UNITED STATESSECURITIESTable ANDof EXCHANGE COMMISSIONContents

ALLIED SECURITYTable HOLDINGSof LLCTABLE OF CONTENTSContents

See AccompanyingTable Notesof Contents

1. Organization andTable Basis of PresentationContents

BasisTable of Presentation Contents

5Table of Contents

StatementTable of Cash FlowsContents

GrossTable carrying amounts and accumulated amortization for intangible assets as of June 30, 2006 and December 31, 2005 are as follows (in thousands):Contents

5. AccruedTable Terminationof CostsContents

InTable connection with the PSB Acquisition, the Company deposited $3,000,000 into an escrow account pursuant to the Indemnity Escrow Agreement entered into contemporaneously with the PSB Acquisition among the Company, then current shareholders of PSB and the escrow agent. These funds were disbursed to the former PSB shareholders on April 20, 2006 in accordance with the Indemnity Escrow Agreement.Contents

10Table of Contents

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

TheTable capital structure of the Company consists of three classes of units which are designated as Class A Units, Class B Units, and Class C Units (collectively, ‘‘Units’’). The Company is authorized to issue up to 10,000,000 Units. The Units do not have any voting approval or consent rights. Class A and Class B Units represent vested ownership interests in the Company. Class C Units generally vest 50% based on passage of time (‘‘Time-Based’’) and 50% based on achievement of defined performance targets (‘‘Performance-Based’’) over periods ranging from three to five years.Contents

On August 2, 2004,Table a direct subsidiary of Mafco acquired all of the shares of Blackstone. As a result, the put rights associated with the 13,779 Class A Units were canceled. The Class A Units formerly held by Blackstone are now held by Mafco’s indirect subsidiary, SpectaGuard Holding Two Corporation.Contents

OnTable March 9, 2006,of 1,500 unvested Performance-Based Class C Units and 1,500 Time-Based Class C Units were forfeited due to an employment resignation.Contents

OnTable July 20, 2006, the Company completed the Initial Acquisition for a net purchase price of approximately $73.0 million. Initial Security provides manned guarding, mobile patrol and related services in the United States.Contents

Item 2. Management’sTable Discussion and Analysis of Financial Condition and Results of Operations. Contents

17Table of Contents

BranchTable overheadof expense includes all salaries, salary related expenses, benefits and travel and entertainment costs paid to branch level employees. Branch administrative personnel typically include division presidents, vice president/general managers, district managers, support and administrative staff. Other primary branch overhead expenses include rent, classified advertisements, office expenses and bad debt expense. Corporate overhead expense includes all expenses related to our headquarters, salaries and related expenses, including benefits, commissions, incentive compensation, travel and entertainment costs, rent, marketing costs, professional and consulting fees, and office expenses.Contents

CustomerTable lists are amortized using the straight line method over six years. We perform periodic analyses and adjust through accelerated amortization any impairment of customer lists. None of the acquired customer lists have required accelerated amortization to date.Contents

Net Loss. NetTable loss for the three months ended June 30, 2006 was $0.8 million, which equals the net loss for the three months ended June 30, 2005, as a result of the items described above.Contents

InterestTable Expense,of Net. Interest expense, net increased $1.0 million, or 5.1%, to $20.7 million for the six months ended June 30, 2006 from $19.7 million for the six months ended June 30, 2005. The increase was due to higher interest rates which were partially offset by lower outstanding debt balances.Contents

21Table of Contents

22Table of Contents

TheTable Prior Credit Facility contained affirmative and negative covenants including (i) the payment of all material obligations; (ii) the maintenance of organizational existences, including, but not limited to, maintaining the Company’s property and insurance; (iii) compliance with all material contractual obligations and requirements of law; (iv) subject to customary exceptions, limitations on the incurrence of indebtedness, which permit only certain limited indebtedness; (v) subject to customary exceptions, limitations on creation and existence of liens; (vi) limitations on certain fundamental changes to the Company’s corporate structure and nature of its business, including mergers; (vii) subject to customary exceptions, limitations on asset sales; (viii) limitations on restricted payments; (ix) limitations on capital expenditures; (x) subject to customary exceptions, limitations on any investments, provided that certain ‘‘permitted acquisitions’’ are allowed; (xi) limitations on optional prepayments and modifications of certain debt instruments: (xii) subject to customary exceptions, limitations on transactions with affiliates; (xiii) limitations on entering into certain swap agreements; (xiv) limitations on any material changes in the Company’s equity structure or the equity structure of any of the Company’s subsidiaries; (xv) limitations on negative pledge clauses or clauses restricting subsidiary distributions; (xvi) limitations on sale-leaseback transactions; and (xvii) limitations on changes to the Company’s fiscal year.Contents

OnTable June 16, 2006, the Company initiated a solicitation from the holders of its Notes of consents to certain amendments to the Indenture governing the terms of the Notes. Upon expiration of the solicitation of consents on July 7, 2006, the Company accepted consents from holders of a majority in aggregate principal amount of the Notes and entered into the Fifth Supplemental Indenture among the Company, certain subsidiaries of the Company, as guaranteeing subsidiaries, and The Bank of New York, a New York banking corporation, as trustee. The Fifth Supplemental Indenture became operative on July 20, 2006 upon the closing of the Initial Acquisition by the Company. The Fifth Supplemental Indenture amended the Indenture to: (1) permit the Company to incur up to an additional $85.0 million in indebtedness in order to finance the Initial Acquisition and (2) provide that the Company may add back to the calculation of Consolidated Cash Flow (as defined in the Indenture) the fees and expenses, including without limitation fees and expenses of counsel, relating to the Initial Acquisition and the financing thereof, including the solicitation of consents discussed above and the related consent fee.Contents

ItemTable 3. Quantitativeof and Qualitative Disclosures about Market Risk. Contents

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

•Table The effects of work stoppages and other labor disturbances;Contents

•Table The effect of changes in security technology, including advances in technology that may decrease demand for security officers, as well as the Company's ability to acquire and effectively integrate available technologies into its business model;Contents

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

~~FORM~~Washington, D.C. 20549 ~~10-Q~~

~~QUARTERLY~~FORM ~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~10-Q

~~For~~þ ~~the~~QUARTERLY ~~quarterly~~REPORT ~~period~~PURSUANT ~~ended~~TO ~~June 30, 2006~~SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ORFor the quarterly period ended June 30, 2008

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

~~For~~o ~~the~~TRANSITION ~~transition~~REPORT ~~period~~PURSUANT ~~from to~~ TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Commission~~For ~~file number~~the ~~333-119127~~transition period from to

~~ALLIED~~Commission ~~SECURITY~~file ~~HOLDINGS LLC~~number 333-119127

~~(Exact~~ALLIED ~~name~~SECURITY ofHOLDINGS ~~Registrant as specified in~~LLC ~~its charter)~~

Delaware			20-1379003
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

(Exact name of Registrant as specified in its charter)

3606 Horizon Drive King of Prussia, PA		19406
Delaware	20-1379003
(Address of principal executive offices)		(Zip Code)
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
3606 Horizon Drive	19406
King of Prussia, PA	(Zip Code)
(Address of principal executive offices)

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

Not Applicable Former name, former address and former fiscal year, if changed since last report.

~~Former~~Indicate ~~name,~~by ~~former~~check ~~address~~mark ~~and~~whether ~~former~~the registrant (1) has filed all reports required to be filed by ~~fiscal~~Section 13 ~~year~~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), ifand ~~changed~~(2) has ~~since~~been subject ~~last~~to ~~report~~such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether ~~Registrant~~the ~~(1)~~registrant ~~has~~is ~~filed~~a ~~all~~large ~~reports~~accelerated ~~required~~filer, toan beaccelerated ~~filed~~filer, bya ~~Section~~non-accelerated 13filer, or ~~15(d)~~a ofsmaller ~~the~~reporting ~~Securities~~company. ~~Exchange~~See ~~Act~~the definitions of ~~1934~~“large ~~during~~accelerated ~~the~~filer,” ~~preceding~~“accelerated 12filer” ~~months~~and ~~(or~~“smaller ~~for~~reporting ~~such~~company” ~~shorter~~in ~~period~~Rule 12b-2 ~~that~~of the ~~registrant~~Exchange ~~was~~Act. ~~required to file such reports), and~~ (2)Check ~~has been subject~~one): ~~to such filing requirements for the past 90 days.~~

~~Yes No~~Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company o (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a ~~large~~shell ~~accelerated~~company ~~filer,~~(as ~~an accelerated~~defined ~~filer, or a non-accelerated filer. See definition of ‘‘accelerated filer and large accelerated filer’’~~ in Rule 12b-2 of the Exchange Act). Yes o No þ

~~Large~~As ~~accelerated~~of ~~filer Accelerated filer Non-accelerated~~June 30, ~~filer~~2008, there were 1,090,253 vested and unvested Class A, Class B and Class C units outstanding.

~~Indicate~~ALLIED bySECURITY ~~check~~HOLDINGS ~~mark whether the Registrant is~~LLC ~~a shell company (as defined in Rule 12b-2 of the Exchange Act).~~

~~Yes No~~TABLE OF CONTENTS

As of August 14, 2006, there were 1,092,086 vested and unvested Class A, Class B and Class C units outstanding.


	PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements		1
Consolidated Balance Sheets as of June 30, 2008 (Unaudited) and December 31, 2007		1
Consolidated Statements of Operations for the Three and Six months ended June 30, 2008 and 2007 (Unaudited)		2
Consolidated Statements of Cash Flows for the Six months ended June 30, 2008 and 2007 (Unaudited)		3
Notes to Consolidated Financial Statements (Unaudited)		4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3. Quantitative and Qualitative Disclosures About Market Risk		24
Item 4. Controls and Procedures		24

PART II. OTHER INFORMATION
Item 1. Legal Proceedings		27
Item 1A. Risk Factors		27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		27
Item 4. Submission of Matters to a Vote of Security Holders		27
Item 5. Other Information		27
Item 6. Exhibits		28

SIGNATURES		29
EX-10.1: AGREEMENT AND PLAN OF MERGER
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATIONS

		Page No.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets as of June 30, 2006 (Unaudited) and December 31, 2005	1
	Consolidated Statements of Operations for the Three and Six months ended June 30, 2006 and 2005 (Unaudited)	2
	Consolidated Statements of Cash Flows for the Six months ended June 30, 2006 and 2005 (Unaudited)	3
	Notes to Consolidated Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 5.	Other Information	29
Item 6.	Exhibits	29
	SIGNATURES	30

PART I. FINANCIAL INFORMATION

~~PART I. FINANCIAL INFORMATIONItem~~ Item 1. Financial Statements

Allied Security Holdings ~~LLCConsolidated~~LLC ~~Balance Sheets (Dollars in thousands, except unit data)~~

	June 30, 2006				December 31, 2005
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	14,766			$	10,710
Restricted cash			6,949				10,402
Accounts receivable, net of allowance for doubtful accounts of $1,431 and $1,877 as of June 30, 2006 and December 31, 2005, respectively			116,456				135,461
Other			4,379				8,454
Total current assets			142,550				165,027
Property and equipment, net			23,225				23,013
Goodwill			343,917				345,567
Other intangible assets, net			67,707				78,366
Deferred financing fees, net			10,243				11,406
Investments available-for-sale			459				—
Other assets			387				394
Total assets		$	588,488			$	623,773
Liabilities and members' equity
Current liabilities:
Current maturities of long-term debt		$	17,500			$	5,668
Insurance premium financing			—				5,869
Accounts payable			6,448				8,423
Accrued expenses			18,056				20,177
Interest payable			9,734				9,433
Accrued claims reserves			26,166				26,125
Accrued payroll and related payroll taxes			36,754				41,600
Accrued termination costs			1,149				1,580
Advance payments			12,799				14,536
Due to affiliates			—				10,217
Total current liabilities			128,606				143,628
Senior term loan			172,582				187,582
Senior subordinated notes			178,308				178,187
Due to affiliates			5,098				4,865
Other long-term liabilities			1,526				1,624
Class A units subject to put rights: 22,317 units authorized, issued and outstanding			6,420				5,819
Class B units subject to put rights: 46,097 units authorized, issued and outstanding as of December 31, 2005			—				2,430
Members' equity:
Units:
Class A, 9,477,683 units authorized, 868,668 units issued and outstanding			131,618				131,618
Class B, 200,000 and 153,903 units authorized, 77,627 and 31,530 units issued and outstanding as of June 30, 2006 and December 31, 2005, respectively			50				20
Class C, 300,000 units authorized, 123,474 and 124,074 units issued and outstanding as of June 30, 2006 and December 31, 2005, respectively			61				56
Accumulated deficit			(35,743	)			(32,011	)
Accumulated other comprehensive loss			(38	)			(45	)
Total members' equity			95,948				99,638
Total liabilities and members' equity		$	588,488			$	623,773

