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


                                    FORM 1O-Q



[X]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the quarter ended September 30, 1998 or

[ ]      Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934




                          COMMISSION FILE NUMBER 1-8138


                            ALARMGUARD HOLDINGS, INC.

Incorporated In Delaware                     IRS Identification No: 33-0318116

Principal Executive Offices:                 Telephone (203) 795-9000
          125 Frontage Road
          Orange, CT  06477


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X    No 
                                      ---      ---

The number of shares of Alarmguard  Holdings,  Inc.'s  common stock,  $.0001 par
value, outstanding as of November 12, 1998 was 5,569,985.



<PAGE>

                          PART I. FINANCIAL INFORMATION


ITEM 1.           FINANCIAL STATEMENTS

ALARMGUARD HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

                                                     SEPTEMBER 30    DECEMBER 31
                                                         1998            1997
                                                     ------------    -----------
                                                      (UNAUDITED)       (NOTE)
     ASSETS:
     Current assets:
       Cash and cash equivalents                       $  4,059       $    698
       Restricted cash                                    2,608          1,931
       Accounts receivable, net                           8,416          5,558
       Inventories                                        4,330          3,065
       Other current assets                                 456            343
                                                       --------       --------
     Total current assets                                19,869         11,595
     
     Property and equipment, net                          4,508          2,133
     Customer installation costs, net                    10,979          8,868
     Customer contracts and intangibles, net             77,869         43,027
     Other investments                                    2,093          2,245
     Other assets                                         1,638          1,982
                                                       --------       --------
     Total assets                                      $116,956       $ 69,850
                                                       ========       ========



         Note: Derived from audited balance sheet as of December 31, 1997.




                                       2
<PAGE>




ALARMGUARD HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands)

                                                    SEPTEMBER 30     DECEMBER 31
                                                        1998             1997
                                                    ------------     -----------
                                                     (UNAUDITED)        (NOTE)
     LIABILITIES AND STOCKHOLDERS' DEFICIENCY:
     Current liabilities:
       Accounts payable                             $   2,474        $   2,659
       Accrued expenses                                 7,621            5,675
       Current portion of notes payable                   578            2,462
       Deferred revenue                                 8,880            6,231
       Other current liabilities                        5,727            4,061
                                                    ---------        ---------
     Total current liabilities                         25,280           21,088

     Notes payable, less current portion                  184              549
     Credit facility                                   65,700           46,700
     Term loan                                          3,900             --
     Subordinated debt                                   --              4,389
     Other liabilities                                    793              321

     Cumulative Convertible Preferred Stock,
         $1,000 par value:
       Series A, 5% dividends, 35,700 shares
         issued and outstanding
         at September 30, 1998                         34,028             --
       Series B, 5,000 shares issued and
         outstanding at September 30, 1998              4,765             --

     Stockholders' deficiency:

       Common Stock, $.0001 par value,
         25,000,000 shares authorized, 5,569,985
         and 5,593,396 shares issued and
         outstanding at September 30, 1998 and
         December 31, 1997, respectively                    1                1
       Additional paid in capital                      43,887           35,286
       Accumulated deficit                            (61,582)         (38,484)
                                                    ---------        ---------
     Total stockholders' deficiency                   (17,694)          (3,197)
                                                    ---------        ---------
     Total liabilities and stockholders'
       deficiency                                   $ 116,956        $  69,850
                                                    =========        =========

         See accompanying notes to condensed consolidated financial statements.

         Note: Derived from audited balance sheet as of December 31, 1997.




                                       3
<PAGE>




ALARMGUARD HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)

<TABLE>
<CAPTION>
                                                            THREE MONTHS            NINE MONTHS
                                                         ENDED SEPTEMBER 30      ENDED SEPTEMBER 30
                                                         ------------------      ------------------
                                                           1998       1997        1998        1997
                                                           ----       ----        ----        ----

<S>                                                    <C>         <C>         <C>         <C>      
Revenue                                                $ 13,523    $  9,627    $ 37,561    $ 24,611
Cost of revenue                                           5,938       4,204      16,710      10,445
                                                       --------    --------    --------    -------- 
Gross profit                                              7,585       5,423      20,851      14,166

  Sales and marketing expense                             1,616       1,252       4,395       3,447
  General and administrative expense                      4,006       2,745      11,002       7,749
  Acquisition integration expense                            36        --           743        --
  Amortization and depreciation expense                   4,932       3,309      12,989       8,776
                                                       --------    --------    --------    -------- 
Total operating expense                                  10,590       7,306      29,129      19,972
                                                       --------    --------    --------    -------- 
Operating loss                                           (3,005)     (1,883)     (8,278)     (5,806)

Other income (expense):
  Interest expense, net                                  (1,482)     (1,334)     (4,582)     (3,329)
  Other, net                                                 96         103         247          91
                                                       --------    --------    --------    -------- 
Net loss before extraordinary item                       (4,391)     (3,114)    (12,613)     (9,044)

Extraordinary loss from early
  extinguishment of debt                                   --          --          --          (813)
                                                       --------    --------    --------    -------- 
Net loss                                                 (4,391)     (3,114)    (12,613)     (9,857)

Dividend requirement on preferred stock,
  including imputed non-cash dividend of $9,024
  recorded in February 1998
  (See Note 10)                                            (560)       --       (10,485)       (200)
                                                       --------    --------    --------    -------- 
Loss applicable to common shares                       $ (4,951)   $ (3,114)   $(23,098)   $(10,057)
                                                       ========    ========    ========    ======== 

Basic and diluted loss per common share:
  Net loss before extraordinary item                   $   (.79)   $   (.56)   $  (2.26)   $  (2.05)
  Extraordinary loss                                       --          --          --          (.18)
                                                       --------    --------    --------    -------- 
  Net loss                                                 (.79)       (.56)      (2.26)      (2.23)
  Dividend requirement on preferred stock                  (.10)       --         (1.87)       (.04)
                                                       --------    --------    --------    -------- 
    Loss per common share                              $   (.89)   $   (.56)   $  (4.13)   $  (2.27)
                                                       ========    ========    ========    ======== 

Weighted average number of basic and diluted
  common shares                                           5,593       5,592       5,593       4,422
                                                       ========    ========    ========    ======== 
</TABLE>

         See accompanying notes to condensed consolidated financial statements.





