annum payable in common stock calculated based on
         90% of the average of the daily volume  weighted  average price for the
         20 days prior to the quarterly  dividend  payment date; (iii) vote: (a)
         as a

                                       11
<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


         single  class  with the  holders of the common  stock,  on all  matters
         submitted  to a vote of, or the  consent  of, the holders of the common
         stock,  except  that  for as long as 51% of the  Series  B  Shares  are
         outstanding,  the  holders  also have the  right to vote as a  separate
         class for the  election  of three  members  of our Board of  Directors,
         provided  however  that  while the Series B Shares  have such  separate
         class voting  rights the holders  thereof do not have the right to vote
         on the  election of the  remaining  members of the Board;  and (b) that
         number of votes equal to the number of whole shares of the common stock
         as to which such shares are then  convertible;  (iv) have preference on
         liquidation  over  any  junior  rank  security;   and  (v)  subject  to
         anti-dilution  adjustment,  are each  convertible  into 1,000 shares of
         common stock at the option of the holder.

         Common shares issued to consultants:

         During the nine months ended  September 30, 2005,  the Company issued a
         total of 165,000  shares of its common  stock  with an  aggregate  fair
         value of  $246,859  in exchange  for  services.  For the nine and three
         months ended  September 30, 2004, the Company issued 156,000 and 24,000
         shares,  respectively,  of common stock in exchange for services having
         an aggregate value of $130,200 and $31,200, respectively.

         Common shares issued to employees:

         During the nine months ended  September 30, 2005 and 2004,  the Company
         issued a total of 20,000 and 40,000  shares of its common  stock having
         an  aggregate  fair  value of $30,000  and  $27,200,  respectively,  as
         compensation to a key employee.

         Common shares issued as payment of preferred dividends:

         During the nine and three months ended  September 30, 2005, the Company
         issued  60,551  and  24,530  shares of its  common  stock as payment of
         $90,000 and $30,000 of dividends, respectively, on its Series A Shares.

         During the nine and three months ended  September 30, 2005, the Company
         issued  200,645  shares of its  common  stock as  payment of $81,261 of
         dividends  on its Series B  Convertible  Preferred  Shares.

         Common shares and warrants issued through private placement:

         On March 7, 2005,  we commenced  private  placement  offerings of up to
         400,000 units at $6.00 per unit, each unit consisting of four shares of
         common  stock and one  warrant to purchase  one share of common  stock,
         exercisable  at $2.00 per  share  for the first  year and for $2.50 per
         share for the  subsequent  two years.  Through  September 30, 2005, the
         Company  issued  approximately  576,000 shares and warrants to purchase
         144,000  shares  upon sale of  144,000  units  from  which it  received
         proceeds,  net of estimated offering costs, of approximately  $864,000.
         The private offering is closed.

Note 7 - 7.5% Convertible Debentures due June 13, 2008

         On June 14, 2005, the Company sold 3-year convertible debentures in the
         aggregate principal amount of $7,000,000,  with a maturity date of June
         13, 2008,  bearing  interest at 7.5% per annum (the  "Debentures")  and
         four year warrants to purchase  2,626,716  shares of common stock at an
         exercise price of $1.28 per share. Subject to anti-dilution adjustment,
         the  Debentures  are  convertible  into a total of 5,837,225  shares of
         common  stock at anytime  following  issuance at a price of $1.1992 per
         share  provided  however,  no conversion can be effected if upon giving
         effect to such conversion,  the holder would beneficially own in excess
         of  4.99%  of  the  number  of  shares  of  common  stock   outstanding
         immediately after giving effect to such conversion. The interest on the
         Debentures  is  payable  in  arrears  quarterly  on March 31,  June 30,
         September  30 and  December  31, in cash or  shares of common  stock if
         certain   conditions  are  met  including,   the   effectuation   of  a
         registration  statement  registering,  among other shares,  130% of the
         shares underlying the Debentures,

                                       12
<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


         the warrants,  an estimated  1,515,808 shares covering the interest and
         an estimated  3,326,250 shares covering the impact of the anti-dilution
         features.

         Of the $7,000,000  raised from the sale of the Debentures,  the Company
         received $4,000,000 on June 14, 2005. The remaining  $3,000,000,  which
         had been placed in escrow,  was  released  to the Company in  September
         2005 upon the hiring of a chief  executive  officer as  satisfaction of
         one of several release conditions.

         The Company  accounts for the intrinsic value of beneficial  conversion
         rights arising from the issuance of convertible  debt  instruments with
         nondetachable   conversion   options  that  are   in-the-money  at  the
         commitment  date pursuant to the  consensuses  for EITF Issue  No. 98-5
         and EITF Issue No. 00-27. Such value is allocated to additional paid-in
         capital  and the  resulting  debt  discount  is  amortized  to interest
         expense  using the  effective  yield method over the period to the debt
         instrument's  earliest  conversion date. Such value is determined after
         first allocating an appropriate portion of the proceeds received to any
         other detachable  instruments included in the exchange.  The beneficial
         conversion rights  attributable to the issuance of the Debentures had a
         fair value of  $286,312,  which  equaled  the  excess of the  aggregate
         proceeds the investors would have received,  over the face value of the
         Debentures,  if the investors had converted the  Debentures,  exercised
         the warrants  issued to the investors in connection with the Debentures
         and sold the resulting shares on June 14, 2005.

         In connection with the sale of Debentures,  the Company paid commission
         to the  sole  placement  agent,  consisting  of  $420,000  of cash  and
         warrants for 490,320 shares of common stock.