Consolidated Balance Sheets

~~See Accompanying~~(Dollars ~~Notes~~in thousands, except unit data)


	June 30,			December 31,
	2008			2007
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	20,480		$	12,611
Restricted cash		4,260			6,128
Accounts receivable, net of allowance for doubtful accounts of $2,260 and $2,050 as of June 30, 2008 and December 31, 2007, respectively		190,280			203,164
Other		5,181			7,051

Total current assets		220,201			228,954
Property and equipment, net		9,337			9,905
Goodwill		399,934			389,848
Other intangible assets, net		50,156			59,052
Deferred financing fees, net		6,921			8,068
Marketable securities		1,531			1,090
Other assets		481			466

Total assets	$	688,561		$	697,383

Liabilities and members’ equity
Current liabilities:
Current maturities of long-term debt	$	9,991		$	10,000
Current installments of obligations under capital leases		272			402
Accounts payable		7,841			8,340
Accrued expenses		17,581			18,078
Interest payable		9,448			9,465
Accrued claims reserves		37,556			36,349
Accrued payroll and related payroll taxes		64,012			66,454
Accrued termination costs		925			1,175
Advance payments		22,049			19,692
Due to affiliate, current		—			5,843

Total current liabilities		169,675			175,798
Senior term loan		247,288			252,500
Senior subordinated notes		178,865			178,714
Obligations under capital leases, excluding current installments		82			198
Other long-term liabilities		4,138			4,037
Class A units subject to put rights: 22,317 units authorized, issued and outstanding		5,025			6,384
Members’ equity:
Units:
Class A, 9,500,000 units authorized, 868,668 units issued and outstanding		131,618			131,618
Class B, 200,000 units authorized, 77,627 units issued and outstanding		50			50
Class C, 300,000 units authorized, 121,641 units issued and outstanding		66			66
Accumulated deficit		(48,331	)		(52,091	)
Accumulated other comprehensive income		85			109

Total members’ equity		83,488			79,752

Total liabilities and members’ equity	$	688,561		$	697,383

~~Allied~~See ~~Security~~Accompanying ~~Holdings~~Notes ~~LLCConsolidated Statements of Operations~~ ~~(Dollars in thousands) (Unaudited)~~

	Three months ended June 30,								Six months ended June 30,
	2006				2005				2006				2005
Revenues		$	282,250			$	276,412			$	566,709			$	550,595
Cost of revenues			241,850				235,109				487,250				472,175
			40,400				41,303				79,459				78,420
Branch and corporate overhead expenses			22,054				23,794				46,380				47,712
Depreciation and amortization			8,799				8,436				17,510				16,780
Operating income			9,547				9,073				15,569				13,928
Interest expense, net			10,348				9,870				20,663				19,715
Net loss		$	(801	)		$	(797	)		$	(5,094	)		$	(5,787	)

2Allied Security Holdings LLC

~~Allied~~Consolidated ~~Security~~Statements ~~Holdings LLCConsolidated Statement~~ of ~~Cash Flows (Dollars in thousands) (Unaudited)~~ Operations

	Six months ended June 30,
	2006				2005
Cash flows from operating activities
Net loss		$	(5,094	)		$	(5,787	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			17,510				16,780
Noncash interest expense			1,730				1,953
Changes in assets and liabilities (net of impact of acquired businesses):
Accounts receivable, net			19,005				11,434
Other current assets and liabilities, net			2,707				20,078
Accounts payable and accrued expenses			(2,661	)			(4,220	)
Advance payments			(1,737	)			(924	)
Non-compete payments			(224	)			(200	)
Other			—				44
Net cash provided by operating activities			31,236				39,158
Cash flows from investing activities
Purchases of property and equipment			(7,063	)			(6,483	)
Purchases of investments			(466	)			—
Due to affiliate payments			(10,191	)			—
Consideration received for acquisition of business, net of cash acquired			—				120
Net cash used in investing activities			(17,720	)			(6,363	)
Cash flows from financing activities
Repayment of senior term loan			(3,168	)			(5,250	)
Insurance payments, net			(5,869	)			(6,246	)
Contributed capital			—				5
Member tax distributions			(437	)			—
Deferred financing fees			—				(880	)
Net cash used in financing activities			(9,474	)			(12,371	)
Effect of foreign currency rates on cash and cash equivalents			14				(58	)
Net change in cash and cash equivalents			4,056				20,366
Cash and cash equivalents at beginning of period			10,710				11,008
Cash and cash equivalents at end of period		$	14,766			$	31,374

(Dollars in thousands)
(Unaudited)

See Accompanying Notes


	Three months ended					Six months ended
	June 30,					June 30,
	2008		2007			2008		2007
Revenues	$	393,466	$	358,627		$	780,804	$	721,255
Cost of revenues		337,636		310,756			677,073		627,376

		55,830		47,871			103,731		93,879

Branch and corporate overhead expenses		32,754		29,848			64,694		61,200
Depreciation and amortization		7,729		7,468			15,424		15,071

Operating income		15,347		10,555			23,613		17,608

Interest expense, net		9,748		11,741			20,943		23,629

Net income (loss)	$	5,599	$	(1,186	)	$	2,670	$	(6,021	)

3See Accompanying Notes

~~Allied~~2 ~~Security Holdings LLCNotes to Consolidated Financial StatementsJune 30, 2006(Unaudited)~~

~~SpectaGuard Acquisition LLC (‘‘SpectaGuard’’), a wholly-owned subsidiary of~~ Allied Security Holdings LLC ~~(the~~ ‘‘Company’’), was formed on February 19, 2003, as a result of the purchase transaction (‘‘Mafco Acquisition’’) by and among MacAndrews & Forbes Holdings Inc. (‘‘Mafco’’), and certain of its related parties, as well as management of SpectaGuard’s predecessor. As a result of this transaction, Mafco has a substantial controlling interest in the Company. Prior to this transaction, the Company also operated under the name SpectaGuard Acquisition (‘‘Predecessor Company’’).

~~On August 2, 2004,~~Consolidated ~~simultaneous~~Statements ~~with the acquisition~~ of ~~Barton~~ ~~Protective~~Cash Services Incorporated (‘‘Barton’’), the members of SpectaGuard became the members of the Company through the contribution of their Class A, Class B, and Class C units, as applicable, of SpectaGuard in exchange for an identical number of Class A, Class B and Class C units, as applicable, of the Company. The Company has no independent assets or operations, other than its ownership of all of the membership units of SpectaGuard.Flows

~~On July 20, 2006, the Company completed the acquisition of Initial Security~~ (~~the ‘‘Initial~~Dollars ~~Acquisition’’)~~in ~~from Rentokil~~thousands) ~~Initial plc and Initial Tropical Plants, Inc.~~ (~~Please see Note 16, ‘‘Subsequent Events’’, for a description of this acquisition and the related financing~~Unaudited).

The Company provides premium contract security officer services to commercial organizations throughout the United States and toll collection services to the State of Florida Department of Transportation (‘‘FDOT’’). The consolidated financial statements of the Company as of June 30, 2006 include the accounts of the Company and its wholly-owned subsidiaries, which are (i) Effective Management Services LLC, (ii) Allied Security LLC, (iii) Allied Security LP, (iv) Professional Security Bureau LLC (‘‘PSB’’), which was acquired on December 19, 2003, (v) Barton Protective Services LLC, which was acquired on August 2, 2004, (vi) SpectaGuard Acquisition LLC, (vii) AlliedBarton Security Services LLC, (viii) AlliedBarton Security Services LP, and (ix) Allied Security Finance Corp. All significant intercompany transactions have been eliminated in consolidation.


	Six months ended
	June 30,
	2008			2007
Cash flows from operating activities
Net income (loss)	$	2,670		$	(6,021	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		15,424			15,071
Noncash interest expense		1,321			1,544
Equity unit compensation expense		26			5
Changes in assets and liabilities (net of impact of acquired businesses):
Accounts receivable, net		14,527			4,184
Other current assets and liabilities, net		2,492			8,987
Accounts payable, accrued expenses and other accrued liabilities		(1,429	)		(3,434	)
Advance payments		2,357			2,185
Non-compete payments		(250	)		(250	)

Net cash provided by operating activities		37,138			22,271


Cash flows from investing activities
Consideration paid for acquisition of businesses		(15,713	)		(2,791	)
Purchases of property and equipment		(1,534	)		(1,575	)
Purchases of marketable securities		(465	)		(474	)
Due to affiliate payment		(5,843	)		—
Proceeds from sale of assets		48			40

Net cash used in investing activities		(23,507	)		(4,800	)


Cash flows from financing activities
Proceeds from revolver		17,000			—
Repayment of revolver		(17,000	)		—
Repayment of senior term loan		(5,221	)		(5,000	)
Capital lease payments		(246	)		(240	)
Member tax distributions paid		(295	)		—

Net cash used in financing activities		(5,762	)		(5,240	)


Net increase in cash and cash equivalents		7,869			12,231
Cash and cash equivalents at beginning of period		12,611			12,622

Cash and cash equivalents at end of period	$	20,480		$	24,853

~~The~~See ~~Company~~Accompanying ~~operates under the names~~Notes ~~of ‘‘AlliedBarton Security Services’’,~~ ‘‘Allied Security’’, ‘‘Barton Protective Services’’ and ‘‘Initial Security’’ nationally, and as ‘‘SpectaGuard’’ and ‘‘Professional Security Bureau’’ in the northeast region of the United States.

~~2. Summary of~~3 ~~Significant Accounting Policies~~

~~The~~Allied ~~Company~~Security ~~has~~Holdings ~~prepared the accompanying unaudited~~LLC consolidated financial statements in accordance with U.S. generally accepted accounting principles (‘‘GAAP’’) for interim financial statements. The consolidated balance sheet as of June 30, 2006, consolidated statements of operations for the three months and six months ended June 30, 2006 and 2005, and the consolidated statements of cash flows for the six months ended June 30, 2006 and 2005 are unaudited, but include all normal recurring adjustments that the Company’s management considers necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The consolidated balance sheet at December 31, 2005 has been derived from audited financial statements.

~~Although~~Notes ~~the Company’s management believes that the disclosures in these financial statements are adequate~~ to ~~make~~Consolidated ~~the~~Financial information presented not misleading, certain information and footnote information normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission (‘‘SEC’’).Statements

4June 30, 2008 (Dollars in thousands except as otherwise stated) (Unaudited)

~~Allied Security~~1. ~~Holdings~~Organization ~~LLCNotes~~and toBasis ~~Consolidated~~of ~~Financial~~Presentation ~~StatementsJune 30, 2006(Unaudited)~~

~~Results~~ Allied ~~for~~Security ~~any~~Holdings ~~interim~~LLC ~~period are not necessarily indicative of results for any future interim period or for~~ (the ~~entire~~‘‘Company’’) ~~year.~~provides ~~The~~premium ~~accompanying~~contract ~~financial~~security ~~statements should be read~~officer inservices ~~conjunction~~to ~~with~~public ~~the financial statements~~ and ~~notes~~private ~~thereto~~sector ~~included in~~customers ~~our~~throughout ~~Annual Report for~~ the ~~year~~United ~~ended December 31, 2005 filed with the SEC on Form 10-K on March 31, 2006~~States. ~~All~~ ~~terms used but not defined elsewhere herein have the meaning ascribed to them in the Company’s 2005 Annual Report on Form 10-K.~~

~~Cash~~ SpectaGuard ~~and~~Acquisition ~~Cash~~LLC ~~Equivalents~~(‘‘SpectaGuard’’), a wholly-owned subsidiary of the Company, was formed on February 19, 2003, as a result of the purchase transaction (‘‘Mafco Acquisition’’) involving MacAndrews & Forbes Holdings Inc. (together with certain of its affiliates, ‘‘Mafco’’), as well as certain members of the management of SpectaGuard’s predecessor. As a result of this transaction, Mafco has a substantial controlling interest in the Company. Prior to this transaction, the Company also operated under the name SpectaGuard Acquisition (‘‘Predecessor Company’’).