                                       4
<PAGE>




ALARMGUARD HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
                                                           NINE MONTHS ENDED
                                                             SEPTEMBER 30
                                                           -----------------
                                                           1998        1997
                                                           ----        ----

   OPERATING ACTIVITIES:
   Net loss                                             $(12,613)   $ (9,857)
   Adjustments to reconcile net loss to net
       cash used in operating activities:
       Amortization and depreciation                      12,989       8,776
       Amortization of subordinated debt warrant
         original issue discount                             211        --
       Customer installation costs incurred               (5,070)     (3,157)
       Changes in operating assets and liabilities,
          net of effects of acquisitions                    (163)       (711)
                                                        --------    --------
   Net cash used in operating activities                  (4,646)     (4,949)

   INVESTING ACTIVITIES:
     Acquisition of businesses, net of cash acquired     (42,322)     (4,645)
     Increase in restricted cash                            (677)     (1,931)
     Purchases of property and equipment                  (1,272)       (192)
                                                        --------    --------
   Net cash used in investing activities                 (44,271)     (6,768)

   FINANCING ACTIVITIES:
     Net proceeds from issuance of preferred stock        37,800        --
     Proceeds from credit facility and term loan          23,700      46,900
     Proceeds from issuance of subordinated debt            --         4,300
     Payments of credit facility and term loan              (800)    (31,836)
     Payments of subordinated debt                        (3,900)     (4,951)
     Payment of cash dividend on preferred stock            (718)       --
     Financing fees paid                                    (445)     (1,040)
     Payments of other notes payable and capital
       leases                                             (3,359)     (1,423)
                                                        --------    --------
   Net cash provided by financing activities              52,278      11,950

   Increase in cash and cash equivalents                   3,361         233
   Cash and cash equivalents at beginning
     of period                                               698         230
                                                        --------    --------
   Cash and cash equivalents at end of period           $  4,059    $    463
                                                        ========    ========

   Cash paid for interest                               $  4,778    $  3,448
                                                        ========    ========

         See accompanying notes to condensed consolidated financial statements.




                                       5
<PAGE>




ALARMGUARD HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1.   BASIS OF PRESENTATION

     Alarmguard   Holdings,   Inc.   ("Alarmguard"  or  the  "Company")  is  the
successor-in-interest  to Security  Systems  Holdings,  Inc.  ("SSH") and Triton
Group Ltd.  ("Triton"),  following  the merger  ("Merger")  of SSH and Triton on
April 15, 1997.  Alarmguard,  through its wholly-owned  subsidiaries,  sells and
installs  burglar and fire alarm  systems and provides  monitoring  and security
system repair and maintenance services to homeowners and businesses, principally
in the Northeast and Mid-Atlantic regions of the United States.

     The  accompanying  unaudited  financial  statements  have been  prepared in
accordance with generally accepted  accounting  principles for interim financial
information and Article 10 of Regulation S-X.  Accordingly,  they do not include
all of the  information  and notes  required by  generally  accepted  accounting
principles for complete financial statements. In the opinion of management,  all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation  have been included.  Operating results for the three and nine
month periods ended  September  30, 1998 are not  necessarily  indicative of the
results  that may be  expected  for the  year  ending  December  31,  1998.  The
condensed  consolidated  balance  sheet as of December 31, 1997 has been derived
from the  audited  consolidated  balance  sheet as of that date.  The  unaudited
interim  financial  information of Alarmguard should be read in conjunction with
the audited  consolidated  financial  statements of Alarmguard as of and for the
year ended  December 31, 1997 included in the  Company's  Form 10-K for the year
then ended.

2.   ACQUISITIONS

     On February 2, 1998, Alarmguard purchased all of the issued and outstanding
shares of  capital  stock of  Detect,  Inc.  ("Pelletier"),  a company  based in
Danbury, Connecticut, with approximately 7,200 subscribers and Monthly Recurring
Revenue  ("MRR")(1) of  approximately  $0.2 million.  The total purchase  price,
including  estimated  transaction  costs, was  approximately  $12.0 million.  At
closing,  the  Company  paid $9.5  million  in cash,  recorded  $2.5  million of
liabilities  and recorded  $12.0 million of assets  including:  $10.8 million of
customer  contracts,  $0.6  million of  current  assets,  $0.4  million of other
intangibles  and $0.2 million of property and  equipment.  The  acquisition  was
accounted for under the purchase  method of  accounting  and,  accordingly,  the
purchase  price  was   preliminarily   allocated  to  the  assets  acquired  and
liabilities  assumed  based  on  their  estimated  fair  values  at the  date of
acquisition.


----------
     (1) MONTHLY RECURRING REVENUE. MRR represents revenue that a company in the
security  alarm  industry is entitled to receive  under  contracts  (monitoring,
leasing,  and  maintenance)  in effect at the end of such period.  MRR is a term
commonly  used in the  security  alarm  industry  as a measure  of the size of a
company. It does not measure profitability or performance,  and does not include
any  allowance  for  future  gross  MRR  attrition  or  uncollectible   accounts
receivable.