Note 8 - Stock options and warrants:

         Information  related to the Company's stock options is included in Note
         8 in the 10-KSB.  A summary of stock  option  activity  during the nine
         months ended September 30, 2005 follows:

                                                                       Weighted-
                                                                        Average
                                                                        Exercise
                                                         Shares          Price
                                                       ---------       ---------

                    Outstanding January 1, 2005        1,097,397         $1.81

                    Granted to employees               1,750,000         $0.36

                    Forfeited                           (290,492)        $1.74
                                                       ---------

                    Outstanding, September 30, 2005    2,556,905         $0.82
                                                       =========

                    Exercisable, September 30, 2005      552,941         $1.92
                                                         =======         =====

         SFAS No. 123,  "Accounting for Stock-Based  Compensation" ("SFAS 123"),
         provides  for the use of a fair value based  method of  accounting  for
         employee stock compensation. However, SFAS 123 also allows an entity to
         continue  to measure  compensation  cost for stock  options  granted to
         employees using the intrinsic value method of accounting  prescribed by
         Accounting  Principles  Board  Opinion  No. 25,  "Accounting  for Stock
         Issued to  Employees"  ("APB  25"),  which  only  requires  charges  to
         compensation  expense for the excess,  if any, of the fair value of the
         underlying  stock  at the  date a stock  option  is  granted  (or at an
         appropriate  subsequent  measurement date) over the amount the employee
         must pay to acquire the stock,  if such amounts differ  materially from
         the historical amounts.  The Company has elected to continue to account
         for employee  stock options using the intrinsic  value method under APB
         25. By making  that  election,  it is required by SFAS 123 and SFAS No.
         148,  "Accounting  for  Stock-Based   Compensation  --  Transition  and
         Disclosure"  ("SFAS 148"), to provide pro forma disclosures of net loss
         and loss per common share as if a fair value based method of accounting
         had been applied.

                                       13
<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


         Since the Company has  elected to continue to use the  intrinsic  value
         method of accounting  prescribed by APB 25 in accounting  for its stock
         options  granted  to  employees  and the  exercise  price of all of the
         options granted to employees has been equal to or greater than the fair
         market value at the date of grant,  no earned or unearned  compensation
         cost has been  recognized in the  accompanying  consolidated  financial
         statements for stock options granted to employees.

         For disclosure purposes,  pro forma net loss and loss per share impacts
         are  provided  as if the  fair  value  method  under  SFAS 123 had been
         applied:

<TABLE>
<CAPTION>

                                                      NINE MONTHS ENDED                THREE MONTHS ENDED
                                               SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,

                                                   2005             2004             2005             2004
                                              ---------------- ---------------- ---------------- ----------------

<S>                                              <C>              <C>              <C>              <C>
Net loss applicable to common stock, as
  reported                                       $ (8,816,500)    $ (3,348,027)    $ (3,462,595)    $ (1,517,054)
Less: Total stock-based employee
  compensation expense determined
  under fair-value based method for all
  awards, net of related tax effects                  446,000               --          446,000               --
                                              ---------------- ---------------- ---------------- ----------------

Pro forma net loss                               $ (9,262,500)    $ (3,348,027)    $ (3,908,595)    $ (1,517,054)
                                              ================ ================ ================ ================

Basic and diluted loss per share:

        As reported                              $      (0.49)    $      (0.26)    $      (0.19)    $      (0.09)
                                              ================ ================ ================ ================

        Pro forma                                $      (0.52)    $      (0.26)    $      (0.21)    $      (0.09)
                                              ================ ================ ================ ================
</TABLE>


         As a result of  amendments to SFAS 123, the Company will be required to
         expense  the fair value of  employee  stock  options  over the  vesting
         period beginning with the quarter ending March 31, 2006

         A summary of warrant  activity for the nine months ended  September 30,
         2005 follows:

                                                                      Weighted
                                                                       Average
                                                                      Exercise
                                                      Amount           Price
                                                     ----------       ---------
      Outstanding, January 1, 2005                   3,191,721          $1.81

      Issued in conjunction with:

        Private placements of units                    144,004           2.25
        Consulting services (A)                        100,000           1.96
        Financing fees (B)                             698,790           1.28
        Acquisition of Chameleon (C)                 1,876,500           1.28
        7.5% Debentures (D)                          2,626,715           1.28

      Exercised                                         (4,000)           1.5
                                                     ---------

      Outstanding, September 30, 2005                8,633,730          $1.48
                                                     =========          =====

(A)  A charge of $6,450 related to the fair value of the warrants is included in
     selling, general and administrative expenses.

(B)  The fair value of  prepaid  financing  costs of $53,445 is being  amortised
     over the term of the related loans.

(C)  The fair value of $204,539 is included in the cost of the acquisition  (see
     Note 3).

(D)  The fair value of $286,312 was recorded as debt  discount and  consequently
     gave rise to beneficial conversion rights of equal value (see Note 7).

Note 9 - Income taxes:

         As of  September  30,  2005,  the Company had Federal and  Canadian net
         operating  loss   carryforwards   of   approximately   $12,600,000  and
         $1,400,000,  respectively.  The net operating  loss  carryforwards  are
         available to reduce future Federal and Canadian  taxable income through
         their expiration in 2024 and 2010,

                                       14
<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


         respectively.  Due to uncertainties related to, among other things, the
         timing and amount of future  taxable  income and  potential  changes in
         control,  the Company  offset net deferred tax assets of  approximately
         $4,700,000  arising  primarily  from the benefits of net operating loss
         carryforwards by an equivalent  valuation allowance as of September 30,
         2005.  The Company had also  offset such  benefits  through a valuation
         allowance  during the year ended  December  31, 2004 (see Note 9 in the
         10-KSB).  Accordingly,  the Company did not  recognize  any credits for
         income taxes in the accompanying condensed  consolidated  statements of
         operations to offset its pre-tax losses.

Note 10 - Segment and related information:

         The  Company's   operations   consist   principally  of  marketing  and
         supporting   security   products   across   integrated   systems   and,
         accordingly,  it operates in one industry segment.  The Company derived
         revenues  from Canada of  approximately  $354,000  and $130,000 for the
         nine months and three months ended  September 30, 2005 and $530,000 and
         $151,000  for the nine and  three  months  ended  September  30,  2004,
         respectively.  However,  it  had  no  material  Canadian  assets  as of
         September 30, 2005 and 2004.

Note 11 - Terminated acquisition:

         In December  2004,  the  Company  signed a letter of intent to purchase
         Allegent Inc., for cash and stock. As of September 30, 2005, the letter
         of intent  has  expired  and  negotiations  have been  suspended.  As a
         result,  during the nine and three months ended September 30, 2005, the
         Company  recorded  charges of $550,000  and $27,000,  respectively  for
         costs associated with this potential acquisition.

Note 12 - Restructuring:

         The Company recorded  approximately  $315,000 of restructuring  charges
         for the nine and three months ended  September 30, 2005 associated with
         the  Company's  restructuring  plan  adopted  in  September  2005.  The
         restructuring  plan is primarily aimed to reduce its cost structure and
         improve  operational  effectiveness.  These restructuring costs include
         $15,000  for  estimated  employee  severance  costs  and  $300,000  for
         estimated costs related to the relocation and consolidation of offices.