~~Cash~~ On ~~and~~August 2, ~~cash~~2004, ~~equivalents~~simultaneous with the acquisition of Barton Protective Services ~~include~~Incorporated ~~cash~~(‘‘Barton’’ onor ~~hand~~“Barton Acquisition”), the members of SpectaGuard became the members of the Company through the contribution of their Class A, Class B, and ~~investments~~Class C ~~with~~units, ~~original~~as ~~maturities~~applicable, of SpectaGuard in exchange for an identical number of ~~three~~Class A, Class B and Class C units, as ~~months~~applicable, of the Company. The Company has no independent assets or ~~less~~operations, other than its ownership of all of the membership units of SpectaGuard and other subsidiaries.

~~Restricted~~ On ~~Cash~~July 20, 2006, the Company acquired Initial Security LLC (“Initial”) from Rentokil Initial plc and Initial Tropical Plants, Inc. (“Initial Acquisition”).

~~Restricted~~ On ~~cash~~January 31, ~~includes~~2007, the Company acquired the assets of Fox Security Group, Inc. and The Fox ~~balances~~Group onInternational, ~~deposit~~Inc. ~~with~~(collectively, “Fox”). On July 2, 2007, the Company’s ~~insurance~~acquired ~~carrier~~the ~~to pay~~assets ~~workers’~~of ~~compensation~~Van ~~claims~~Ella, Inc. (“Van Ella”).

~~Accounts~~ On June 13, 2008, the Company acquired the assets of HR Plus (“HR Plus”) from Gallery ~~Receivable~~Holdings, LLC. See Note 3, Acquisition, for a description of this acquisition.

The ~~Company's~~consolidated ~~customers~~financial ~~are~~statements ~~located~~of ~~throughout~~ the ~~United States. The~~ Company ~~grants~~include ~~credit~~the toaccounts ~~its~~of ~~customers~~the ~~and generally does not require collateral. The~~ Company ~~maintains an~~and ~~allowance~~its ~~for~~wholly-owned ~~doubtful~~subsidiaries, ~~accounts~~ which ~~management~~are ~~believes~~(i) SpectaGuard toAcquisition ~~be sufficient~~LLC, ~~to cover potential credit losses and estimated billing~~(ii) AlliedBarton ~~adjustments.~~Security ~~Management~~Services ~~reviews~~LLC, ~~the~~(iii) AlliedBarton ~~components~~Security ofServices ~~their~~LP, ~~accounts receivable~~(iv) Allied ~~balance~~Security onFinance ~~a monthly basis and performs an additional detail review on a quarterly basis~~Corp. ~~This process includes an analysis of~~ ~~specific reserves based upon known credit~~ and ~~collection~~(v) AlliedBarton ~~issues and potential reserve adjustments~~(NC) LLC. ~~Such~~All ~~amounts~~significant ~~are~~intercompany ~~charged~~transactions ~~off~~have ~~against~~been ~~the allowance~~eliminated ~~for doubtful accounts when the Company concludes that the~~in ~~balances will not be recoverable~~consolidation.

~~Property~~ The Company operates under the name of “AlliedBarton Security Services” and “AlliedBarton” ~~Equipment~~nationally and as “VanElla” and “HR Plus” in the conduct of the background verification business.

~~Property and equipment are recorded at cost~~2. ~~Leasehold improvements~~Summary ~~are amortized over the respective lives~~ of ~~the~~Significant ~~leases~~Accounting orPolicies the service lives of the improvements, whichever is shorter. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. The useful lives are as follows: leasehold improvements – up to 10 years; uniforms – 3 years; computer equipment – 1 to 5 years; office furniture, fixtures and equipment – 5 years.

~~Goodwill~~Basis ~~and~~of ~~Intangible Assets~~Presentation

~~Under~~ The Company has prepared the accompanying unaudited consolidated financial statements in ~~SFAS~~accordance Nowith U.S. ~~142~~Generally Accepted Accounting Principles (“GAAP”) for interim financial statements. The consolidated balance sheet as of June 30, ~~goodwill~~2008, consolidated statements of operations for the three and ~~intangible~~six ~~assets~~months ~~with~~ended ~~indefinite~~June 30, ~~lives~~2008 ~~are~~and 2007 and the consolidated ~~not~~statements ~~amortized;~~of ~~rather~~cash flows for the six months ended June 30, ~~they~~2008 and 2007 are ~~tested~~unaudited, ~~for~~but ~~impairment~~include all onnormal atrecurring ~~least~~adjustments anthat the Company’s management considers necessary for a fair ~~annual~~presentation ~~basis.~~of ~~Additionally,~~the ~~intangible~~financial ~~assets~~position, ~~such~~results asof ~~customer~~operations ~~lists,~~and cash flows for the periods ~~with~~presented. ~~finite~~The ~~lives~~consolidated ~~are~~balance ~~amortized~~sheet ~~over~~at ~~their~~December 31, ~~useful~~2007 ~~lives~~has been derived from the Company’s audited financial statements.

~~SFAS No.~~4 142 requires a two-step impairment test for goodwill. The first step is to compare the carrying amount of the reporting unit's assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying amount exceeds the fair value then the second step is required to be completed, which involves allocating the fair value of the reporting unit to each asset and liability, with the excess being implied goodwill. An impairment loss occurs if the amount of the recorded goodwill exceeds the implied goodwill. The determination of the fair value of our reporting unit is based, among other things, on estimates of future operating performance of the reporting unit being valued. We are required to complete an impairment test for goodwill and record any resulting impairment losses annually. Changes in market conditions, among other factors, may have an impact on these estimates. We complete our annual impairment test in the fourth quarter of each fiscal year.

Allied Security Holdings ~~LLCNotes~~LLC Notes to Consolidated Financial Statements ~~StatementsJune~~ June 30, 2008 ~~2006~~(Dollars in thousands except as otherwise stated) (Unaudited)

~~Customer~~ Although ~~lists~~the ~~are~~Company’s ~~amortized~~management ~~using~~believes that the ~~straight~~ ~~line~~disclosures ~~method~~in ~~over~~these ~~six~~interim ~~years.~~financial statements Weare ~~perform~~adequate ~~periodic~~to ~~analyses~~make ~~and adjust~~the ~~through~~information ~~accelerated~~presented ~~amortization~~not ~~any~~misleading, ~~impairment~~certain ofinformation ~~customer~~and ~~lists.~~footnote ~~None~~information ofnormally ~~the~~included ~~currently~~in ~~held~~financial ~~customer~~statements ~~lists~~prepared ~~have~~in ~~required~~accordance with GAAP ~~accelerated~~have ~~amortization~~been ~~adjustments~~omitted pursuant to ~~date.~~the ~~Covenants~~rules ~~not-to-compete are~~and ~~amortized~~regulations ~~using~~of the ~~straight-line~~Securities ~~method~~and ~~over~~Exchange ~~five years~~Commission (“SEC”).

~~Long~~ Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-~~Lived~~K ~~Assets~~for the year ended December 31, 2007 filed with the SEC on March 17, 2008. All terms used but not defined elsewhere herein have the meaning ascribed to them in the Company’s 2007 Annual Report on Form 10-K.

~~The~~Revenue ~~Company has adopted Statement of~~Recognition Financial Accounting Standards (‘‘SFAS’’) No. 144, Accounting for Impairment or Disposal of Long-Lived Assets. This standard requires the Company to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the carrying amount of an asset or group of assets exceeds its net realizable value, the asset or group of assets will be written down to its fair value.

~~Investment~~ The ~~Securities~~Company –recognizes revenue in the period in which services are provided to its customers. ~~Available-for-Sale~~Advance payments represent amounts received from customers in advance of performing the related services and are recorded as a current liability. The Company reports revenue net of sales tax.

~~The~~Uniform ~~Company’s investment securities~~Purchases are classified as available-for-sale. The Company's securities traded on an established market and are carried at fair value using the specific identification method. Unrealized gains and losses are reported in a separate component of accumulated other comprehensive loss. We include realized gains and losses from investments in other income. All of our available-for-sale securities are classified as long term and include investments that do not have contractual maturities due to the nature of the investment vehicle.

The Company expenses all uniform purchases at time of receipt to cost of revenues. ~~Insurance Reserves~~

WeUse ~~maintain insurance coverage for workers’ compensation, medical claims and general liability. Reserves have been provided for certain~~ of ~~these claims based upon insurance coverages and~~Estimates management's judgment. Management reviews these estimates on a quarterly basis based upon currently available information and adjusts the reserves accordingly. In the opinion of management, we believe our insurance reserves are sufficient to cover the ultimate outcome of these claims.

~~Revenue~~ The ~~Recognition~~preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues and expenses and the disclosure of certain contingent assets and liabilities. Actual results may differ from such estimates.

~~The~~Restricted ~~Company recognizes~~Cash ~~revenue in the period in which services are provided. Advance payments represent amounts received from customers in advance of performing the related services.~~

~~Financial~~ Restricted ~~Instruments~~cash includes balances on deposit with the Company’s insurance carriers to pay workers’ compensation claims and general liability insurance claims as they become due.

~~The~~Property ~~carrying value of short-term financial instruments, such as cash equivalents, accounts receivable, accounts payable~~ and ~~accrued expenses~~Equipment, ~~approximates~~ ~~their fair value based on the short-term maturities of~~net ~~these instruments.~~

~~Use~~ Property and equipment are stated at cost. Equipment under capital leases is stated at the present value of ~~Estimates~~future minimum lease payments. Equipment held under capital leases and leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows: leasehold improvements — up to 10 years; computer equipment — 1 to 5 years; computer and operating software — 3 to 5 years; vehicles — up to 5 years; office furniture, fixtures and equipment — 5 years.

~~The~~Goodwill ~~preparation of consolidated financial statements in conformity with GAAP requires management to make estimates~~ and ~~assumptions~~Intangible ~~that affect the reported~~Assets ~~amounts of certain assets, liabilities, revenues and expenses and the disclosure of certain contingent assets and liabilities. Actual results may differ from such estimates.~~

6 Under Statement of Financial Accounting Standards (‘‘SFAS’’) No. 142, ‘‘Goodwill and Other Intangible Assets’’, goodwill and other intangible assets with indefinite lives are not amortized; rather, they are tested for impairment on at least an annual basis. Additionally, intangible assets, such as customer lists, with finite lives are amortized over their estimated useful lives.

~~Allied~~5 ~~Security Holdings LLCNotes to Consolidated Financial StatementsJune 30, 2006(Unaudited)~~

~~The following~~Allied ~~noncash~~Security ~~transactions~~Holdings ~~have~~LLC Notes ~~been~~to ~~excluded~~Consolidated ~~from~~Financial ~~the~~Statements June 30, ~~consolidated~~2008 ~~statement~~(Dollars ofin ~~cash~~thousands ~~flows~~except ~~for~~as ~~the~~otherwise ~~six months ended June 30,~~stated) ~~2006 and 2005~~ (~~in thousands~~Unaudited):

	Six months ended
	June 30, 2006				June 30, 2005
Mafco goodwill adjustments		$	(1,650	)		$	—
Barton goodwill adjustments		$	—			$	(281	)
Increase in redemption amount of Class A Units subject to put rights		$	601			$	—
Decrease in redemption amount of Class B Units subject to put rights		$	(2,430	)		$	—

SFAS No. 142 requires a two-step impairment test for goodwill. The first step is to compare the carrying amount of the reporting unit’s net assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further analysis is required and no impairment loss is recognized. If the carrying amount exceeds the fair value then the second step is required to be completed, which involves allocating the fair value of the reporting unit to each asset and liability, with the excess being the implied fair value of goodwill. An impairment loss occurs if the amount of the recorded goodwill exceeds the implied fair value of goodwill. The determination of the fair value of the Company’s reporting unit is based on a combination of significant observable and unobservable inputs, including estimates of future operating performance. Changes in market conditions, among other factors, may have an impact on these estimates. The Company completes its annual impairment test as of October 1 of each calendar year.

~~Cash interest~~ Customer ~~paid~~lists ~~during~~are amortized using the straight-line method over six ~~months~~years. ~~ended~~The ~~June 30, 2006~~Company performs periodic analyses and ~~June 30, 2005~~adjusts ~~was~~through ~~approximately~~accelerated ~~$18,961,000~~amortization ~~and~~any impairment of customer ~~$18~~lists. None of the currently held customer lists have required accelerated amortization adjustments to date. Covenants not-to-compete are amortized using the straight-line method over the period covered by the not-to-compete agreement,~~116,000,~~ ~~respectively~~which is five years.