                                       6
<PAGE>

     During the first nine  months of 1998,  Alarmguard  also  acquired  certain
operating assets of Security Systems, Inc. ("Sentry"), of Malden,  Massachusetts
and seven additional companies in the security alarm installation and monitoring
business  adding  approximately  $0.6  million of MRR and  approximately  24,000
customers.  The  total  purchase  price of the  operating  assets  for the eight
companies,  including  estimated  transaction  costs,  was  approximately  $31.2
million.  At closing,  the Company  paid $25.8  million in cash,  recorded  $5.4
million of  liabilities  and recorded $31.2 million of assets  including:  $28.9
million of customer  contracts,  $1.2 million of current assets, $0.6 million of
property and equipment,  and $0.5 million of other assets. The acquisitions were
accounted for under the purchase  method of  accounting  and,  accordingly,  the
purchase  price has been  preliminarily  allocated  to the assets  acquired  and
liabilities assumed based on their estimated fair values at the respective dates
of acquisition.

     In September 1998, the Company  completed the  post-closing  adjustment for
two 1997 acquisitions.  As a result of these  adjustments,  the Company retained
25,622 shares of its Common Stock, which had been held in escrow, as such shares
were  not  issuable  to the  Sellers  based  on  criteria  established  in their
respective purchase and sale agreements.

     The  following  unaudited pro forma  information  for the nine months ended
September 30, 1998 and 1997 presents the results of the Company's  operations as
though the  acquisitions  consummated  during the first nine  months of 1998 had
been made as of  January  1, l998 and  January  1,  1997,  and the  acquisitions
consummated  during  fiscal  year 1997 had been made as of  January  1, 1997 (in
thousands, except per share data):

                                                     For the Nine Months Ended
                                                           September 30,
                                                     -------------------------
                                                       1998           1997
                                                     --------       --------
   Pro forma revenue                                 $ 39,626       $ 37,297
                                                     ========       ========
   Pro forma loss before
       extraordinary item                            $(14,772)      $(22,274)
                                                     ========       ========
   Pro forma net loss                                $(14,772)      $(23,087)
                                                     ========       ========
   Pro forma basic and diluted net
       loss per share before
       extraordinary item                            $  (2.65)      $  (4.00)
                                                     ========       ========
   Pro forma basic and diluted net
       loss per share                                $  (2.65)      $  (4.14)
                                                     ========       ========
   Shares used in computations                          5,570          5,570
                                                     ========       ========

     The pro forma results are not necessarily  indicative of the actual results
of operations that would have been obtained had the acquisitions  taken place at
the  beginning  of the  respective  periods or the results that may occur in the
future and do not give effect to cost  savings  which are expected to occur as a
result of the consolidation of the acquired companies.

3.   INVENTORIES

     Inventories  consist principally of alarm components and supplies which are
carried at the lower of cost or market value.




                                       7
<PAGE>





4.   CUSTOMER INSTALLATION COSTS

During the nine months ended  September 30, 1998 and 1997,  Alarmguard  incurred
approximately  $5.1  million  and  $3.2  million,   respectively,   of  customer
installation  costs  primarily  attributable to the operations of its dealer and
direct marketing programs. In 1998,  Alarmguard added approximately  $177,000 of
MRR and  $105,000  of MRR,  through  its dealer and direct  marketing  programs,
respectively.  Additionally,  the Company added a nominal  amount of MRR through
its  dealer  program  in 1997,  but added  $150,000  of MRR  through  its direct
marketing program during the nine months ended September 30, 1997.

5.   CUSTOMER CONTRACTS AND INTANGIBLES

     Customer  contracts and  intangibles (at cost) consist of the following (in
thousands):

                                                   September 30,    December 31,
                                                       1998             1997
                                                   -------------    ------------
     Acquired customer contracts                    $  92,469        $  49,807
     Covenants not to compete                          13,754           12,944
     Goodwill                                           2,493            2,493
                                                    ---------        ---------
                                                      108,716           65,244
     Less accumulated amortization                    (30,847)         (22,217)
                                                    ---------        ---------
                                                    $  77,869        $  43,027
                                                    =========        =========

The  Company  added $4.2  million to  customer  contracts  during the first nine
months of 1998 as a result of its dealer  program.  The amount added in 1997 was
nominal.

6.   OTHER INVESTMENTS

     Other  investments are comprised of certain remaining assets held by Triton
at the time of the Merger in April 1997, (in thousands):

                                                   September 30,    December 31,
                                                       1998             1997
                                                   -------------    ------------
     Ridgewood Hotels, Inc. Series A
          Preferred Stock                              $2,009           $2,009
     Other                                                 84              236
                                                       ------           ------
                                                       $2,093           $2,245
                                                       ======           ======

     Alarmguard  owns  450,000  shares of Series A Preferred  Stock of Ridgewood
Hotels,  Inc.  ("Ridgewood")  with a face  value  of  $3.6  million.  Alarmguard
currently  receives a 10% quarterly  dividend of $90,000 on this  investment and
the  preferred  stock is  redeemable  at any time by Ridgewood at its face value
plus accrued dividends.  The preferred stock is convertible by Alarmguard at any
time into 1,350,000 Ridgewood common shares, which would represent approximately
47% of the  Ridgewood  common  shares then  outstanding,  or 40% fully  diluted.
Alarmguard  accounts  for the  Ridgewood  investment  using  the cost  method of
accounting.




                                       8
<PAGE>





7.   LONG TERM DEBT

     At September  30, 1998,  outstanding  borrowings  under the  Company's  $90
million  Credit  Facility  were  $65.7  million.   As  of  September  30,  1998,
availability under the Credit Facility was approximately $4.2 million.  Interest
on the Credit  Facility  accrues  and is payable at the option of the Company at
either  prime plus 1-1/2% or LIBOR plus 2.75%  (approximately  8.2% at September
30,  1998).  The Company  has fixed the  interest  rate on $40.0  million of the
outstanding  borrowings  at 8.84% for three years  through an interest rate swap
agreement.