         As of September 30, 2005, the outstanding estimated liabilities related
         to the restructuring of approximately $315,000 are included in "Accrued
         expenses" in the accompanying  unaudited condensed consolidated balance
         sheet.

Note 13 - Commitments and Contingencies

         Loan Guarantee:

         The Company  guaranteed a loan,  due November 24, 2005,  payable by the
         former  owner of the assets and  business of Cybrix,  which the Company
         acquired  in  November  2004  (see  Note 3).  The  Company  provided  a
         certificate  of  deposit  in the amount of  approximately  $218,000  as
         collateral for the loan.

         The Company has been informed that the former owner will not be able to
         repay the loan.  Therefore,  it is expected that, on November 24, 2005,
         the entire  certificate  of deposit  will be drawn down to satisfy  the
         liability.  The use of the Company's  certificate of deposit to satisfy
         the loan  resulted in the  recognition  of a loss on loan  guarantee of
         $218,000 in the nine and three months ended September 30, 2005.

                                       15
<PAGE>


                     SECURED SERVICES, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


         Guarantee of Future Lease Payments:

         The Company has provided a $76,000 certificate of deposit as collateral
         to guarantee lease payments for its New York office. In connection with
         its  restructuring  plan (see Note 12),  the  Company  has  recorded an
         estimated  liability as of September  30, 2005 in excess of $76,000 for
         the termination of the New York office lease.

         Threatened Litigation:

         On or about  November  1, 2005,  the  Company  received a letter from a
         representative   of  Corporate  Capital   Management,   LLC  (a  former
         consultant to the Company) and certain of its  affiliates,  and certain
         other  shareholders of the Company  threatening to commence  litigation
         against  the  Company,  certain of its officer  and  directors.  In the
         letter,  the shareholders  claim that they invested in the Company as a
         result  of  representations  made  to  them  by  certain  officers  and
         directors  of the Company and allege  that those  representations  were
         false  and  caused  them  damages.   The  Company   believes  that  the
         shareholders'  claims  are  in  response  to  its  termination  of  the
         consulting  arrangement  with Corporate  Capital  Management,  LLC. The
         Company has commenced  negotiations  with such  stockholders to resolve
         this  matter  amicably.   Management  believes  that  the  Company  has
         meritorious defenses and will vigorously defend this matter.

                                       16
<PAGE>


     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

THE FOLLOWING  DISCUSSION  OF OUR FINANCIAL  CONDITION AND RESULTS OF OPERATIONS
SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES TO
THE  FINANCIAL  STATEMENTS  INCLUDED  ELSEWHERE IN THIS  QUARTERLY  REPORT.  THE
FOLLOWING  DISCUSSION  REGARDING  US AND OUR BUSINESS  AND  OPERATIONS  CONTAINS
FORWARD-LOOKING  STATEMENTS. SUCH STATEMENTS CONSIST OF ANY STATEMENT OTHER THAN
A  RECITATION  OF  HISTORICAL  FACT  AND  CAN BE  IDENTIFIED  BY THE USE OF SUCH
FORWARD-LOOKING TERMINOLOGY SUCH AS "MAY," "EXPECT," "ANTICIPATE," "ESTIMATE" OR
"CONTINUE" OR THE NEGATIVE  THEREOF OR OTHER VARIATIONS  THEREON,  OR COMPARABLE
TERMINOLOGY.  THE READER IS CAUTIONED  THAT ALL  FORWARD-LOOKING  STATEMENTS ARE
NECESSARILY SPECULATIVE AND THERE ARE CERTAIN RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER  MATERIALLY  FROM THOSE  REFERRED TO IN
SUCH FORWARD-LOOKING STATEMENTS.

OVERVIEW

         Secured  Services,  Inc.  ("Secured  Services")  provides  Secured User
Management solutions that enable large organizations to administer,  control and
audit users' digital  identities' and their access  privileges to  applications,
data  systems  and  connectivity  in  wired  and  wireless  networks.  With  our
IDENTIPRISE  SECUREDUSER  software,  a single user logon can provide  controlled
access  to  all  user   applications   (Web,   client/server   and   mainframe).
Additionally, this solution provides an automated way to grant, modify or revoke
user  account  access  to  applications   and   connectivity.   Our  IDENTIPRISE
SECUREDMOBILE    software   solution   delivers   end-to-end    encrypted   data
communications between a user device (e.g. computer, handheld, mobile phone) and
protected  information  resources,  across any wired or  wireless  network  with
connection mobility across such networks.

         Every   organization   is  challenged   with  managing  users'  digital
identities  and  communications  security.  Disjointed  or piecemeal  management
approaches  create a significant  set of  operational,  security and  regulatory
compliance  problems.  The strategy behind our IDENTIPRISE Secured User software
is to provide a comprehensive security solution that concurrently addresses this
trio of problems.

         IDENTIPRISE  differentiates  itself in the marketplace by providing the
combined benefits of (i) complete, end-to-end functionality  "pre-integrated" on
one platform and (ii) an architecture design that overcomes traditional barriers
to deployment. This yields a solution that implements rapidly, non-disruptively,
and  comprehensively  within  complex  IT  environments,   for  all  users,  all
application types, and across all networks, both wired and wireless.

         In addition,  complementary  professional  services  assist  clients in
understanding their regulatory and security requirements,  designing appropriate
policies,  and developing plans and budgets to support the  implementation of an
enterprise-wide security solution. During IDENTIPRISE  implementations,  Secured
Services provides project management, training and services to ensure successful
roll-out of the Secured User  Management  solution.  To that end, on November 1,
2004 we purchased the assets of Cybrix  Corporation,  a Minnesota company in the
business  of  providing  IT security  services.  On June 14, 2005 we merged with
Chameleon Communications Technology, Inc. ("Chameleon"),  a provider of wireless
security software which  compliments our Identiprise  product suite allowing our
services to extend to mobile users. We believe that these  acquisitions  broaden
both our skill set and geographic coverage.

         Secured  Services'  target  customers  include  large  to  medium  size
organizations in the financial services,  health care,  telecom,  and government
markets,  primarily in North America.  Secured  Services employs a multi-channel
approach to reach these sector markets.