~~New~~Long-Lived ~~Accounting~~Assets ~~Pronouncements~~

In The ~~June 2006,~~Company ~~the~~reviews ~~Financial~~its ~~Accounting Standards~~long-lived ~~Board~~assets ~~(‘‘FASB’’)~~for ~~issue~~impairment ~~FASB Interpretation~~whenever ~~No.~~events ~~48,~~or ~~‘‘Accounting~~changes ~~for Uncertainty~~ in ~~Income~~circumstances ~~Taxes~~indicate —that ~~an interpretation of FASB Statement No. 109’’ (‘‘FIN 48’’). FIN 48 clarifies~~ the ~~accounting~~carrying ~~for~~amount ~~uncertainty~~of insuch ~~income~~assets ~~taxes~~may ~~recognized~~not ~~in financial~~be ~~statements in accordance with FASB Statement No~~recoverable. ~~109, ‘‘Accounting~~If ~~for Income Taxes’’. FIN 48 prescribes a recognition threshold and measurement attribute for~~ the ~~financial~~carrying ~~statement~~amount ~~recognition and measurement~~ of aan ~~tax~~asset ~~position taken~~ or ~~expected~~group toof beassets ~~taken~~exceeds inits anet ~~return.~~realizable ~~FIN 48 also provides guidance on derecognition~~value, ~~classification,~~the ~~interest~~asset ~~and~~or ~~penalties, accounting in~~group ~~interim~~of ~~periods,~~assets ~~disclosure,~~will ~~and~~be ~~transition.~~written ~~The~~down ~~Company is required~~ to ~~adopt~~ ~~the provisions of FIN 48 during the first fiscal year beginning after December 15, 2006. The Company is currently evaluating the impact of FIN 48 on~~ its ~~consolidated~~fair ~~results of operations and financial position~~value.

~~3. Goodwill~~Marketable ~~and~~Securities ~~Other Intangible~~— ~~Assets~~Available-for-Sale

~~Goodwill~~ The isCompany’s ~~deemed~~investments toin ~~have~~marketable ansecurities ~~indefinite~~are ~~life~~classified as available-for-sale in ~~and~~accordance iswith ~~not~~SFAS ~~amortized~~No. 115, ~~but~~‘‘Accounting isfor ~~subject~~Certain toInvestments ~~annual~~in ~~impairment~~Debt ~~tests.~~and Equity Securities.’’ The marketable securities are carried at fair value based on quoted prices in active markets. Unrealized gains and losses are reported as a separate component of accumulated other comprehensive income. The Company ~~completed~~reports ~~its~~realized ~~annual~~gains ~~impairment~~and ~~assessment~~losses from investments in ~~the~~interest ~~fourth~~expense, net. ~~quarter~~All of ~~fiscal~~the ~~2005~~Company’s ~~using~~available-for-sale asecurities ~~multiple~~are ofclassified ~~earnings~~as ~~calculation~~long-term and include ~~concluded~~investments that ~~there~~do isnot nohave ~~impairment~~contractual maturities due to the nature of ~~goodwill~~the investment vehicle.

~~The~~Insurance ~~change in~~Reserves ~~the carrying amount of goodwill for the six months ended June 30, 2006 is as follows (in thousands):~~

Balance as of December 31, 2005	$	345,567
Mafco Acquisition adjustments		(1,650	)
Balance as of June 30, 2006	$	343,917

The Company maintains insurance coverage, subject to certain self-insured retentions, for workers’ compensation, general liability and employment practice liability matters. The Company also maintains medical insurance coverage for certain of its employees, however, since January 1, 2007, the Company has not been subject to self-insured retentions for employee medical coverage. Reserves have been provided for certain of these claims based upon insurance coverages, the risk of loss retained by the Company, third party actuarial analysis and management’s judgment. Management reviews these estimates on a quarterly basis subject to information then currently available and adjusts the reserves accordingly. In the opinion of management, the Company’s insurance reserves are sufficient to cover the ultimate costs of these claims.

~~Adjustments to~~Deferred ~~goodwill~~Financing ~~relate to pre-acquisition contingent tax liabilities that~~Fees existed at the date of the Mafco Acquisition. These contingent tax liabilities relate to predecessor companies Effective Holdings Inc. and subsidiaries and AS Acquisition Inc. and subsidiaries which were taxed under Subchapter C of the Internal Revenue Code. These predecessor companies had tax reserves relating to uncertainties about tax returns for periods prior to the Mafco Acquisition. Each year following the Mafco Acquisition, the Company reviewed such tax reserves and recorded adjustments to goodwill as deemed necessary. The primary triggering event resulting in the change of estimate of the reserve was the expiration of the statute of limitations on the successor entity’s tax years.

7 Costs incurred in connection with obtaining financing are deferred and amortized to interest expense using the effective interest method over the terms of the respective financing agreements.

~~Allied~~6 ~~Security Holdings LLCNotes to Consolidated Financial StatementsJune 30, 2006(Unaudited)~~

	Gross Carrying Amount						AccumulatedAmortization
	June 30,2006			December 31,2005			June 30,2006				December 31,2005
Amortized intangible assets:
Customer lists		$	125,865		$	125,865		$	(59,008	)		$	(48,519	)
Covenants not-to-compete			1,700			1,700			(850	)			(680	)
Total		$	127,565		$	127,565		$	(59,858	)		$	(49,199	)

Allied Security Holdings LLC
Notes to Consolidated Financial Statements
June 30, 2008
(Dollars in thousands except as otherwise stated)
(Unaudited)

~~The value~~Statement of ~~the~~Cash ~~customer lists acquired is being amortized using the~~Flows ~~straight-line method over six years. Covenants not-to-compete are being amortized using the straight-line method over five years.~~

~~Amortization~~ The ~~expense~~following ~~for~~noncash ~~the~~transactions ~~three~~have ~~and~~been ~~six~~excluded ~~months~~from ~~ended June 30, 2006~~the ~~was~~consolidated ~~approximately~~statements ~~$5,329,000~~of ~~and~~cash ~~approximately~~flows ~~$10,659,000, respectively. Amortization expense~~ for the ~~three~~ ~~and~~ six months ended June 30, ~~2005~~ ~~was approximately~~2008 ~~$5,330,000~~ and ~~approximately $10~~2007,~~659,000,~~ respectively.:

Estimated annual aggregate amortization expense for the remainder of the current year and each of the remaining four years is as follows (in thousands):


	Six months ended
	June 30,			June 30,
	2008			2007
(Decrease) increase in redemption amount of Class A Units subject to put rights	$	(1,359	)	$	1,040
Fox goodwill adjustments	$	—		$	(124	)
PSB goodwill adjustments	$	—		$	(111	)
Initial goodwill adjustments	$	(8	)	$	885

2006	$	10,659
2007	$	21,317
2008	$	21,317
2009	$	10,356
2010	$	4,058

Cash interest paid during the six months ended June 30, 2008 and 2007 was $20,114 and $22,669, respectively.

~~4. Available-for-Sale~~New Accounting Pronouncements ~~Securities~~

~~The~~ In ~~Company~~September 2006, ~~holds~~the ~~equity~~Financial ~~investments~~Accounting ~~which~~Standards ~~are~~Board (“FASB”) issued SFAS No. 157, ~~accounted~~“Fair ~~for~~Value asMeasurements.” ~~available-~~SFAS No. 157 defines fair value, establishes a framework for~~-sale~~ ~~securities~~measuring fair value and expands disclosures about fair value measurements. The ~~unrealized~~standard ~~losses~~applies whenever onother ~~available-for-sale~~standards ~~securities~~require as(or ofpermit) ~~June 30~~assets or liabilities to be measured at fair value, ~~2006~~ ~~and~~but does ~~June 30, 2005~~not ~~were~~expand ~~approximately~~the $7use of fair value in any new circumstances. In February 2008,~~000~~ the FASB issued FASB Staff Positions (“FSP”) 157-1 and $0157-2. FSP 157-1 amends SFAS No. 157 to exclude SFAS No. 13, ~~respectively~~“Accounting for Leases,” and ~~have~~its ~~been~~related ~~reported~~interpretive inaccounting ~~the~~pronouncements ~~Company’s~~that ~~balance~~address ~~sheet~~leasing astransactions, awhile ~~component~~FSP of157-2 ~~accumulated~~delays ~~other~~the ~~comprehensive~~effective ~~loss~~date of SFAS No. 157 ~~The~~to ~~cost,~~fiscal years ~~gross~~beginning ~~unrealized~~after ~~loss~~November 15, 2008, for all nonfinancial assets and ~~estimated~~nonfinancial liabilities, except those that are recognized or disclosed at fair value ~~related~~in the financial statements on a recurring basis. With respect to financial assets and financial liabilities, the adoption of SFAS No. 157, as amended by FSP 157-1, did not have a material effect on the Company’s ~~available-for-sale~~results ~~securities~~of ~~are~~operations asor financial ~~follows (in~~position. ~~thousands):~~

	Three months endedJune 30,							Six months endedJune 30,
	2006				2005			2006				2005
Cost		$	466			$	—		$	466			$	—
Gross unrealized losses			(7	)			—			(7	)			—
Estimated fair value		$	459			$	—		$	459			$	—

SFAS No. 157 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

8 In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 provides companies with an option to report selected financial assets and liabilities at fair value and requires entities to display the fair value of those assets and liabilities for which the company has chosen to use fair value on the face of the balance sheet. The Company adopted the provisions of SFAS No. 159 on January 1, 2008 and did not elect the fair value option for any items permitted under SFAS No. 159. Accordingly, SFAS No. 159 had no effect on the Company’s consolidated results of operations or financial position.

~~Allied~~7 ~~Security Holdings LLCNotes to Consolidated Financial StatementsJune 30, 2006(Unaudited)~~

OnAllied ~~December 19, 2003,~~Security ~~the~~Holdings ~~Company acquired all of the~~LLC ~~outstanding~~Notes ~~common~~to ~~shares~~Consolidated ofFinancial ~~PSB (the ‘‘PSB~~Statements ~~Acquisition’’). As a result of the PSB Acquisition~~June 30, ~~the~~2008 ~~Company adopted a formal plan~~ (~~the~~Dollars ‘‘PSB Plan’’) to terminate certain PSB employees and exit duplicative PSB office facilities. The PSB Plan includes severance-related benefits for approximately 120 PSB employees. The PSB Plan also includes lease termination costs in ~~order~~thousands toexcept ~~exit 14 PSB office facilities. The Company recorded net reserves of $1,154,000 related to the PSB Plan~~ as aotherwise ~~part of the purchase price allocation. The~~stated) ~~PSB Plan was complete as of December 31, 2004, other than~~(Unaudited) ~~the payment of the remaining liability which totaled $159,000 at June 30, 2006. As of June 30, 2006, $995,000 of payments have been made related to the PSB Plan.~~