     On July 31,  1998,  the Company  repaid $3.9 million of  subordinated  debt
which bore interest at 15% and would have been due in April 1999.  The repayment
was completed through a new $3.9 million term loan which was provided by certain
banks under the Fourth  Amended and Restated  Acquisition  Credit  Agreement and
Term  Loan.  The new term loan has no impact on  availability  under the  Credit
Facility.  The term loan accrues  interest at 30 day LIBOR plus 4.10% (which was
approximately 9.76% on September 30, 1998) and is due and payable on January 31,
2005.

8.   STOCK OPTIONS

     On March 10, 1998, the Board of Directors  issued 365,000  additional stock
options to the  senior  management  of  Alarmguard  which vest over a  four-year
period from the date of grant.  The exercise  price for all options  granted was
$10.00 per share,  the quoted  market  value of the common  stock on the date of
grant. On July 1, 1998, the Company issued 70,000 stock options to the Directors
of the Company  pursuant to the Directors Stock Option Plan.  These options vest
over a  three-year  period and have an exercise  price of $9.625 per share,  the
quoted market value of the common stock on the date of grant.  All stock options
vest immediately upon a change in control (as defined).

9.   COMMITMENTS AND CONTINGENCIES

     The Company  experiences  routine  litigation  in the normal  course of its
business.  Management does not believe that any pending or threatened litigation
will have a material  adverse  effect on the  financial  condition or results of
operations of the Company.

10.  SALE OF CUMULATIVE CONVERTIBLE PREFERRED STOCK

     On February 3, 1998, the Company  completed an offering of 40,000 shares of
Cumulative  Convertible  Preferred  Stock  (35,000  shares of Series A Preferred
Stock  and  5,000  shares  of  Series  B  Preferred  Stock)  (collectively,  the
"Preferred  Stock") at $1,000 per share  yielding gross proceeds of $40 million.
Concurrently,  the Company issued an additional 700 shares of Series A Preferred
Stock in exchange for $0.7 million of the Company's subordinated debt.

     The Series A Preferred  Stock pays  quarterly cash dividends at the rate of
5% per annum and the Series B Preferred  Stock pays no dividends.  The Preferred
Stock has a liquidation  preference of $1,000 per share (plus accrued and unpaid
dividends)  payable  upon any  liquidation,  dissolution  or  winding  up of the
Company.  Holders of the Series A Preferred  Stock and Series B Preferred  Stock



                                       9
<PAGE>

have the right to convert  all or any  portion of their  shares at any time into
shares of the Company's  common stock at the conversion price of $8.25 per share
and $7.75 per share, respectively,  subject to certain anti-dilution provisions.
Holders of the Preferred  Stock are entitled to vote on an "as converted"  basis
with the holders of the Company's  common stock on all matters  submitted to the
stockholders  for a vote, and to vote  separately as a single class to elect two
directors to serve on the Company's  Board of Directors.  In connection with the
sale of the Preferred Stock, the Company imputed a one-time non-cash dividend of
approximately  $9.0  million  ($1.61  per  common  share)  as a  result  of  the
conversion  prices of the two  series of  preferred  stock  being  less than the
quoted  market price of the Company's  common stock at the date of issuance,  as
required by EITF D-60:  Accounting  for the  Issuance of  Convertible  Preferred
Stock and Debt Securities with a Nondetachable  Conversion Feature.  Such amount
was  recognized  immediately  upon issuance of the  Preferred  Stock as a charge
against accumulated deficit, with a corresponding increase in additional paid in
capital.  The  imputed  non-cash  dividend  has been  included  in the  dividend
requirement  on  Preferred  Stock in the  condensed  consolidated  statement  of
operations for the nine months ended September 30, 1998.

     The Company is obligated to redeem the Preferred  Stock on February 2, 2003
at a price per share equal to the liquidation  preference  ($1,000) plus accrued
and unpaid dividends. In addition, if a "change in control" (as defined) occurs,
any  holder of  Preferred  Stock may  require  the  Company to redeem all or any
portion of the  Preferred  Stock owned by such holder at a price per share equal
to the greater of (i) $1,300 if the change of control  occurs  prior to February
2, 1999 or  $1,500  if the  change in  control  occurs  thereafter,  or (ii) the
liquidation preference plus accrued and unpaid dividends.


11.  EARNINGS PER SHARE

     The 1997  calculation  of basic and diluted loss per common share  excludes
the dividend requirement on preferred stock as a result of the conversion of the
old Redeemable  Preferred  Stock and related  accrued  dividends into Alarmguard
Common Stock at the time of the merger.

     All dilutive securities (stock options,  warrants and convertible preferred
stock) have been excluded from the diluted loss per common share  calculation as
such instruments are antidilutive.

12.  RECENT FASB PRONOUNCEMENTS

     In 1998,  the FASB issued SFAS No. 131,  "Disclosure  about  Segments of an
Enterprise  and  Related  Information."  The  Company  will  adopt  SFAS No. 131
effective  for  year-end  financial  reporting  in 1998 and  expects no material
impact upon adoption.

     In  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities,"  which is required to be adopted in years
beginning  after June 15,  1999.  The  statement  will  require  the  Company to
recognize all  derivatives  on the balance sheet at fair value.  The Company has
not  determined  what the effect of  Statement  133 will be on the  earnings and
financial position of the Company.