THE SECURED SERVICES SOLUTION: IDENTIPRISE

       IDENTIPRISE is the cornerstone of our Secured User  Management  strategy,
targeting two distinct yet  interlinked  enterprise  challenges:

o      Securing  the User - that is, the  administration,  control  and audit of
       user's access privileges to information resources, generally known in the
       industry as "identity and access  management" (IAM). These challenges are
       met by the IDENTIPRISE SECUREDUSER solution set.

o      Securing  the  Connection  - that  is,  the  management  of  users'  data
       communications encryption,  bandwidth,

                                       17
<PAGE>


       and mobility.  These challenges are met by the IDENTIPRISE  SECUREDMOBILE
       solution set.

IDENTIPRISE SECUREDUSER

IDENTIPRISE SECUREDUSER offers the combined advantages of:

COMPLETE  DIGITAL  IDENTITY  LIFE  CYCLE  MANAGEMENT.   IDENTIPRISE  SECUREDUSER
incorporates  comprehensive identity  administration,  access control, and audit
management functionality, BUILT ON A SINGLE, INTEGRATED PLATFORM. This makes for
unique  cohesiveness  and  seamlessness  in managing the entire life cycle of an
identity (i.e. grant, use, modify, revoke and audit);

TRUE,  ENTERPRISE-WIDE  REACH.  IDENTIPRISE  SECUREDUSER  establishes  a  single
identity  management system that spans all users and application types,  whether
Web-based,  client/server  or legacy  mainframe.  The realization of TRUE SINGLE
SIGN-ON,  seamlessly  integrated with user account  provisioning  processes,  is
unique to the industry; and

EASE OF DEPLOYMENT.  IDENTIPRISE  SECUREDUSER  overcomes traditional barriers to
IAM  deployments by adhering to three  architecture  design  principles of Span,
Speed and Scale. This yields a solution that is highly flexible, deploys rapidly
and  non-disruptively,  and is  radically  less risky and complex to  implement,
relative to competing approaches.

IDENTIPRISE SECUREDMOBILE

IDENTIPRISE SECUREDMOBILE combines four core traits for managing and controlling
the user's physical communications connection:

END-TO-END  ENCRYPTION.  IDENTIPRISE  SECUREMOBILE  ensures  confidentiality and
integrity for all data communications by providing certificate-based  encryption
from the user to the information  system resource,  even when transmitted across
untrusted, public networks.

MOBILITY  THROUGH   CONNECTION   PERSISTENCE.   The  IDENTIPRISE   SECUREDMOBILE
technology  automatically  maintains  encrypted  communications even as the user
moves  from  one type of  network  to  another,  without  requiring  the user to
re-authenticate  themselves or be concerned  with which network is being used at
any given time.

CENTRALIZED   MANAGEMENT   CONSOLE.   Through  a  central  management   console,
IDENTIPRISE  SECUREDMOBILE  enables the organization to provision  users,  audit
their use, and implement user-based bandwidth and access management.

EASE OF DEPLOYMENT.  IDENTIPRISE  SECUREDMOBILE is architected to overlay on any
type of  communications  equipment,  without requiring changes or integration to
such  equipment.  The  platform  is  "agnostic"  to any  brand  of gear  that an
organization may procure, making deployment rapid,  non-disruptive,  and capable
of handling the equipment heterogeneity that is common in most organizations.

         Our software  products are generally sold on a perpetual license basis.
Customers enter into an annual support  agreement for their software  license at
the  time of  initial  purchase  and  typically  renew  this  support  agreement
annually.  Our support  agreement  entitles  customers to software  upgrades and
support.

                                       18
<PAGE>


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The preparation of the consolidated  financial statements in conformity
with  accounting  principles  generally  accepted in the United States  requires
management to make estimates and judgments  that affect the reported  amounts of
assets,  liabilities,  revenues  and  expenses,  and the related  disclosure  of
contingent assets and liabilities.  Management bases its estimates and judgments
on  historical  experience  and on various other factors that are believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily apparent from other sources.  Management  continuously evaluates its
estimates  and  judgments,  and actual  results may differ from these  estimates
under different assumptions or conditions.

         Those   estimates  and  judgments   that  were  most  critical  to  the
preparation  of  the  financial   statements   involved   revenue   recognition,
recognition of impairment and software development costs as further explained in
our Annual  Report on Form  10-KSB for the year  ending  December  31,  2004 and
restructuring charges estimated during the quarter ended September 30, 2005.

RESULTS OF OPERATIONS

         The   following   table  sets  forth  for  the  period   presented  the
consolidated operations data as an approximate percentage of revenues:

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------
                                                                         NINE MONTHS    THREE MONTHS    THREE MONTHS
                                                                             ENDED          ENDED           ENDED
                                                     NINE MONTHS ENDED   SEPTEMBER 30,   SEPTEMBER 30,  SEPTEMBER 30,
                                                    SEPTEMBER 30, 2005      2004             2005            2004
                                                    ------------------  --------------  --------------  --------------
-----------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>               <C>              <C>              <C>
Revenues                                                 100.0%            100.0%           100.0%           100.0%
-----------------------------------------------------------------------------------------------------------------------
Cost of revenues                                          64.0%             37.1%            67.2%            37.1%
                                                        -------           -------          -------          -------
-----------------------------------------------------------------------------------------------------------------------
Gross profit                                              36.0%             62.9%            32.8%            62.9%
                                                        -------           -------          -------          -------
-----------------------------------------------------------------------------------------------------------------------
Selling, general and administrative expense              208.8%            231.3%           259.0%           300.2%
-----------------------------------------------------------------------------------------------------------------------
Research and  development                                 61.0%             56.2%            85.3%           102.3%
-----------------------------------------------------------------------------------------------------------------------
Restructuring charges                                     12.6%                              48.3%
-----------------------------------------------------------------------------------------------------------------------
Charge for impairment of loans from related parties       39.9%                              38.4%
-----------------------------------------------------------------------------------------------------------------------
Depreciation and amortization                             22.3%             15.4%            55.9%            17.3%
                                                        -------           -------          -------          -------
-----------------------------------------------------------------------------------------------------------------------
Total operating expenses                                 344.6%            302.9%           486.9%           419.8%
                                                        -------           -------          -------          -------
-----------------------------------------------------------------------------------------------------------------------
Loss from operations                                    (308.6)%          (240.0)%         (454.1)%         (356.9)%
-----------------------------------------------------------------------------------------------------------------------
Other income (expense)                                   (37.6)%            (0.4)%          (59.8)%            1.6%
                                                        -------           -------          -------          -------
-----------------------------------------------------------------------------------------------------------------------
Net loss                                                (346.2)%          (240.4)%         (513.9)%         (355.3)%
                                                        =======           =======          =======          =======
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