On In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS ~~August 2~~No. 141(R)”), ~~2004~~ which replaces SFAS No. 141, “Business Combinations.” SFAS No. 141(R) retains the underlying ~~Company~~concepts ~~acquired~~of SFAS No. 141 in that all ofbusiness ~~the~~combinations are still required to be ~~oustanding~~accounted ~~common~~for ~~shares~~at fair value under the acquisition method of ~~Barton~~accounting (~~the~~previously ~~‘‘Barton~~referred to as ~~Acquisition’’~~the purchase method) but SFAS No. 141(R) Aschanges athe ~~result~~method of applying the ~~Barton~~acquisition method in a number of significant aspects. Acquisition, costs will generally be expensed as incurred; ~~the~~noncontrolling ~~Company~~interests ~~adopted~~will abe ~~formal~~valued ~~plan~~at (fair value at the ~~‘‘Barton~~acquisition date; in-process research ~~Plan’’)~~and todevelopment ~~terminate~~will ~~certain~~be ~~Barton~~recorded ~~employees~~at ~~and~~fair ~~exit duplicative~~value ~~Barton~~as ~~office~~an ~~facilities.~~indefinite-lived ~~The~~intangible ~~Barton~~asset ~~Plan~~at ~~initially~~the ~~included~~acquisition ~~severance-related~~date; ~~benefits~~restructuring ~~for~~costs ~~approximately~~associated ~~246~~with ~~Barton~~a business combination will generally be ~~employees.~~expensed ~~The~~subsequent ~~Barton~~to ~~Plan~~the ~~also~~acquisition ~~initially~~date; ~~included~~and ~~lease~~changes ~~termination~~in deferred tax asset valuation allowances ~~costs~~and inincome ~~order~~tax touncertainties ~~exit~~after 21the ~~Barton~~acquisition ~~office~~date ~~facilities.~~generally ~~The~~will ~~Company~~affect income tax expense. ~~initially~~SFAS ~~recorded~~No. 141(R) is effective on a ~~total~~prospective ~~reserve~~basis offor ~~approximately~~all ~~$6,135,000~~business ~~related to~~combinations for which the acquisition ~~Barton~~date ~~Plan~~is ason ~~part~~or after the beginning of the ~~purchase~~first ~~price~~annual ~~allocation.~~period Insubsequent ~~2005~~to December 15, 2008, with the ~~Company~~exception ~~revised~~of ~~its~~the ~~estimate~~accounting offor ~~certain~~valuation ~~lease~~allowances ~~termination~~on ~~and severance~~deferred ~~costs~~taxes and ~~reduced~~acquired tax ~~the~~contingencies. ~~corresponding~~SFAS ~~liability~~No. 141(R) byamends ~~$2,437,000~~SFAS No. As 109 ofsuch ~~June 30, 2006,~~that ~~approximately~~adjustments ~~$2,708,000~~made ofto ~~payments~~valuation ~~have~~allowances ~~been~~on ~~made~~deferred ~~related~~taxes and acquired tax contingencies associated with acquisitions that closed prior to the ~~Barton~~effective ~~Plan~~date of SFAS No. 141(R) ~~The~~would ~~Barton~~also ~~Plan~~apply ~~was~~the ~~complete as~~provisions of ~~August 2005,~~SFAS ~~other~~No. 141(R). ~~than~~Early adoption is not permitted. The Company will apply the ~~payment~~provisions of ~~the~~SFAS ~~remaining~~No. 141(R) ~~liability~~to ~~which~~any ~~totals~~business ~~$990,000~~combinations asoccurring ofon ~~June 30,~~or after ~~2006~~January 1, 2009.

~~The~~ In ~~following~~April 2008, ~~table~~the ~~shows~~FASB issued FSP No. FAS 142-3, “Determination of the ~~activity~~Useful ~~for~~Life of Intangible Assets.” This FSP amends the ~~six~~factors ~~months~~to be considered in developing renewal or extension ~~ended~~assumptions ~~June 30, 2006~~used ~~for~~to determine the ~~accrued~~useful ~~termination~~life ~~costs~~of ~~for~~a recognized intangible asset under SFAS No. 142. Its intent is to improve the ~~above~~consistency ~~acquisitions~~between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) and other GAAP. This FSP applies to all intangible assets, whether acquired in a business combination or otherwise, and shall be effective for financial statements ~~thousands):~~issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, and applied prospectively to intangible assets acquired after the effective date. Early adoption is not permitted. The Company will apply the provisions of this FSP beginning January 1, 2009.

	Lease				Severance				Total
Balance as of December 31, 2005		$	1,310			$	270			$	1,580
Payments			(240	)			(191	)			(431	)
Balance as of June 30, 2006		$	1,070			$	79			$	1,149

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in accordance with GAAP. This statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The Company does not expect the adoption of SFAS No. 162 to have a material impact on its consolidated results of operations or financial position.

~~6. Prior~~8 ~~Acquisition Indemnity Agreements~~

~~In connection~~Allied ~~with~~Security ~~the~~Holdings ~~Barton Acquisition, the Company deposited~~LLC ~~$9,000,000~~Notes ~~into an escrow account pursuant~~ to ~~the~~Consolidated ~~Indemnity~~Financial ~~Escrow~~Statements ~~Agreement entered into contemporaneously with the Barton Acquisition among the Company~~June 30, ~~then current shareholders of Barton and the escrow~~2008 ~~agent.~~(Dollars ~~The funds are being held~~ in ~~such~~thousands ~~escrow~~except ~~account~~as ~~pending resolution~~otherwise ~~of outstanding claims for indemnification from the~~stated) ~~sellers.~~(Unaudited)

93. Acquisition

~~Allied~~ On June 13, 2008, the Company acquired the assets of HR Plus (the “HR Plus Acquisition”), a ~~Security~~provider ~~Holdings~~of ~~LLCNotes~~employee tobackground ~~Consolidated~~verification ~~Financial~~services. The cost of the HR Plus Acquisition, which ~~StatementsJune 30~~was funded by operating cash flow, was $15,713. The preliminary purchase price has been allocated ~~2006(Unaudited)~~as follows:

7. Deferred Financing Fees


Accounts receivable	$	1,643
Property and equipment		148
Goodwill		10,094
Customer list		4,326
Other assets		5
Accounts payable		(450	)
Accrued expenses		(3	)
Accrued termination costs		(50	)

	$	15,713

~~Deferred~~ In ~~financing~~connection ~~fees~~with ~~are~~the ~~being~~HR ~~amortized~~Plus toAcquisition, ~~interest expense~~the ~~using~~Company deposited $1,750 of the ~~effective~~purchase ~~interest~~price into ~~method~~an ~~over~~escrow ~~the~~account ~~term~~pending resolution of ~~their respective~~any ~~financing~~claims ~~agreements~~on inthe ~~relation~~part toof the ~~Senior~~Company ~~subordinated~~for ~~notes~~indemnification ~~and~~from the ~~Senior~~sellers. ~~Term~~No ~~Loans,~~disbursements ~~which~~have ~~mature~~been ~~between~~made ~~June 2010 and~~from ~~July 2011~~the ~~(see~~escrow ~~Note 8)~~account.

~~Amortization~~ Unaudited ofpro ~~deferred financing~~forma ~~fees~~consolidated ~~for~~results ~~the~~of ~~three~~operations ~~and~~of ~~six~~the ~~months~~Company ~~ended~~assuming ~~June 30, 2006~~the ~~was~~HR ~~approximately $584,000 and $1,163,000,~~Plus ~~respectively.~~Acquisition ~~Amortization~~had ofoccurred ~~deferred~~at ~~financing~~the ~~fees~~beginning ~~for~~of the ~~three~~periods ~~and six~~presented ~~months~~have ~~ended~~not ~~June 30, 2005~~been ~~was~~presented ~~approximately~~due ~~$547,000~~to ~~and~~the ~~$1,129,000,~~immaterial ~~respectively~~nature of this acquisition.

~~The~~4. ~~estimated~~Goodwill ~~annual~~and ~~aggregate amortization~~Other ~~expense,~~Intangible ~~which will be included as interest expense~~Assets, ~~for~~net ~~the remainder of the current year and the remaining five years is as follows (in thousands):~~

2006	$	1,180
2007	$	2,340
2008	$	2,221
2009	$	2,114
2010	$	1,609
2011	$	779

The change in carrying amount of goodwill for the six months ended June 30, 2008 is as follows:

8. Debt


Balance as of December 31, 2007	$	389,848
Initial Acquisition adjustments		(8	)
HR Plus Acquisition (see Note 3)		10,094

Balance as of June 30, 2008	$	399,934

~~The Company's~~ Gross ~~debt~~carrying isamounts ~~summarized~~and accumulated amortization for intangible assets as ~~follows~~of ~~(in~~June 30, ~~thousands)~~2008 and December 31, 2007 are as follows:

		June 30,2006						December 31,2005
	June 30, 2008											December 31, 2007
Senior Term Loan, variable rate interest (effective rate of 8.86% and 8.28% at June 30, 2006 and December 31, 2005, respectively), due June 30, 2010			$	190,082					$	193,250
	Gross				Accumulated							Gross		Accumulated
11.375% Senior Subordinated Notes, due July 15, 2011				178,308						178,187
	Amount				Amortization				Net			Amount		Amortization			Net
4.99% fixed rate insurance premium financing, due through May 1, 2006				—						5,869
Amortized intangible assets:
				368,390						377,306
Customer lists	$	160,514			$	(110,528	)		$	49,986		$	156,188	$	(97,476	)	$	58,712
Less current maturities				(17,500	)					(11,537	)
Covenants not-to-compete		1,700				(1,530	)			170			1,700		(1,360	)		340
			$	350,890					$	365,769
Total	$	162,214			$	(112,058	)		$	50,156		$	157,888	$	(98,836	)	$	59,052

~~Simultaneously~~9 with the closing of the Barton Acquisition on August 2, 2004, the Company entered into a senior secured credit facility (the ‘‘Prior Credit Facility’’ or ‘‘Prior Credit Agreement’’) with Bear Stearns Corporate Lending Inc., as Administrative Agent, and a syndicate of lenders arranged by Bear, Stearns & Co. Inc. The Company executed an amendment to the Prior Credit Facility on May 10, 2005 (‘‘Amendment No. 1’’) modifying certain of its terms. The Prior Credit Facility initially provided for (i) a $210,000,000 six-year term loan facility (the ‘‘Senior Term Loan’’) and (ii) a $50,000,000 five-year revolving loan (the ‘‘Prior Revolver’’) with certain sub-limits for letters of credit and swingline loans. In addition, the Company issued $180,000,000 in aggregate principal amount of senior subordinated notes (the ‘‘Notes’’), at a discount of $2,118,600 and bearing interest of 11.375%, which mature on July 15, 2011. The Company used initial borrowings under the Prior Credit Facility, together with the net proceeds from the Notes, to finance the purchase price for Barton, to repay amounts outstanding under the previous credit facility, to redeem the then outstanding senior subordinated notes and to pay related fees, expenses and redemption premiums.

Allied Security Holdings ~~LLCNotes~~LLC Notes to Consolidated Financial Statements ~~StatementsJune~~ June 30, 2008 ~~2006~~(Dollars in thousands except as otherwise stated) (Unaudited)

~~The~~ Amortization ~~Prior~~expense ~~Credit~~for ~~Facility contains~~the ~~affirmative~~three and ~~negative~~six ~~covenants~~months ~~including~~ended ~~(i) the payment of all material obligations; (ii) the maintenence of organizational existences~~June 30, ~~including,~~2008 ~~but~~was ~~not limited to~~$6,632 ~~maintaining the Company’s property~~ and ~~insurance; (iii) compliance with all material contractual obligations and requirements of law; (iv) subject to customary exceptions~~$13, ~~limitations on the incurrence of indebtedness~~222, ~~which~~respectively. ~~permit~~Amortization ~~only~~expense ~~certain~~for ~~limited indebtedness; (v) subject to customary exceptions, limitations on creation and existence of liens; (vi) limitations on certain fundamental changes to~~ the ~~Company’s corporate~~three ~~structure~~ and ~~nature~~six ofmonths ~~its~~ended ~~business~~June 30, ~~including~~2007 ~~mergers; (vii) subject~~was ~~to customary exceptions~~$6,530 ~~limitations on asset~~and ~~sales; (viii) limitations on restricted payments; (ix) limitations on capital expenditures; (x) subject to customary exceptions~~$13, ~~limitations on any investments~~049, provided that certain ‘‘permitted acquisitions’’ are allowed; (xi) limitations on optional prepayments and modifications of certain debt instruments: (xii) subject to customary exceptions, limitations on transactions with affiliates; (xiii) limitations on entering into certain swap agreements; (xiv) limitations on any material changes in the Company’s equity structure or the equity structure of any of the Company’s subsidiaries; (xv) limitations on negative pledge clauses or clauses restricting subsidiary distributions; (xvi) limitations on sale-leaseback transactions; and (xvii) limitations on changes to the Company’s fiscal yearrespectively.

~~The Prior~~ Estimated ~~Credit~~annual ~~Facility~~aggregate ~~also~~amortization ~~contains~~expense ~~financial~~for ~~covenants requiring~~ the ~~Company~~ toyears ~~maintain~~ending asDecember 31 atis ~~the last day of any period of four~~as ~~consecutive fiscal quarters~~follows: ~~(i) a maximum senior consolidated debt~~ ratio; (ii) a maximum total consolidated leverage ratio; (iii) a minimum consolidated interest coverage ratio; and (iv) a maximum capital expenditure limit. The Prior Credit Facility contains customary events of default.

The Prior Revolver availability is reduced by outstanding letters of credit, which totaled $24,799,000 as of June 30, 2006. For the Prior Revolver, each eurodollar rate loan bears interest at a rate per annum equal to the eurodollar rate for such day plus 4.50%. Each base rate loan bears interest at a rate per annum equal to the base rate plus 3.50%. Amounts outstanding on the Prior Revolver are due on August 2, 2009. As of June 30, 2006, the outstanding Prior Revolver balance, excluding the outstanding letters of credit, was zero.