                                       10
<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     Certain  matters in this  section  constitute  "forward-looking  statements
"within  the meaning of the Private  Securities  Litigation  Reform Act of 1995.
Such forward-looking  statements involve known and unknown risks,  uncertainties
and other  factors which may cause the actual  results of  Alarmguard  Holdings,
Inc. (the "Company" or "Alarmguard") to be materially  different from historical
results  or from any  results  expressed  or  implied  by such  forward  looking
statements.  These factors are discussed  under the caption "Risk  Factors" in a
Registration  Statement  on  Form  S-4  (File  No.  333-23307)  filed  with  the
Securities and Exchange Commission on March 14, 1997.

GENERAL OVERVIEW

     Alarmguard  sells and installs  burglar and fire alarm systems and provides
security monitoring services and security system repair and maintenance services
to homeowners  and  businesses,  principally  in the Northeast and  Mid-Atlantic
regions of the United States. Alarmguard provides its security alarm systems and
services primarily under its trademark  "Alarmguard".  As of September 30, 1998,
Alarmguard had  approximately  $3.1 million of Monthly Recurring Revenue ("MRR")
and approximately 101,000 subscribers.

     Alarmguard's  objective is to provide  residential and commercial  security
services to an increasing number of subscribers. Alarmguard's growth strategy is
to enhance  its  position  in the  security  alarm  monitoring  industry  in the
Northeastern and Mid-Atlantic United States by increasing the number and density
of  subscribers  for whom it provides  services.  Alarmguard  is  pursuing  this
strategy   through  a  balanced   growth  plan  involving:   (1)   incorporating
acquisitions  of portfolios of  subscriber  accounts in existing and  contiguous
markets;  (2) internal growth through direct marketing to obtain new subscribers
(the  "Direct  Marketing  Program"  or  "DMP");  (3)  acquiring  credit-approved
monitoring contracts from Alarmguard  authorized dealers (the "Dealer Program");
and (4) growth of Alarmguard's  core business through  referrals and traditional
local marketing.

     During the nine  months  ended  September  30,  1998,  Alarmguard  acquired
operating  assets of nine  companies  in the  security  alarm  installation  and
monitoring  business  for an aggregate  purchase  price,  including  transaction
costs, of $43.2 million in cash,  notes payable and amounts due to sellers based
on certain post closing  adjustments.  The acquisitions added approximately $0.8
million of MRR and approximately 31,000 subscribers.

KEY OPERATING MEASURES

     The Company  employs three internal  measurements to assess the performance
of its operations: Adjusted EBITDA, MRR and Gross MRR Attrition.

     ADJUSTED  EBITDA.  Adjusted EBITDA is derived by adding to EBITDA (Earnings
Before Interest, Taxes, Depreciation and Amortization),  Dealer and DMP expenses
less  Dealer and DMP  revenues,  plus  acquisition  integration  expenses.  This
calculation  provides a basis for comparison of 


                                       11
<PAGE>

Alarmguard's  results  to those of other  security  alarm  companies  that  grow
primarily through the acquisition of subscriber  accounts.  An amount similar to
Adjusted EBITDA is used by lenders in extending  credit to Alarmguard.  Adjusted
EBITDA does not  represent  cash flows from  operations  as defined by generally
accepted accounting  principals and should not be construed as an alternative to
net  income.  Adjusted  EBITDA for the three  months  ended  September  30, 1998
increased to $2.5 million from $1.9 million for the  comparable  1997 period,  a
30.6% increase.  For the nine months ended  September 30, 1998,  Adjusted EBITDA
was $6.9 million compared to $4.6 million in the prior year, a 49.8% increase.


                                      For the Three Months   For the Nine Months
                                       Ended September 30    Ended September 30
                                      --------------------   -------------------
                                         1998       1997       1998       1997
                                         ----       ----       ----       ----
                                                     (in thousands)
EBITDA                                 $ 1,927    $ 1,426    $ 4,711    $ 2,970
  Plus Dealer and Direct
      Marketing Program expense          1,063        810      2,764      2,632
  Less Dealer and Direct
     Marketing Program revenue            (489)      (294)    (1,269)      (963)
  Plus acquisition integration
     expense
                                            36       --          743       --
                                       -------    -------    -------    -------
Adjusted EBITDA                        $ 2,537    $ 1,942    $ 6,949    $ 4,639
                                       =======    =======    =======    =======


     MONTHLY  RECURRING  REVENUE.  MRR represents  revenue that a company in the
security  alarm  industry is entitled to receive  under  contracts  (monitoring,
leasing,  and  maintenance)  in effect at the end of such period.  MRR is a term
commonly  used in the  security  alarm  industry  as a measure  of the size of a
company. It does not measure profitability or performance,  and does not include
any  allowance  for  future  gross  MRR  attrition  or  uncollectible   accounts
receivable.

     GROSS MRR  ATTRITION.  Gross MRR  attrition  has an  adverse  effect on the
Company's  financial  position and results of  operations,  since it affects the
Company's  recurring  revenues.  Gross MRR attrition,  generally expressed on an
annualized  basis,  can be measured in terms of  decreased  MRR  resulting  from
canceled subscriber accounts.  Gross MRR attrition is defined by the Company for
a particular period as a quotient,  the numerator of which is equal to gross MRR
lost as the result of canceled  subscriber  accounts  during such period and the
denominator  of which is the average  month end MRR during such 12 month period.
The following table sets forth the Company's MRR additions,  cancellations,  and
gross MRR attrition for the periods indicated (dollars in thousands):




                                       12
<PAGE>



                                               Nine Months         Twelve Months
                                                  Ended                Ended
                                              September 30,        December 31,
       MRR                                        1998                 1997
       ---                                    -------------        ------------
       Beginning of period                      $ 2,087              $ 1,392
       Direct Marketing Program additions           105                  193
       Dealer Program additions                     177                   --
       Acquisition additions                        821                  586
       Other additions (1)                          174                  134
       Canceled MRR (2)                            (255)                (218)
                                                -------              -------
       End of period                            $ 3,109              $ 2,087
                                                =======              =======
       Gross MRR attrition (3)                     12.0%                11.8%
                                                =======              =======

----------

(1)  MRR primarily generated through traditional non-investment sales programs.
(2)  Includes  canceled  MRR  of  subscribers  who  have  moved  from  homes  or
     businesses in which an existing alarm system has already been installed.
(3)  Calculated on a trailing twelve-month basis.



RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1997

     REVENUE.  Revenues for the three months ended September 30, 1998 were $13.5
million,  an increase of $3.9 million,  or 40.5%,  over the comparable period in
1997.  This increase was  primarily the result of a 46.8%  increase of recurring
revenue to $8.9 million from $6.1 million and a 27.9%  increase in  installation
revenue to $3.7 million from $2.9 million.  Two  acquisitions  completed in 1998
accounted  for $2.7 million,  or 70% of the increase,  and the remainder was the
result of other sales programs.

     GROSS PROFIT.  Gross profit  increased to $7.6  million,  or 56.1% of total
revenue,  for the quarter ended September 30, 1998 compared to $5.4 million,  or
56.3% of total revenue, in the comparable 1997 period. The $2.2 million increase
in gross profit is primarily the result of increased revenue described above.

     SALES AND MARKETING. Sales and marketing expense for the three months ended
September  30,  1998  increased  approximately  $0.4  million  or 29.1% over the
comparable  period in 1997. As a percent of total  revenue,  sales and marketing
expense for the three months ended  September  30, 1998  decreased to 11.9% from
13.0% in the comparable  1997 period,  reflecting  economies of scale  resulting
from incremental revenue growth as described above.




                                       13
<PAGE>



     GENERAL  AND  ADMINISTRATIVE.  General and  administrative  expense for the
quarter ended September 30, 1998 increased approximately $1.3 million, or 45.9%,
over the comparable period in 1997. The increase was primarily the result of the
1998 acquisitions,  in particular the addition of a new branch office in Malden,
Massachusetts  following the  acquisition of Sentry  Protective  Systems earlier
this year, as well as increased staffing requirements required to facilitate the
Company's growth plan. As a percent of total revenue, general and administrative
expense for the three months ended  September  30, 1998  increased to 29.6% from
28.5% in the comparable 1997 period.

     ACQUISITION  INTEGRATION EXPENSES.  During the three months ended September
30, 1998,  the Company  incurred a nominal  amount of one time costs  associated
with the integration of acquired  subscriber accounts into the Company's system.
Management  expects  to  continue  to  incur  costs in the  future,  principally
relating to the  integration of subscriber  account  portfolios  acquired during
1998 and future acquisitions.

     AMORTIZATION  AND  DEPRECIATION.  Amortization  and  depreciation  for  the
quarter ended  September 30, 1998 increased by  approximately  $1.6 million,  or
49.0%,  compared to the same period in 1997.  This  increase was  primarily  the
result  of  amortization  of  intangible  assets  recorded  as a  result  of the
acquisition activity in 1997 and 1998.

     OPERATING LOSS. The operating loss for the three months ended September 30,
1998 increased to $3.0 million from $1.9 million in the comparable  1997 period.
As a percent of total revenue,  the operating loss for the quarter  increased to
22.2% in 1998  compared  to 19.6% for the same  period in 1997,  reflecting  the
increased  amortization  and  depreciation  and to a lesser extent the increased
general and administrative expenses discussed above.

     INTEREST EXPENSE.  Interest expense,  net of interest and other income, for
the quarter ended September 30, 1998 was $1.4 million,  compared to $1.2 million
in the  comparable  period in 1997.  This increase is primarily the result of an
increased  outstanding  balance  under the  Company's  Credit  Facility  in 1998
compared to the  comparable  period of 1997,  reflecting  the  Company's  growth
through  acquisitions  combined with subscriber additions through the Dealer and
Direct Marketing Programs.

     DIVIDEND  REQUIREMENT  ON  PREFERRED  STOCK.  The dividend  requirement  on
preferred  stock during the quarter ended September 30, 1998 reflects the 5% per
annum cash dividend and the  amortization  of the costs  incurred for completing
the offering of Cumulative  Convertible Preferred Stock issued in February 1998.
The costs are being  amortized  over the five-year life of the security with the
unamortized  balance  reflected as a reduction of the Preferred Stock's carrying
value.

NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1997

     REVENUE.  Revenues for the nine months ended  September 30, 1998 were $37.6
million,  an increase of $13.0 million,  or 52.6%, over the comparable period in
1997.  This increase was  primarily the result of a 57.7%  increase of recurring
revenue to $24.3 million from $15.4 million and 



                                       14
<PAGE>

a 43.0% increase in installation revenue to $10.9 million from $7.6 million. Two
1998 acquisitions and one 1997 acquisition  accounts for $8.6 million, or 67% of
the increase.

     GROSS PROFIT.  Gross profit  increased to $20.9 million,  or 55.5% of total
revenue, for the nine months ended September 30, 1998 compared to $14.2 million,
or 57.6% of total revenue,  in the comparable 1997 period. The decrease in gross
profit as a percentage of total revenue was primarily the result of lower margin
installations in the current year, as a result of increased dealer installations
and the unfavorable mix of traditional installations.

     SALES AND MARKETING.  Sales and marketing expense for the nine months ended
September 30, 1998 was $4.4 million  compared to $3.4 million for the comparable
1997 period. As a percent of total revenue,  sales and marketing expense for the
nine-month  period  decreased to 11.7% from 14.0% in the prior year,  reflecting
efficiencies resulting from increased revenues.