NINE AND THREE MONTH PERIODS ENDED SEPTEMBER 30, 2005 AND 2004

REVENUES.  The  revenues  for the  nine  months  ended  September  30,  2005 and
September  30,  2004  were  $2,497,000  and  $1,355,000,   respectively,   which
represented a growth of approximately  84%.  Revenues for the three months ended
September 30, 2005 and 2004 were $652,000 and $419,000,  respectively,  a growth
of 56%. The increase in revenues was due primarily to additional sales resulting
from our  acquisition  of Cybrix's  business in November 2004.  Such  additional
sales  amounted to  $1,078,000  and $289,000 for the nine and three months ended
September 30, 2005,  respectively.  The balance of the increase for the nine and
three months ended  September 30, 2005 resulted from an increase in  Identiprise
revenue.

COST OF REVENUES.  Cost of revenues was $1,599,000  and $503,000,  respectively,
which represented 64% and 37%, respectively, of our revenues for the nine months
ended  September 30, 2005 and  September 30, 2004.  The cost of revenues for the
three months ended  September  30, 2005 and September 30, 2004 were $438,000 and
$155,000, respectively,  representing 67% and 37% of our revenues, respectively.
Cost of revenues mainly consists of payroll and related expenses associated with
our consulting  services and software  maintenance in connection with previously
installed Identiprise  licenses.  The increase in cost of revenues was primarily
due to the

                                       19
<PAGE>


additional  costs of $862,000 and $225,000 from Cybrix  operations  for the nine
and three months ended  September 30, 2005 and, to a lesser extent,  an increase
in payroll costs resulting from our build-up of staff.

GROSS PROFIT. Gross profit approximated $898,000 versus $853,000,  respectively,
down to 36% from 63%,  respectively for the nine months ended September 30, 2005
and 2004.  The gross profit for the three months  ended  September  30, 2005 and
2004 was  $214,000  and  $263,000,  respectively,  reduced to 32% from 63%.  The
decrease in the gross profit as a percentage of revenue in 2005 is primarily due
to the  acquisition  of Cybrix which  generated a gross profit margin of 20% and
22% for the nine and three months ended  September  30, 2005.  In addition,  our
gross  profit  margins were  adversely  impacted by the increase in our manpower
base to handle the anticipated  growth in sales and services in 2005,  which did
not  materialize  and the increase in the Canadian  dollar  relative to the U.S.
dollar which increased the costs of our Canadian operations.

RESEARCH AND DEVELOPMENT.  The cost associated with our research and development
efforts  amounted to  $1,525,000  and  $556,000,  respectively,  or 61% and 85%,
respectively  for the nine and  three  months  ended  September  30,  2005.  The
comparable figures for the same period in 2004 were $762,000 and $428,000 or 56%
and 102%, respectively. Our investment in research and development enabled us to
improve  and  further  enhance  our  Identiprise  product  in  response  to  our
customers' request and in anticipation of their future requirements.  Also, with
the acquisition of Chameleon, there are additional costs related to software and
network developers for the Chameleon software.

SELLING,  GENERAL  AND  ADMINISTRATIVE.   Selling,  general  and  administrative
expenses were  $5,214,000 and $3,135,000 for the nine months ended September 30,
2005 and 2004,  respectively.  Selling,  general and administrative expenses for
the  three  months  ended  September  30,  2005 and  2004  were  $1,689,000  and
$1,257,000, respectively. The increase in selling and general and administrative
expenses for the nine and three months ended September, 2005, as compared to the
comparable  periods ended September 30, 2004,  resulted from a build up of sales
and marketing  personnel;  increased legal costs  associated with debt financing
and  business  acquisitions;  and  administrative  expenses  resulting  from the
acquisitions of Chameleon and Cybrix.

DEPRECIATION  AND  AMORTIZATION.  Depreciation  and  amortization  expenses were
$557,000 and $365,000  for the nine and three months ended  September  30, 2005,
respectively,  compared  to $209,000  and $72,000 for the same  periods in 2004.
These costs,  which  increased  significantly,  are  primarily  attributable  to
amortization   of  intangible   assets   acquired  in  connection  our  business
acquisitions  and  increased  significantly  as a result of the  acquisition  of
Chameleon in June 2005.

CHARGE FOR IMPAIRMENT OF LOANS TO RELATED PARTIES.  As of September 30, 2005, we
made  aggregate  cash  advances of  $1,596,179  to related  companies in which a
founder/director of our's has an ownership interest.  The related companies have
used the funds to pursue  litigation  to regain  certain  technology  consulting
contracts,  which they believe were  misappropriated from them. We own rights to
purchase  the  contracts  from the related  companies in exchange for its common
stock. Management believes that the contracts in question are lucrative,  and if
the related companies  prevail in the litigation,  we would seek to exercise its
rights to obtain the contracts.

Included in the advances of $1,596,179  are two notes  receivable  with balances
aggregating  $1,545,281  bearing  interest  at 6% per  annum.  Interest  only is
payable  monthly  with the entire  principal  balance and all accrued and unpaid
interest due on April 1, 2006.  The notes are  collateralized  by 500,000 common
shares of Secured  Services  as well as  certain  other  proprietary  intangible
assets of related companies.

At December 31, 2004,  management made an assessment that the related  companies
did not have  sufficient  resources  to continue  pursuing the  litigation,  and
possibly  will  not have  sufficient  resources  to  continue  operating  if the
litigation  process is not  decided in their  favor.  Based on the status of the
litigation,  the management had estimated that  subsequent to December 31, 2004,
the related companies could require  additional funds of approximately  $300,000
to carry the litigation to its conclusion.