2008 (less six months ended June 30, 2008)	$	13,546
2009		16,130
2010		9,833
2011		5,775
2012		3,688
Thereafter		1,184

	$	50,156

~~Based~~5. onDeferred ~~the~~Financing ~~borrowing rates currently available for loans with similar terms and maturities~~Fees, ~~the~~net ~~fair value of the long-term debt approximated its carrying value as of June 30, 2006 and December 31, 2005, respectively.~~

~~The~~ Deferred ~~Prior~~financing ~~Credit~~fees, ~~Facility~~net ~~requires~~are ~~an excess~~being ~~cash~~amortized ~~flow~~to ~~calculation~~interest ~~commencing~~expense ~~with~~using the ~~fiscal~~effective interest ~~year~~method ~~ending December 31, 2005.~~over Ifthe ~~such~~term ~~excess~~of ~~cash~~the ~~flow~~respective ~~exists~~financing ~~as defined~~agreements in ~~the~~relation ~~Prior~~to ~~Credit~~the ~~Facility~~Notes, ~~prepayment of~~ the Senior Term ~~Loans~~ isLoan ~~required~~and ~~no later than five days after~~ the ~~earlier~~Revolver of (i)as ~~the date~~hereinafter ondefined), which ~~the~~mature ~~financial~~between ~~statements~~June 2010 ~~are~~and ~~required to be delivered to~~July ~~the~~2011 ~~lenders, and~~ (~~ii)~~see ~~the~~Note ~~date such financial statements are actually delivered~~8). ~~We made an excess cash flow prepayment of the Senior Term~~ ~~Loan of approximately $668,000 on March 31, 2006.~~

~~Please~~ Amortization ~~see~~of ~~Note~~deferred ~~16,~~financing ~~‘‘Subsequent Events’’,~~fees for athe ~~description~~three ofand ~~recent~~six ~~amendments~~months toended ~~the terms~~June 30, of2008 ~~the~~was $578 ~~Notes~~ and a$1,147, ~~description~~respectively. Amortization of deferred financing fees for the ~~Amended~~three and ~~Restated~~six ~~Credit~~months ~~Agreement~~ended ~~entered~~June 30, ~~into~~2007 bywas ~~the~~$546 ~~Company~~and ~~on July 20~~$1, ~~2006 (the~~085, ~~‘‘New Credit Agreement’’)~~respectively.

In The ~~the~~estimated ordinary course of business, the Company enters into short-term financing agreements in order to fund its business insurance policy premiums. On August 13, 2004, the Company entered into such a financing agreement with Cananwill, Inc. for a total amount of $11,242,000. Payments were due in equal monthly installments through May 1, 2005 and bore an annual ~~interest~~aggregate ~~rate~~amortization ~~of 2.99%. As of May 1~~expense, ~~2005,~~ ~~this~~which ~~financing~~will ~~agreement,~~be ~~including~~included ~~accrued~~as interest, ~~was repaid in full. On August 15~~expense, ~~2005,~~ ~~the Company entered into another financing agreement with Cananwill, Inc.~~ for ~~a total~~the ~~amount~~remainder of ~~$10,564,000.~~the ~~Payments~~current ~~were~~year ~~due in equal monthly installments through May 1, 2006~~ and ~~bore~~the anfollowing ~~annual interest~~three ~~rate~~years ofis ~~4.99%.~~as ~~As of June 30, 2006, this~~follows: ~~financing agreement, including accrued interest, was repaid in full.~~


2008 (less six months ended June 30, 2008)	$	1,181
2009		2,475
2010		2,213
2011		1,052

	$	6,921

~~Allied Security~~6. ~~Holdings~~Marketable ~~LLCNotes to Consolidated Financial~~Securities ~~StatementsJune 30, 2006(Unaudited)~~

~~Debt~~ The ~~maturities~~unrealized (losses) gains on available-for-sale ~~the~~securities ~~remainder~~as of ~~the~~June 30, 2008 and ~~current~~December 31, ~~year~~2007 were approximately $(14) and ~~the~~$10, ~~remaining~~respectively, ~~five~~and ~~years~~have ~~are~~been reported in the Company’s balance sheet as ~~follows~~a ~~(in~~component of accumulated other comprehensive income. The cost, ~~thousands~~unrealized (losses) gains and estimated fair value related to the Company’s available-for-sale securities are as follows:

2006			$	2,500
	June 30,				December 31,
2007				30,000
	2008				2007
2008				30,000
Cost	$	1,545			$	1,080
2009				30,000
Unrealized (losses) gains		(14	)			10
2010				97,582
Estimated fair value	$	1,531			$	1,090
2011				178,308
Total			$	368,390

~~9. Contingent~~10 ~~Liabilities~~

~~10. Comprehensive~~Allied Security Holdings LLC ~~Loss~~Notes to Consolidated Financial Statements June 30, 2008 (Dollars in thousands except as otherwise stated) (Unaudited)

~~Comprehensive loss is defined as net loss and other changes in members’ equity (deficit) from transactions and other events from sources other than members~~7. AAccrued ~~reconciliation~~Termination ~~of net loss to other~~Costs ~~comprehensive loss is as follows (in thousands):~~

	Three months endedJune 30,								Six months endedJune 30,
	2006				2005				2006				2005
Net loss		$	(801	)		$	(797	)		$	(5,094	)		$	(5,787	)
Foreign currency translation adjustments			12				(36	)			14				(58	)
Unrealized losses on available-for-sale investments			(7	)			—				(7	)			—
Comprehensive loss		$	(796	)		$	(833	)		$	(5,087	)		$	(5,845	)

As a result of the Initial Acquisition on July 20, 2006, the Company adopted a formal plan (the “Initial Plan”) to terminate certain Initial employees and close duplicative Initial office facilities. The Initial Plan provides for severance-related benefits to cover affected Initial employees. The Initial Plan also includes lease termination costs incurred in the closing of 16 Initial office facilities. The Company initially recorded approximately $2,475 of termination costs related to the Initial Plan as part of the purchase price allocation. In 2007, the Company revised its estimate of certain lease termination and severance costs and decreased the corresponding aggregate liability by $59, recording the adjustment to goodwill. In 2008, the Company revised its estimate of certain severance costs and decreased the corresponding aggregate liability by $8, recording the adjustment to goodwill. As of June 30, 2008, approximately $1,533 of payments have been made related to the Initial Plan with a liability for remaining lease payments of $875 expected to be paid out by March 31, 2012.

11 As a result of the HR Plus Acquisition completed on June 13, 2008, the Company adopted a formal plan (the “HR Plus Plan”) to terminate certain HR Plus employees. ~~Income~~ The HR Plus Plan provides ~~Taxes~~for severance-related benefits to cover affected HR Plus employees. The Company initially recorded approximately $50 of termination costs related to the HR Plus Plan as part of the purchase price allocation.

The ~~members~~following oftable ~~the~~shows ~~Company have elected to be treated as a partnership for both federal and state income tax purposes. In accordance with applicable regulations, taxable income or loss of~~ the ~~Company~~ isactivity required to be reported in the income tax returns of the Company's members in accordance with the Company’s Operating Agreement, dated as of August 2, 2004 (as amended, the ‘‘Operating Agreement’’). The Operating Agreement enables the Company to make distributions to each member to satisfy their respective tax liability arising in connection with their respective ownership interest in the Company. Accordingly, no provision for ~~income taxes has been made in~~ the ~~Company's consolidated financial statements. These distributions for the three and~~ six months ended June 30, ~~2006~~ ~~were $204~~2008,~~000~~ ~~and $437,000, respectively. There were no tax distributions~~ for the ~~three~~accrued ~~and~~termination ~~six~~costs ~~months ended June 30, 2005. Taxable income may vary substantially from income or loss reported~~ for ~~financial~~the ~~statement purposes,~~above ~~due principally to differences in depreciation and~~acquisitions: ~~amortization.~~

12. Employee Postretirement Plan


	Lease			Severance			Total
Balance as of December 31, 2007	$	1,015		$	160		$	1,175
Additions		—			50			50
Payments		(140	)		(152	)		(292	)
Adjustments		—			(8	)		(8	)

Balance as of June 30, 2008	$	875		$	50		$	925

~~The Company sponsors a qualified 401(k) retirement plan that allows eligible employees to contribute a portion of their compensation through payroll deductions in accordance with specified guidelines~~8. ~~The~~Debt ~~Company matches a percentage of the employees’ contributions up to certain limits.~~

12 The Company’s debt is summarized as follows:

Allied Security Holdings LLCNotes to Consolidated Financial StatementsJune 30, 2006(Unaudited)


	June 30,			December 31,
	2008			2007
Senior Term Loan, variable rate interest (effective rate 5.49% and 7.83% as of June 30, 2008 and December 31, 2007, respectively), due June 30, 2010	$	257,279		$	262,500
11.375% Senior Subordinated Notes, due July 15, 2011, net of unamortized discount of $1,135 and $1,286 as of June 30, 2008 and December 31, 2007, respectively		178,865			178,714
Capital leases at a rate of 3.69% and 5.88% as of June 30, 2008 and December 31, 2007, respectively, due through June 30, 2010		354			600

		436,498			441,814
Less current maturities		(10,263	)		(10,402	)

	$	426,235		$	431,412

~~13. Units Subject to Put Rights and~~11 ~~Members' Equity~~

~~Pursuant~~Allied toSecurity ~~the~~Holdings ~~Operating~~LLC ~~Agreement,~~Notes ~~cash distributions may be made~~ to ~~the~~Consolidated ~~members~~Financial ~~in the~~Statements ~~following order and priority: (i) among the Units in proportion to~~June 30, ~~and~~2008 ~~to the extent of, initial contributed capital attributable to the Units~~ (~~excluding~~Dollars ~~any~~in ~~capital~~thousands ~~attributable~~except toas ~~unvested~~otherwise ~~Class C Units~~stated) ~~until~~ ~~all initial contributed capital has been returned, and~~ (iiUnaudited) ~~any~~ ~~remaining balance, to the members in proportion to their ownership percentage.~~

~~Upon~~ On ~~formation~~August 2, of2004, the Company onissued ~~February 19, 2003, initial capital contributed was approximately~~ $~~116,915,000~~180.0 million ~~This~~in ~~consisted~~aggregate ofprincipal ~~$112,983,000~~amount ~~(739,733~~of ~~Class A Units)~~Senior ~~from~~Subordinated ~~Mafco~~Notes ~~and~~(the ~~its affiliates~~‘‘Notes’’), ~~$2,307,000~~at ~~(19,584~~a ~~Class~~discount Aof ~~Units subject to put rights) from OCM,~~ $2.1~~,538,000~~ million ~~(13,056 Class A Units subject to put rights) from Blackstone,~~ and ~~$50,000~~bearing ~~(77,627~~interest ~~Class B Units~~ of ~~which 46~~11.375%,~~097~~ which ~~were~~mature ~~subject~~on toJuly 15, ~~put~~2011. ~~rights)~~The ~~from~~fair ~~members~~value of the ~~Company's senior~~Notes ~~management.~~was ~~The~~below ~~Class~~its Acarrying ~~and~~value ~~Class B Units subject to put rights~~by ~~for~~approximately ~~OCM are classified as temporary equity, outside of members’ equity~~$24.1 million ~~Members~~at ~~of senior management also contributed $37~~June 30,~~000~~ ~~for 110,000 unvested Class C Units~~2008.

On ~~May 2~~July 20, ~~2003~~ 2006, the Company entered into an Amended and Restated Credit Agreement (the 67‘‘Credit Agreement’’) governing its $325.0 million senior secured credit facility with Bear Stearns Corporate Lending Inc.,~~778~~ ~~Class~~as AAdministrative ~~Units~~Agent, ~~were~~the ~~issued~~financial ~~for~~institutions ~~$10~~party thereto as lenders,~~000~~ Sovereign Bank.,~~000~~ toas ~~reduce~~syndication ~~the~~agent, and CIT Lending Services Corporation, ING Capital ~~principal~~LLC ~~amount~~and ~~outstanding~~PNC ~~under~~Bank, National Association, as co-documentation agents. The Credit Agreement amended, restated and superseded the ~~previous~~Company’s ~~senior~~prior credit agreement. The Credit Agreement consists of a $275.0 million term loan. Of(the ‘‘Senior Term Loan’’) facility which was drawn at the closing of the ~~these~~Initial ~~units,~~Acquisition 1and which matures on June 30,~~562~~ ~~units~~2010 ~~were~~(with ~~subject~~such date being automatically extended to ~~put~~July 20, ~~rights~~2012 if the Notes are refinanced as permitted under the Credit Agreement by new indebtedness having a term of at least six years and ~~had~~six months after July 20, 2006) and a ~~fair~~$50.0 million revolving credit facility (the ‘‘Revolver’’) that matures on August 2, 2009. The Revolver includes a $50.0 million sub-limit for letters of credit. The fair value of ~~$230~~the Senior Term Loan approximates its carrying value at June 30,~~000~~ 2008.