     GENERAL AND ADMINISTRATIVE. General and administrative expense for the nine
months ended September 30, 1998 increased  approximately $3.3 million, or 42.0%,
over the comparable  period in 1997. As a percent of total revenue,  general and
administrative  expense for the nine-month  period decreased to 29.3% from 31.5%
in the comparable 1997 period, resulting from increased revenue.

     ACQUISITION  INTEGRATION  EXPENSES.  During the nine months ended September
30, 1998, the Company  incurred $0.7 million of one time costs  associated  with
the integration of acquired subscriber accounts into the Company's system. These
costs were not material in 1997.

     AMORTIZATION AND  DEPRECIATION.  Amortization and depreciation for the nine
months ended  September 30, 1998  increased by  approximately  $4.2 million,  or
48.0%,  compared to the same period in 1997.  The  increase  was  primarily  the
result  of the  amortization  of  intangible  assets  recorded  as a  result  of
acquisition activity in 1997 and 1998.

     OPERATING  LOSS. The operating loss for the nine months ended September 30,
1998 increased to $8.3 million from $5.8 million in the comparable  1997 period.
As a percent of total revenue,  the operating loss was 22.0% in the current year
compared to 23.6% for the same period in 1997.

     INTEREST EXPENSE.  Interest expense,  net of interest and other income, for
the nine months  ended  September  30, 1998 was $4.3  million,  compared to $3.2
million in the comparable  period in 1997. This increase is primarily the result
of an increased  outstanding balance under the Company's Credit Facility in 1998
compared to 1997,  reflecting the Company's growth through acquisitions combined
with subscriber additions through the Dealer and Direct Marketing Programs.

     DIVIDEND  REQUIREMENT  ON  PREFERRED  STOCK.  The dividend  requirement  on
preferred  stock during the nine months ended September 30, 1998 reflects the 5%
per annum cash dividend,  amortization  of the costs incurred for completing the
offering of Preferred  Stock issued in February  1998,  and an imputed  one-time
non-cash  dividend of  approximately  $9.0 million as a result of the conversion
prices of the two series of  Preferred  Stock being less than the quoted  market
price of the Company's Common Stock at the date of issuance.  The costs incurred
for completing the offering



                                       15
<PAGE>

are being amortized over the five-year life of the security with the unamortized
balance reflected as a reduction of the Preferred Stock's carrying value. In the
comparable  period in the prior year, this amount reflects the dividends accrued
on the Redeemable Preferred Stock of the predecessor company that were converted
to Common  Stock of the Company in  connection  with the Triton  Merger in April
1997.


LIQUIDITY AND CAPITAL RESOURCES

     CAPITAL RESOURCES. The Company has financed its operations and growth since
May 1992 with a combination of borrowings under credit  facilities,  issuance of
subordinated  debentures,  sale of common and preferred  stock,  the 1997 merger
with Triton, and internally  generated cash flows. The Company's  principal uses
of cash have been the acquisition of subscriber accounts,  costs associated with
the Dealer and Direct  Marketing  Programs and interest  payments on  borrowings
under the  Credit  Facility.  A  substantial  portion  of the  Company's  future
operating cash flow will be used to fund the acquisition of subscriber accounts,
the Dealer and Direct  Marketing  Programs and to service  borrowings  under the
Credit  Facility and other  Company  debt.  There can be no  assurance  that the
Company will continue to have the ability to meet its borrowing requirements and
to fund its acquisition strategies and Dealer and Direct Marketing Programs.

     In February  1998,  the Company  completed an offering of 40,000  shares of
Cumulative  Convertible  Preferred  Stock  (35,000  shares of Series A Preferred
Stock and 5,000 shares of Series B Preferred Stock) at $1,000 per share yielding
gross  proceeds  totaling  $40  million.  Concurrently,  the Company  issued 700
additional  shares of the Series A Preferred  Stock in exchange for $0.7 million
of the Company's  subordinated debt. The Series A Preferred Stock pays quarterly
dividends  at a rate of 5% per annum and the  Series B  Preferred  Stock pays no
dividends.  Holders of the Series A Preferred Stock and Series B Preferred Stock
have the right to convert  all or any  portion of their  shares at any time into
shares of the Company's  common stock at the conversion price of $8.25 per share
and $7.75 per share, respectively,  subject to certain anti-dilution provisions.
Concurrent with the offering, the Company increased its Credit Facility from $60
million to $90 million.

     As of  September  30, 1998,  the Company had $4.1  million in  unrestricted
cash.  Additionally,  the Company had $65.7 million outstanding under its Credit
Facility with  approximately $4.2 million of availability at September 30, 1998.
The Company's  ability to borrow under the Credit Facility is limited by certain
representations and financial covenants.

     The Credit Facility is a non-amortizing  loan which converts to a five-year
amortizing term loan on April 30, 2000. Borrowings under the Credit Facility are
secured  by  substantially  all of the  properties  and  assets of the  Borrower
including  accounts  receivable,   inventory,   leasehold  interests,   customer
contracts and the capital stock of all of the subsidiaries of the Company.

     At September 30, 1998,  Alarmguard had a term loan of $3.9 million  bearing
interest at 30-day LIBOR plus 4.10%,  effectively  9.76% at such date.  The term
loan was  obtained on July 31,  1998,  the  proceeds of which were used to repay
$3.9 million of subordinated debt bearing interest at



                                       16
<PAGE>

15% and due in April 1999.  The Company  also has a total of $3.6 million due to
sellers  of  previous  acquisitions,  a portion  of which is  secured by various
notes.