                                       20
<PAGE>


At December  31,  2004,  the  Company  established  a reserve  against the notes
receivable  from the related  parties and  recorded a  corresponding  charge for
impairment of $600,000  that reduced the net balance of the notes  receivable to
$945,281,  which  approximated  the  estimated  fair  value at that  date of the
collateral that secures the notes.  In addition,  the Company  discontinued  the
accrual of interest. In May 2005, the Company learned that it was not successful
in all aspects of its case and in June 2005 the  Company  decided to suspend the
pursuit of the litigation until it can obtain further legal advice. Based on the
status of the  litigation  and the value of the  collateral at June 30, 2005 and
September 30, 2005,  the Company  established  additional  reserves  against the
notes receivable from the related parties and recorded corresponding charges for
impairment  totaling  $945,281  (including  $345,281 in the three  months  ended
September 30, 2005),  to fully offset the balance of the notes  receivable.  The
Company also established  reserves  against other related party  receivables and
recorded a corresponding  charge for impairment of $50,898 in the nine and three
months ended September 30, 2005 to fully offset the related accounts  receivable
balance.

There  were no  comparable  costs for the nine  months  and three  months  ended
September 30, 2004.

OTHER INCOME  (EXPENSE).  Other income  (expense)  for the nine and three months
ended  September 30, 2005 of ($440,000) and $25,000,  respectively,  compared to
($4,780)  and  $6,462 for the  comparable  periods  in 2004,  respectively.  The
increase  in  expense  in  2005  is  primarily  attributable  to the  terminated
acquisition  of Allegent Inc. In December  2004, we signed a letter of intent to
purchase  Allegent Inc., for cash and stock. The letter of intent has expired in
2005 and  negotiations  have been  suspended.  As a result,  during the nine and
three  months ended  September  30,  2005,  we recorded  charges of $550,000 and
$27,000 for costs associated with this potential acquisition.

LOSS ON LOAN GUARANTEE.  We guaranteed a loan, due November 24, 2005, payable to
the former  owner of the assets and  business  of Cybrix  which we  acquired  in
November   2004.  We  provided  a  certificate  of  deposit  in  the  amount  of
approximately  $218,000 as  collateral  for the loan. We have been informed that
the loan will not be repaid by the former  owner or  renewed.  Therefore,  it is
expected  that, on November 24, 2005,  our  certificate of deposit will be drawn
down to satisfy the liability.  The use of our certificate of deposit to satisfy
the loan results, is a loss which has been accrued for the nine and three months
ended September 30, 2005.

There were no comparable costs during 2004.

RESTRUCTURING CHARGES. We accrued estimated  restructuring costs of $315,000 for
the nine and three months ended September 30, 2005 representing amounts expected
to be incurred with the planned  closing of our New York and Toronto offices and
the  consolidation of operations into a new corporate office in Virginia.  There
were no comparable costs during 2004.

INTEREST  EXPENSE.  Interest  expense  during  the nine and three  months  ended
September 30, 2005 approximated $280,000 and $196,000, respectively, and related
primarily to the accrued  interest and  amortization of the debt discount on the
7.5%  debentures  from  June  14,  2005  to  September  30,  2005 as well as the
obligation  owing to VASCO  Data  Security  International,  Inc.  ("VASCO"),  in
accordance with the terms of the purchase of our Identiprise software system

NET LOSS.  Our net loss for the nine months  ended  September  30, 2005 and 2004
amounted to $8,645,000 and  $3,258,000,  respectively,  and for the three months
ended September 30, 2005 and 2004 were $3,351,000 and $1,487,000, respectively.

For the nine months ended September 30, 2005, the loss stems from our failure to
meet revenue goals while  continuing  our  investment in selling,  marketing and
research and  development  costs.  As discussed  above for the nine months ended
September 30, 2005, the loss further includes  $315,000  expected to be incurred
as part of  restructuring;  $218,000  related  to a  previous  acquisition,  the
balance of $945,000  as a reserve to reduce the balance of a related  party note
and $52,000 to reduce the balance of a related party receivable to a total of $0
which  represents  the  estimated  fair value of the  collateral,  and  $550,000
attributable to an acquisition that that has been terminated.

For the three months ended September 30, 2005, the loss results from our failure
to meet revenue and expansion  goals.  For the three months ended  September 30,
2005,  the loss  further  includes  $315,000  expected to be incurred as part of
restructuring; $218,000 related to a previous acquisition, $251,000 as a reserve
to reduce a related party

                                       21
<PAGE>


note  to a  total  of $0  which  represents  the  estimated  fair  value  of the
collateral, and $27,000 attributable to an acquisition that has been terminated.

Net loss  applicable  to common stock for the nine months and three months ended
September 30, 2005 amounted to $8,817,000 and  $3,463,000,  respectively,  after
preferred stock dividend requirements of $171,000 and $111,000 respectively, for
the nine months and three months ended September 30, 2005.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2005, we had current assets totaling approximately  $2,101,000.
Total current assets include cash and cash equivalents of $980,000, certificates
of deposit for $294,000,  accounts receivable of $464,000,  other receivables of
$72,000,  and  prepaid  expenses  and other  current  assets of  $290,000.  Cash
equivalents  are  limited  to  investment  grade   marketable   securities  with
maturities of less than three months when acquired. A certificate of deposit for
$76,000  secures a letter of credit and  matures in  February  2006 and  accrues
interest  at 2.85% per annum.  The  second  certificate  of  deposit  matures in
November 2005 and accrues  interest at 4.75% per annum.  The two certificates of
deposit, amounting to approximately $294,000, are expected to be used to satisfy
accrued expenses arising from a previous  acquisition and restructuring  charges
expected  to be incurred  with the  planned  closing of our New York and Toronto
offices.

Net cash used in operating  activities  totaled  $6,225,000  for the nine months
ended  September  30, 2005  compared  to  $1,934,000  for the nine months  ended
September 30, 2004. The increase in net cash used in operating activities is due
primarily to our net loss  resulting from an increase in investment in our sales
and  marketing  efforts.  Net cash  used in  investing  activities  approximated
$1,298,000 for the nine months ended September 30, 2005, of which $1,147,000 was
paid in connection with our acquisition of Chameleon, as described below.

Net cash provided by financing  activities  for the nine months ended  September
30, 2005 approximated  $7,016,000 which includes $7,000,000 of proceeds from our
sale of 7.5%  convertible  debentures  in June 2005,  $864,000 of proceeds  from
private placements of common stock,  $339,000 of loan proceeds from stockholders
and $128,000 of proceeds from warrant exercises and collections of subscriptions
receivable  offset by repayments of principal amounts due under the note payable
to VASCO,  NextPoint Partners II, L.P. and Toucan Capital II, L.P. in the amount
of $1,267,000.  The cash provided by financing  activities  will be used to fund
working capital  requirements and to expand our sales and marketing  initiatives
for Identiprise.