On The ~~December 19, 2003,~~indebtedness ~~50,834 Class~~under Athe ~~Units~~Credit ~~were~~Agreement ~~issued~~is ~~for~~guaranteed $7by the Company and its subsidiaries (collectively,~~500,000~~ ~~related~~the to‘‘Guarantors’’). The Company’s obligations under the ~~PSB~~Credit Agreement and the ~~Acquisition~~guarantees of the Guarantors are secured by a first-priority security interest in substantially all of the Company’s and the Guarantors’ assets, other than leased real property. OfBorrowings ~~these~~under ~~units~~the Credit Agreement bear interest, 1at the Company’s option,~~894~~ ~~units~~at ~~were~~either ~~subject~~an toadjusted ~~put~~Eurodollar ~~rights~~rate ~~and~~plus ~~had~~an aapplicable ~~fair~~margin ~~value~~of 4.50% in the case of ~~$279~~revolving loans or 3.00% in the case of term loans,~~000~~ or an alternative base rate plus an applicable margin of 3.50% in the case of revolving loans or 2.00% in the case of term loans.

On The ~~December 31~~Credit Agreement contains affirmative and negative covenants customary for such financings. The Credit Agreement also requires the Company to maintain, ~~2003,~~ as further defined in the 7Credit Agreement,~~500~~ ~~unvested~~a ~~Class~~minimum Cratio ~~Units~~of ~~were~~Consolidated ~~issued~~EBITDA to antotal ~~executive~~consolidated ~~for~~cash interest ~~approximately~~expense ~~$2,000~~and to not exceed a maximum ratio of total consolidated debt outstanding to Consolidated EBITDA as of the last day of each calendar quarter.

On The ~~December 31~~Credit Agreement contains events of default customary for such financings, ~~2003~~ including but not limited to non-payment of principal, 13interest,~~083~~ fees or other amounts when due; violation of ~~Time-Based~~covenants; ~~Class~~failure Cof ~~Units~~any representation or warranty to be true in all material respects when made or deemed made; cross default and 13cross acceleration to certain indebtedness; certain ERISA events; change of control; dissolution,~~083~~ ~~Performance-Based~~insolvency ~~Class~~and Cbankruptcy ~~Units~~events; material judgments; the ~~vested~~subordination provisions under the Indenture being revoked, invalidated or otherwise ceasing to be in full force and effect; and actual or asserted invalidity of the guarantees or security documents. Some of these events of default allow for grace periods and materiality qualifications. As of June 30, 2008, the Company is in compliance with all covenants under the Credit Agreement.

On The Revolver availability with a lending capacity of $50.0 million is reduced by outstanding letters of credit, which totaled $32.4 million as of June 1 30, ~~2004~~ 2008. On March 17, 72008,~~500~~ ~~unvested~~the ~~Class C~~Company ~~Units~~borrowed ~~were~~$17.0 million ~~issued~~under tothe anRevolver ~~executive~~ for ~~approximately~~general ~~$5,000,~~corporate 3purposes. In April 2008,~~750~~ ofthe $17.0 ~~which~~million ~~were~~Revolver ~~subsequently~~borrowing ~~repurchased~~was ~~from~~repaid in full. At June 30, 2008, the ~~employee~~remaining asamount ofavailable for ~~December 31, 2004~~borrowing under the Revolver was $17.6 million.

~~On August 2, 2004,~~12 ~~7,500 Class C Units were issued, of which 750 units were immediately vested, to an executive for approximately $5,000.~~

OnAllied ~~October 5, 2004,~~Security ~~2,250~~Holdings ~~unvested~~LLC Notes ~~Performance-Based~~to ~~Class~~Consolidated CFinancial ~~Units were forfeited and~~Statements 2June 30,~~250~~ ~~Time-Based~~2008 (Dollars ~~Class~~in Cthousands ~~Units~~except ~~vested~~as ~~due~~otherwise ~~to an employment~~stated) ~~termination.~~(Unaudited)

On The ~~December 31, 2004,~~Company ~~3,750~~is ~~unvested Performance-Based~~obligated ~~Class~~under Ccapital ~~Units~~leases ~~were~~for ~~forfeited~~vehicles ~~due~~that toexpire anat ~~employment~~various dates during ~~termination~~the next 24 months totaling $0.4 million.

On Debt ~~December 31, 2004,~~maturities ~~13,083 Time-Based~~for ~~Class~~the Cremainder ~~Units~~of the current year and ~~13,383~~the ~~Performance-Based~~following ~~Class~~three Cyears ~~Units~~are as ~~vested.~~follows:


2008 (less six months ended June 30, 2008)	$	5,157
2009		10,166
2010		242,310
2011		178,865

Total	$	436,498

~~Allied Security~~9. ~~Holdings~~Contingent ~~LLCNotes to Consolidated Financial~~Liabilities ~~StatementsJune 30, 2006(Unaudited)~~

On In ~~March 9~~the normal course of operations, ~~2005~~ various legal claims are filed against the Company. The Company has reserved for certain of these claims based upon insurance coverages, 7the risk of loss retained by the Company,~~500~~ and management’s judgment (in some cases after receipt of the advice of ~~unvested~~counsel). ~~Class~~In Cthe ~~Units~~opinion ~~were~~of ~~issued~~management, tothe anultimate ~~executive~~outcome ~~for~~of ~~approximately~~these actions is not expected to $5have a material adverse effect on the consolidated financial position,~~000~~ results of operations, or cash flows of the Company.

On10. ~~May 17, 2005,~~Comprehensive ~~7,500~~Income ~~unvested Class C~~(Loss) ~~Units were issued to an executive for approximately $5,000.~~

On Comprehensive income (loss) is defined as net income (loss) and other changes in members’ ~~August 2, 2005,~~equity ~~675~~(deficit) from ~~Time-Based~~transactions ~~Class~~and Cother ~~Units~~events from sources other than those derived from ~~vested~~members. A reconciliation of net income (loss) to comprehensive income (loss) is as follows:

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


	Three months ended					Six months ended
	June 30,					June 30,
	2008		2007			2008			2007
Net income (loss)	$	5,599	$	(1,186	)	$	2,670		$	(6,021	)
Unrealized gains (losses) on marketable securities		21		55			(24	)		71

Comprehensive income (loss)	$	5,620	$	(1,131	)	$	2,646		$	(5,950	)

~~On December 6, 2005,~~11. ~~2,500~~Income ~~unvested Class C Units were~~Taxes ~~issued to an executive for approximately $1,667.~~

On The members of the Company have elected to be treated as a partnership for both federal and ~~December 31~~state income tax reporting purposes. In accordance with applicable regulations, ~~2005~~ taxable income or loss of the Company is required to be reported in the income tax returns of the Company’s members in accordance with the Company’s Operating Agreement, 12dated as of August 2,~~501~~ ~~Time-Based~~2004, ~~Class~~as Camended ~~Units~~(the ~~vested,~~“Operating ~~and~~Agreement”). 13Accordingly,~~176~~ ~~Performance-Based~~no ~~Class~~provision ~~Units~~for ~~were~~income ~~forfeited~~taxes ~~and~~has been made in the Company’s ~~canceled~~consolidated ~~due~~financial statements. The Operating Agreement enables the Company to make distributions to each member to satisfy their respective tax liabilities arising in connection with their respective ownership interest in the Company. ~~not~~Distributions ~~achieving~~for ~~its~~the ~~performance~~three ~~goals~~and six months ~~applicable~~ended toJune 30, 2008 were approximately $0.2 million and $0.3 million, respectively. No distributions were made for the ~~Performance-Based~~three Cand ~~Units~~six months ended June 30, 2007. Due principally to differences in depreciation and amortization, taxable income may vary substantially from income or loss reported for ~~fiscal~~financial ~~2005~~reporting purposes.

On13 ~~January 18, 2006, 2,400 unvested Performance-Based Class C Units and 2,700 Time-Based Class C Units were forfeited due to an employment resignation.~~

~~On March 31, 2006,~~Allied ~~7,500~~Security ~~unvested~~Holdings ~~Class~~LLC Notes Cto ~~Units~~Consolidated ~~were~~Financial ~~issued~~Statements toJune 30, an2008 (Dollars ~~executive~~in ~~for~~thousands ~~approximately~~except ~~$5,000.~~as otherwise stated) (Unaudited)

The Operating Agreement includes put rights issued to OCM that give OCM the option to cause the Company to purchase all of the Class A Units subject to put rights held by them at specified periods of time, the earliest of which is 2007, at an estimated fair value at the time the put right is exercised12. ~~The Company~~Defined ~~recorded~~Benefit ~~estimated~~Pension ~~increases in the redemption amount of such~~Plan ~~Class A Units subject to put rights as a reduction to members’ equity of $601,000 and $3,109,000 on June 30, 2006 and December 31, 2005, respectively.~~

~~Pursuant~~ The toCompany ~~the Operating~~maintains ~~Agreement,~~a ~~Mr. Albert Berger~~defined ~~had~~benefit ~~the~~pension ~~right~~plan ~~to cause~~covering ~~the~~a ~~Company~~limited tonumber ~~purchase~~of ~~all,~~current ~~but~~and former ~~not~~employees ~~less~~who ~~than~~are ~~all,~~members of ~~his outstanding~~a ~~Class~~guard Bunion ~~Units~~located ~~during~~in aNew ~~90-day period beginning on February 19~~York, ~~2006~~ inNY. ~~accordance~~Eligibility ~~with~~and ~~a specified~~benefits ~~calculation~~vary asdepending ~~defined~~upon in the ~~Operating~~year ~~Agreement.~~of ~~The~~hire; ~~put right valued at $2~~furthermore,~~995,000~~ ~~expired~~benefit onaccumulation ~~May 19, 2006.~~has ~~There~~been ~~were no new Class B Units issued in 2005 or 2006~~suspended.

~~14. Related~~ Net ~~Party~~periodic benefit income for the Company’s pension plan includes the following components: ~~Transactions~~

In connection with the Mafco Acquisition, senior management of the Company canceled their vested options in the Predecessor Company. The Company's majority member, SpectaGuard Holding Corporation, is obligated to return to members of senior management the amount of deferred payment totaling $16,251,000 including estimated taxes, in periods ranging from three to five years from the agreement date. This amount has been recorded at its present value and is included on the accompanying consolidated balance sheets in due to affiliates. On February 17, 2006, the Company made payments of $2,201,000 to members of senior management related to the deferred payment which includes the $1,000,000 payment to Mr. Berger discussed below. The Company is obligated to reimburse SpectaGuard Holding Corporation for all costs and expenses incurred in connection with its performance under the Amended and Restated Management Agreement between SpectaGuard and SpectaGuard Holding Corporation dated as of August 2, 2004 including amounts of such deferred payments to senior management.


	Three months ended						Six months ended
	June 30,						June 30,
	2008			2007			2008			2007
Interest cost	$	15		$	16		$	30		$	32
Expected return on assets		(22	)		(22	)		(44	)		(44	)

Net periodic benefit income	$	(7	)	$	(6	)	$	(14	)	$	(12	)

14 The Company contributed $22 and $42 to the defined benefit pension plan during the three and six months ended June 30, 2008. The Company’s contributions to the plan for the remainder of fiscal 2008 are expected to be in the range of $40 to $45.