     The Company  intends to continue to use its cash balances,  the liquidation
of its other investments and borrowings under the Credit Facility to finance the
addition of subscriber  accounts,  primarily through acquisitions and the Dealer
and Direct Marketing Programs.  Additionally,  the Company,  depending on future
needs and the cost and availability of various financing alternatives,  may from
time to time seek additional  debt or equity  financing in the public or private
markets in order to continue to support the growth of subscriber accounts. There
can be no  assurance  that the Company  will be able to obtain  such  capital on
acceptable  terms  or at all.  If cash  flows  from  operations,  combined  with
borrowings  under the Credit Facility and other  borrowings are  insufficient to
fund the Company's  growth  strategies,  management would curtail the Dealer and
Direct Marketing  Programs and implement a cost reduction strategy to the extent
necessary to satisfy its obligations.

     LIQUIDITY.  During the nine months ended  September 30, 1998 and 1997,  the
Company's net cash used in operating  activities was approximately  $4.6 million
and $4.9 million, respectively.

     For the nine months ended  September  30, 1998 and 1997,  the Company's net
cash used in  investing  activities  was  approximately  $44.3  million and $6.8
million,  respectively.  This  significant  increase  reflects the  acquisitions
completed primarily in the first quarter of 1998.

     Net cash provided by financing  activities was approximately  $52.3 million
during the nine months ended September 30, 1998 compared to $12.0 million in the
comparable  year ago period.  The increase  reflects the cash generated from the
Preferred  Stock  offering and increased  borrowings  under the Credit  Facility
discussed above.

     The Company  incurred losses  applicable to common shares of  approximately
$23.1 million and $10.1 million for the nine months ended September 30, 1998 and
1997,  respectively.  The Company  expects to incur  losses for the  foreseeable
future, the result of its continuing growth strategy.

     Increased  interest expense  resulting from higher borrowings will continue
to negatively  impact net income and represents a significant  cash  obligation.
Additionally,  the 5% cash dividend on $35.7 million of Series A Preferred stock
results  in  approximately  $1.8  million  of  cash  dividends  annually,  which
negatively  impacts loss  applicable  to common  shares and  represents  another
significant cash outflow.

     RECENT  FASB  PRONOUNCEMENTS.  In 1998,  the  FASB  issued  SFAS  No.  131,
"Disclosure  about  Segments  of an  Enterprise  and Related  Information."  The
Company will adopt SFAS No. 131  effective for year-end  financial  reporting in
1998 and expects no material impact upon adoption.

     In  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities,"  which is required to be adopted in years
beginning  after June 15,  1999.  The  statement  will  require  the  Company to
recognize all  derivatives  on the balance sheet at fair value.  



                                       17
<PAGE>

The Company has not  determined  what the effect of Statement 133 will be on the
earnings and financial position of the Company.

     YEAR 2000  ISSUES.  The "Year 2000" issue  relates to computer  systems and
programs  that may not properly  recognize the change in date years from 1999 to
2000. As a result, any business entity is at risk for possible system failure or
miscalculations  causing  disruptions  of  operations,  including,  among  other
things, a temporary inability to process transactions,  send invoices, or engage
in similar normal business activities.

     Subscriber alarm systems,  which are almost all  microprocessor  based, are
generally not date dependent, but are designed to receive commands from a keypad
or various sensors (smoke, intrusion,  temperature, etc.) and pass those signals
over a phone line to the Company's central monitoring facility. The exception is
certain  access  control  systems  installed at  subscribers'  premises,  almost
exclusively commercial buildings, most of which are already Year 2000 compliant.
The Company has identified the very small  percentage of these systems that need
to be upgraded and is scheduling service calls to upgrade these systems prior to
December  31, 1999.  The cost of such  upgrades  will  generally be borne by the
subscriber.

     Alarmguard's  alarm  processing  and  accounting  systems  utilize the PICK
operating system, a widely used system that is Year 2000 compliant.  The Company
has completed any necessary  upgrades of its computer systems to date as part of
its normal software support or by in-house programming staff without significant
costs.  The  Company  does not  believe  that the cost of the  remaining  system
upgrades will be material to its results of operations or cash flows.

     The Company's  accounts payable system does not interface directly with any
third party vendors and the Company has queried its significant suppliers and is
not  aware  of any  such  external  agent  with a Year  2000  issue  that  would
materially  impact the  Company's  results of  operations,  liquidity or capital
resources.  However,  the Company has no means of ensuring the  external  agents
will be Year 2000 ready.  The inability of key external agents to complete their
own Year 2000 resolution  process in a timely manner could materially impact the
Company. The effect of non-compliance by external agents is not determinable.

     Management  of  the  Company  believes  that  it  has  already  effectively
addressed  the vast  majority of the Year 2000 issues and has a program in place
to resolve  the  remaining  Year 2000  issues in a timely  manner.  Accordingly,
Management  does not believe that a  contingency  plan is required for Year 2000
issues.  Management  will  continue to evaluate its Year 2000 issues,  including
communication with key external agents, and will determine in the future if such
a plan is necessary. However, the Company could be materially adversely affected
by any disruptions in the economy in general resulting from Year 2000 issues.




                                       18
<PAGE>



                           PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits

     The following exhibits are filed with this quarterly report on Form l0-Q:

Exhibit
Number   Exhibit
------   -------

10.14    Fourth Amended and Restated Term Loan and Acquisition Credit Agreement,
         dated as of July 31, 1998

27       Financial data schedule

(b)      There were no reports on Form 8-K filed  during the three  months ended
         September 30, 1998.





                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                        ALARMGUARD HOLDINGS, INC.



DATE:    November 13, 1998              By: /s/ David Heidecorn
                                            --------------------------------
                                                David Heidecorn
                                                Principal Financial Officer