Going Concern Uncertainty

The accompanying  condensed consolidated financial statements have been prepared
assuming  that we will  continue as a going  concern.  However,  as shown in the
accompanying  condensed  consolidated  financial  statements,  we only generated
revenues of  approximately  $2,497,000 and $1,355,000 and incurred net losses of
approximately  $8,645,000  and $3,258,000  and had cash flow  deficiencies  from
operating  activities of  approximately  $6,225,000  and $1,934,000 for the nine
months ended  September  30, 2005 and 2004,  respectively.  These  matters raise
substantial doubt about our ability to continue as a going concern.

Management  believes that, in the absence of a substantial  increase in revenues
from sales and services,  it is probable that Secured  Services will continue to
incur losses and negative cash flows from operating  activities through at least
September 30, 2006 and that Secured Services will require new capital funding by
the first week of December, 2005 in order to continue as a going concern.  If we
are unable to meet our revenue and cash goals and also  renegotiate the terms of
our outstanding  loan agreements or obtain new equity or debt funding,  until we
can market our products,  expand our customer base and achieve profitability and
positive  cash flows,  we may have to curtail or terminate  some, or all, of our
planned operations. The accompanying condensed consolidated financial statements
do not include any adjustments relating to the recoverability and classification
or recorded assets, or the amounts and classifications of liabilities that might
be necessary in the event we cannot continue as a going concern.

RECENT FINANCING AND ACQUISITION

In March 2005, we commenced  private  placement  offerings  aggregating  400,000
units at $6.00 per unit, each unit consisting of four shares of common stock and
one  warrant to purchase  one share of common  stock,  exercisable  at

                                       22
<PAGE>


$2.00 per share  for the first  year and for $2.50 per share for the  subsequent
two years. Through September 30, 2005, we sold approximately  144,000 units from
which we received  proceeds,  net of estimated  offering costs, of approximately
$864,000.  The proceeds of this  financing will be used for sales and marketing,
research and development,  government certification,  finance and administration
and working  capital.  This offering is now closed.  The securities  were issued
pursuant to exemptions  from  registration  under the Securities Act of 1933, as
amended pursuant to Section 4(2) and Regulation D and Regulation S thereunder.

On June 14, 2005 (the  "Effective  Date"),  we acquired  all of the business and
assets of Chameleon by merger (the "Chameleon Merger Transaction") and closed on
the private  placement of  $7,000,000  of  debentures  and warrants to Midsummer
Investment,  Ltd. and Islandia L.P.,  both  institutional  buyers and accredited
investors  (each an  "Investor")  (the  "Debenture  Transaction")  pursuant to a
Securities  Purchase Agreement (the "Debenture  Agreement") dated as of June 13,
2005. We received  $7,000,000 in cash from Midsummer  Investment Ltd. (including
$3,000,000  initially placed in escrow), and paid $1,000,000 to the stockholders
of Chameleon.

The consideration for the Chameleon Merger  Transaction  consisted of $1,147,000
in cash,  1-year  non-interest  bearing  promissory notes (the "Chameleon Merger
Notes") in the  aggregate  principal  amount of  $1,000,000  convertible  at the
option of the holders  into  834,000  shares of our common stock after 360 days,
$5,000,000  of our  Series  B  Shares,  consisting  of  4,170  Series  B  Shares
convertible  into  4,170,000  shares  of common  stock  (the  "Chameleon  Merger
Shares"),  and four-year  common stock purchase  warrants to purchase  1,876,500
shares of our common stock at an exercise price of approximately $1.28 per share
(the "Chameleon  Merger  Warrants").  The Chameleon  Merger Notes, the Chameleon
Merger Warrants and the Chameleon Merger Shares are all subject to anti-dilution
adjustments.   The  consideration  for  the  Chameleon  Merger  Transaction  was
determined in  "arms-length"  negotiations  and the  transaction was unanimously
approved by the Boards of Directors of the parties involved.

In September 2005, upon release of $3,000,000 from escrow, and the completion of
the Debenture Transaction, the Chameleon Merger Notes were paid in full.

Prior to the Effective Date, neither we or any of our affiliates, nor any of our
officers or directors or any associate of any such  officers or  directors,  had
any material  relationship  with  Chameleon,  except that in January 2005 we had
executed a letter of intent with Chameleon pursuant to which we had been funding
the operations of Chameleon through the Effective Date.

Under the terms of the Debenture  Agreement,  the Investors purchased $7,000,000
of the Debentures and warrants to purchase  2,626,716 shares of common stock. Of
the  $7,000,000,  $4,000,000  was  paid to us on the  Effective  Date  with  the
remaining $3,000,000 was released to us in September 2005 upon the engagement of
a Chief Executive Officer as satisfaction of one of several conditions.

The principal  amount of the Debentures  along with any outstanding  interest is
due and payable on June 13,  2008.  Subject to  anti-dilution  adjustments,  the
Debentures are convertible into an aggregate of 5,837,146 shares of common stock
at the option of the holders.

In connection with the Debenture  Transaction,  we paid a commission to Merriman
Curhan Ford & Co.,  sole  placement  agent,  consisting  of cash of $420,000 and
warrants for 490,320 shares of common stock.

ITEM 3. CONTROLS AND PROCEDURES

         EVALUATION OF  DISCLOSURE  CONTROLS AND  PROCEDURES.  After taking into
account the deficiencies and the alternative analysis procedures  implemented in
connection  with the  completion  of our  financial  reports  for the year ended
December  31,  2004  and  the  other   ameliorative   actions  mentioned  below,
management,  with the participation of our chief executive officer and the chief
financial  officer,  carried  out  an  evaluation  of the  effectiveness  of our
"disclosure  controls and procedures" (as defined in the Securities Exchange Act
of 1934 (the "Exchange Act") Rules 13a-15(e) as of the end of the period covered
by this report (the "Evaluation  Date").

Although the Company  properly and timely  accrued the loss for the nine and the
three months ended September 30, 2005 associated with the Cybrix Loan Guarantee,
the Company did not disclose in prior filings that it had a contingent agreement
outstanding,  which represented a material  weakness in disclosure  controls and
procedures which was corrected in the period covered by this report.

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<PAGE>


Based upon that  evaluation,  our chief  executive  officer and chief  financial
officer  concluded that, as of the Evaluation Date, our disclosure  controls and
procedures are effective to ensure that information  required to be disclosed by
us in the reports  that we file or submit  under the  Exchange  Act is recorded,
processed,  summarized  and reported,  within the time periods  specified in the
SEC's rules and forms. Information required to be disclosed by us in the reports
we file or submit under the Exchange Act is accumulated and  communicated to our
management,  including our principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.

         CHANGES IN INTERNAL  CONTROL OVER  FINANCIAL  REPORTING.  In connection
with the audit of our financial  statements  for the fiscal year ended  December
31, 2004,  management,  together with J.H. Cohn LLP, our independent  registered
public accounting firm, identified the existence of several deficiencies related
to  the  preparation  of our  financial  statements  and  notes  thereto.  These
deficiencies  collectively  amounted  to  material  weaknesses  in the design or
operation of internal  control over  financial  reporting  that were  reasonably
likely to adversely affect our ability to record, process,  summarize and report
financial data if uncorrected.  In the main, these deficiencies consisted of too
small an accounting  staff and the need for additional  continuing  professional
education  by staff  members.  In response to these  deficiencies,  we performed
extensive  alternative  analysis  procedures to mitigate the deficiencies and we
believe  that,  as a  result  of  those  procedures,  our  ability  to  process,
summarize,  and report  financial  data for the year ended December 31, 2004 and
for the period from April 28, 2003 (date of  inception) to December 31, 2003 was
not  adversely  affected.  In  addition  on or about April 20, 2005 we engaged a
professional  accounting  company to assist us in the  preparation of statements
prior to their auditor review by our independent  registered  public  accounting
firm.  We  believe  that this  professional  accounting  company  possesses  the
requisite  accounting  knowledge and  professional  education to supplement  any
deficiencies  therein  by  our  internal  staff.  Since  the  retention  of  the
accounting  company we have met regularly with them,  particularly in connection
with this quarterly  report for the period ended September 30, 2005, to identify
accounting  and reporting  issues and to obtain the benefit of their guidance in
the preparation of our periodic filings

         In addition,  in June 2005, the Board of Directors engaged as a special
consultant,  a certified  public  accountant with over 30 years of experience as
chief  financial  officer of several  public  companies,  a former  director and
chairman  of the audit  committee  of a public  company and an  operational  and
financial consultant to venture capital and leveraged buyout firms to review our
financial reporting procedures,  review functions of the financial  organization
and confirm that  approved  recommendations  were  implemented.  We believe this
engagement,  combined with the ameliorative  actions mentioned above,  cured the
material weakness noted by our independent registered public accounting firm.

         From  April 20,  2005  through  November  11,  2005,  we have  incurred
expenses of approximately  $172,000 in remediating the material deficiencies and
providing related accounting and financial advice to the Board and management.

         Other than as set forth  above  there  were no changes in our  internal
controls over financial  reporting,  known to the chief executive officer or the
chief  financial  officer that occurred during the period covered by this report
that has materially affected,  or is reasonably likely to materially affect, our
internal control over financial reporting.

                           PART II--OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

RECENT SALES OF UNREGISTERED SECURITIES

       1)     From July 2005  through  September  2005 we issued an aggregate of
              24,530   shares   of   Common   Stock  to  VASCO   Data   Security
              International,  Inc. in payment of $30,000 quarterly dividends due
              on the Series A Convertible Preferred Stock for the 2nd quarter of
              the fiscal year ending December 31, 2005;

                                       24
<PAGE>


       2)     As of  September  30,  2005,  for the  period  July  2005  through
              September  2005,  we owe an aggregate  of 94,044  shares of Common
              Stock to VASCO Data  Security  International,  Inc.  in payment of
              $30,000  quarterly  dividends  due on  the  Series  A  Convertible
              Preferred  Stock for the 3rd  quarter  of the fiscal  year  ending
              December 31, 2005;

       3)     In  September  2005 we issued an  aggregate  of 200,645  shares of
              Common Stock to the holders of our Series B Convertible  Preferred
              Stock ("the "Series B Shares") in payment of approximately $81,000
              in dividends due on September 1, 2005 on the Series B Shares; and

       4)     As of  September  30,  2005,  for the  period  July  2005  through
              September  2005,  pursuant  to the  Consulting  Agreement  between
              Secured Services and Crosslink Resources,  dated January 17, 2005,
              we owe  them an  aggregate  of 9,000  shares  of  Common  Stock in
              payment of $2,791 in fees for their  investor  relations  services
              rendered.

     The sale of the foregoing securities was exempt from registration  pursuant
to Sections 4(2) and 4(6) of the Securities Act of 1933, as amended (the "Act").
All of certificates for the securities were imprinted with a legend  restricting
transfer unless pursuant to an effective  registration statement or an available
exemption under the Act. The stockholders were required to represent and warrant
(i) that the securities  were  purchased  entirely for their own account with no
intention, at the time of purchase, of dividing the securities with others or of
reselling or otherwise disposing of any portion of the securities unless covered
by an effective  registration  statement  or pursuant to an available  exemption
from such  registration;  (ii) that the  securities  will be held for investment
purposes  and not with a view toward  further  distribution  or sale;  and (iii)
further agree that they will not engage in any short selling.

ITEM 6. EXHIBITS

      Exhibits:

       Exhibit No.        Description
       -----------        -----------

         10.21    Employment Agreement between Secured Services, Inc. and Robert
                  Skinner, dated September 9, 2005

         10.22    Employment Agreement between Secured Services, Inc. and John
                  Lund, dated October 17, 2005

         31.1     Chief Executive Officer Certification pursuant to section 302
                  of the Sarbanes-Oxley Act of 2002*

         31.2     Chief Financial Officer Certification pursuant to section 302
                  of the Sarbanes-Oxley Act of 2002*

         32.1     Chief Executive Officer Certification pursuant to section 906
                  of the Sarbanes-Oxley Act of 2002*

         32.2     Chief Financial Officer Certification pursuant to section 906
                  of the Sarbanes-Oxley Act of 2002*

                                       25
<PAGE>


                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                            Secured Services, Inc
                                            ---------------------------
                                            (Registrant)

Date        November 21, 2005               /s/ Robert Skinner
      -----------------------------         ------------------
                                            Robert Skinner
                                            Chief Executive Officer

Date        November 21, 2005               /s/ Jane Dietze
      -----------------------------         ------------------
                                            Jane Dietze
                                            Interim Chief Financial Officer
                                            (Principal Financial Officer)

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