~~Allied Security~~13. ~~Holdings~~Units ~~LLCNotes~~Subject to ~~Consolidated~~Put ~~Financial~~Rights and Members’ Equity ~~StatementsJune 30, 2006(Unaudited)~~

~~Mr. Berger’s~~ The ~~employment agreement~~capital ~~was~~structure ~~amended~~of ~~on February 17, 2006. The amendment modified~~ the ~~payment~~Company ~~terms~~consists ~~applicable~~of tothree aclasses ~~special~~of ~~payment~~units ~~payable~~which toare designated ~~Mr. Berger~~as inClass A ~~the approximate amount of $7~~units,~~000,000~~ ~~(with~~Class B ~~a gross-up~~units ~~payment~~and toClass C ~~the~~units. ~~extent~~The ~~that~~Company ~~the~~is ~~special~~authorized ~~payment~~to isissue ~~taxed~~up ~~at a~~to ~~rate~~10,000,000 ~~higher~~units. ~~than~~The ~~the~~units ~~highest~~do ~~federal~~not ~~capital~~have ~~gains~~any ~~rate)~~voting ~~previously payable~~approval toor ~~Mr. Berger~~consent ~~on February 19, 2006~~rights. ~~Specifically,~~ ~~the~~Class A ~~amendment~~and ~~modified~~Class B units ~~the~~represent ~~timing~~vested ofownership ~~the~~interests ~~payment~~in ~~such that $1,000,000 of~~ the ~~special~~Company. ~~payment~~Class C ~~was~~units ~~paid~~generally tovest ~~Mr. Berger~~50% onbased ~~February 17, 2006~~on ~~and~~passage ~~the balance~~ of ~~the~~time ~~special~~and ~~payment was~~50% ~~paid~~based on ~~April 28, 2006~~achievement ~~(in~~of ~~each~~defined ~~instance,~~performance ~~with~~targets ~~a gross-up~~over ~~payment~~periods ~~to the extent that the special payment is taxed at a~~ranging ~~rate~~from ~~higher~~three ~~than~~to ~~the~~six ~~highest federal capital gains rate)~~years.

15 Pursuant to the Operating Agreement, cash distributions may be made to the members in the following order and priority: (i) among the units in proportion to, and to the extent of, initial contributed capital attributable to the units (excluding any capital attributable to unvested Class C units) until all initial contributed capital has been returned, and (ii) any remaining balance to the members in proportion to their ownership percentage. ~~Leases~~

The ~~Company~~Operating ~~has~~Agreement ~~commitments~~includes ~~under operating~~put ~~leases~~rights ~~for~~issued ~~certain~~to ~~equipment~~OCM ~~and~~Specta ~~facilities~~Holdings ~~used~~Inc. in(“OCM”), ~~its~~a ~~operations.~~member ~~Total~~of ~~rental~~the ~~expense~~Company, ~~for~~that give OCM the ~~three~~option ~~and~~to ~~six~~cause ~~months~~the ~~ended June 30~~Company to purchase all of the 22, ~~2006~~317 Class A ~~was~~units ~~approximately~~subject $1to put rights held by OCM at specified periods of time,~~994,000~~ ~~and~~the earliest of which $4was 2007,~~048,000,~~ ~~respectively.~~at ~~Total~~the ~~rental~~estimated ~~expense~~redemption ~~for~~amount at the ~~three~~time the put right is exercised. The estimated redemption amount is recorded at its estimated fair value and ~~six~~is calculated using a combination of significant observable and unobservable inputs. During the six months ended June 30, ~~2005~~ ~~was~~2008, ~~approximately~~the Company ~~$2,220,000~~recorded an estimated decrease in the redemption amount of such Class A units subject to ~~and~~put rights of $41,~~213,000,~~359 ~~respectively~~as an increase of members’ equity.

16 Class C units outstanding at June 30, 2008 totaled 121,641. ~~Subsequent~~ There were no new issuances or ~~Events~~cancellations of Class C units during the six months ended June 30, 2008. The number of Class C units vested as of June 30, 2008 and December 31, 2007 was 108,142.

~~On June 16, 2006, the Company initiated a~~14 solicitation from the holders of its Notes of consents to certain amendments to the Indenture (the ‘‘Indenture’’) governing the terms of the Notes. Upon expiration of the solicitation of consents on July 7, 2006, the Company accepted consents from holders of a majority in aggregate principal amount of the Notes and entered into a Fifth Supplemental Indenture (the ‘‘Fifth Supplemental Indenture’’) among the Company, certain subsidiaries of the Company, as guaranteeing subsidiaries, and The Bank of New York, a New York banking corporation, as trustee. The Fifth Supplemental Indenture became operative on July 20, 2006, upon the closing of the Initial Acquisition. The Fifth Supplemental Indenture amended the Indenture to: (1) permit the Company to incur up to an additional $85.0 million in indebtedness in order to finance the Initial Acquisition and (2) provide that the Company may add back to the calculation of Consolidated Cash Flow (as defined in the Indenture) the fees and expenses, including without limitation fees and expenses of counsel, relating to the Initial Acquisition and the financing thereof, including the solicitation of consents discussed above and the related consent fee.

OnAllied ~~July 20, 2006,~~Security ~~the~~Holdings Company entered into the New Credit Agreement governing its $325.0 million senior secured credit facility with Bear Stearns Corporate Lending Inc., as administrative agent, the financial institutions party thereto as lenders, Sovereign Bank., as syndication agent, and CIT Lending Services Corporation, ING Capital LLC ~~and PNC Bank, National~~ ~~Association,~~Notes asto ~~co-documentation~~Consolidated ~~agents.~~Financial ~~The new credit facility~~Statements ~~consists of a $275.0 million term loan facility which was drawn at the closing of the Initial Acquisition and matures on~~ June 30, ~~2010~~ 2008 (~~with~~Dollars ~~such~~in ~~date~~thousands ~~being~~except ~~automatically extended to July 20, 2012 if the Notes are refinanced~~ as ~~permitted under~~otherwise ~~the New Credit Agreement by new indebtedness having a term of at least six years and six months after July 20, 2006~~stated) ~~and a~~ ~~$50.0 million revolving credit facility~~ (~~the ‘‘New Revolver’’~~Unaudited) ~~that matures on August 2, 2009.~~ The New Revolver includes a $50.0 million sublimit for letters of credit. As of July 20, 2006, no amounts were drawn under the New Revolver, with approximately $24.8 million of letters of credit outstanding. The Company used the initial borrowings under the New Credit Agreement to finance the Initial Acquisition (and pay related fees and expenses) and to repay amounts outstanding under the Prior Credit Facility.

1514. Related Party Transactions

~~Allied~~ In connection with the Mafco acquisition, senior management of the Company canceled their ~~Security~~vested ~~Holdings~~options ~~LLCNotes~~in the Predecessor Company. The Company’s majority member, SpectaGuard Holding Corporation, was obligated to ~~Consolidated~~return ~~Financial~~to members of senior management the amount of deferred payment ~~StatementsJune 30~~totaling $16,251 including estimated taxes, in periods ranging from three to five years. This amount has been recorded at its present value and is included on the accompanying consolidated balance sheets in due to affiliate. In 2006~~(Unaudited)~~, the Company paid $10,191 to senior management, and as of December 31, 2007, the Company had $5,843 accrued related to this remaining liability, which was paid on February 19, 2008. The Company was obligated to reimburse SpectaGuard Holding Corporation for all costs and expenses incurred in connection with its performance under the Amended and Restated Management Agreement between the Company and SpectaGuard Holding Corporation dated as of August 2, 2004, including amounts of such deferred payments to senior management.

~~The~~ During ~~indebtedness under~~ the ~~New~~three ~~Credit Agreement~~and issix ~~guaranteed~~months byended ~~the~~June 30, ~~Company's~~2008 ~~domestic~~and ~~subsidiaries (collectively~~2007, the ~~‘‘Guarantors’’). The~~ Company's ~~obligations~~provided ~~under~~contract security ~~the~~officer ~~New~~services ~~Credit~~to ~~Agreement~~certain ~~and~~companies ~~the guarantees~~in ofwhich ~~the~~Mafco ~~Guarantors~~has ~~are secured by~~ a ~~first-priority~~significant ~~security~~ownership ~~interest~~percentage. inThe ~~substantially all of the~~ Company's ~~and~~earned ~~the Guarantors'~~revenue ~~assets~~from ~~other~~these ~~than~~companies ~~leased~~for ~~real~~such ~~property.~~services ~~Borrowings under~~in the ~~New~~amounts ~~Credit~~of $1,513 ~~Agreement~~and ~~bear interest~~$2,935 atfor the ~~Company's option,~~three atand ~~either~~six anmonths ~~adjusted~~ended ~~Eurodollar~~June 30, ~~rate~~2008, ~~plus~~respectively, anand ~~applicable~~$817 ~~margin~~and of$1,639 ~~4.50%~~for in the ~~case~~three ofand ~~revolving~~six ~~loans~~months orended 3June 30, 2007, respectively.~~00%~~ inThe ~~the~~rates charged for these ~~case~~services ofwere ~~term~~competitive ~~loans,~~with orindustry anrates ~~alternative~~for ~~base~~similarly ~~rate~~situated ~~plus~~security anfirms. ~~applicable~~The Company ~~margin~~had ofaccounts ~~3.50%~~receivable inbalances ~~the~~from ~~case~~these companies of ~~revolving~~$1,161 ~~loans~~and or$741 ~~2.00% in~~at ~~the~~June 30, ~~case~~2008 ofand December 31, ~~term~~2007, ~~loans~~respectively.

~~The New Credit Agreement contains affirmative and negative covenants customary for such financings~~15. ~~The New~~Subsequent ~~Credit Agreement also requires the Company to maintain a minimum~~Event ratio of consolidated earnings before interest, taxes, depreciation and amortization (‘‘EBITDA’’) to total consolidated cash interest expense and to not exceed a maximum ratio of total consolidated debt outstanding to consolidated EBITDA as of the last day of each fiscal quarter commencing with the fiscal quarter ending September 30, 2006.

~~The~~ As ~~New~~previously ~~Credit~~disclosed ~~Agreement contains~~on ~~events~~the ofCompany’s ~~default~~Form ~~customary~~8-K ~~for~~filed ~~such~~with ~~financings,~~the ~~including~~SEC ~~but not~~on ~~limited~~July 29, to2008, ~~non-payment~~on ~~of principal~~July 24, ~~interest~~2008, ~~fees~~the orCompany ~~other amounts~~entered ~~when~~into ~~due;~~an ~~violation~~Agreement ofand ~~covenants;~~Plan ~~failure~~ of ~~any~~Merger ~~representation or~~with ~~warranty~~SpectaGuard toHolding Corporation be(“SpectaGuard”), ~~true~~MacAndrews in& ~~all~~Forbes ~~material~~Holdings ~~respects~~Inc, ~~when~~solely ~~made~~for orcertain ~~deemed~~sections ~~made;~~specified ~~cross~~therein, ~~default~~AB ~~and~~Capital ~~cross~~Holdings ~~acceleration~~LLC to(“Purchaser”), ~~certain~~and ~~indebtedness; certain~~AB ~~ERISA~~Merger ~~events;~~Sub ~~change~~LLC of(“Merger ~~control; dissolution~~Sub”), ~~insolvency and~~a ~~bankruptcy~~wholly-owned ~~events;~~subsidiary ~~material~~of ~~judgments;~~Purchaser, ~~the~~pursuant ~~subordination~~to ~~provisions under~~which ~~the~~Merger ~~Indenture~~Sub ~~being~~will ~~revoked,~~merge ~~invalidated~~with orand ~~otherwise~~into ~~ceasing to~~the beCompany in(the ~~full~~“Merger”) ~~force~~ and ~~effect;~~the ~~and~~Company ~~actual~~will orcontinue ~~asserted~~as ~~invalidity~~a subsidiary of ~~the guarantees~~Purchaser. orPurchaser ~~security~~and Merger ~~documents.~~Sub ~~Some~~are ofcontrolled ~~these~~by ~~events~~a ofprivate ~~default~~equity ~~allow for~~fund ~~grace~~affiliated ~~periods~~with ~~and~~The ~~materiality~~Blackstone ~~qualifications~~Group (“Blackstone”).

The ~~Company provides~~Merger ~~contract~~will ~~employees~~constitute ~~for~~a ~~toll~~change ~~operator~~of ~~services~~control tounder the ~~FDOT pursuant~~Company’s toCredit ~~contracts~~Agreement ~~that~~and ~~expire on November 30, 2006.~~the ~~These~~Indenture ~~contracts~~governing ~~generated~~its ~~an aggregate of approximately $50~~11.~~1 million, or approximately 4.5~~375%, ofSenior ~~our~~Subordinated ~~2005~~Notes ~~revenues~~due ~~and approximately $25~~2011.~~0 million,~~ orAt ~~approximately~~the ~~4.4%,~~closing of ~~our~~ ~~revenues for~~ the ~~six months ended June 30~~Merger, ~~2006. The~~ ~~FDOT~~the ~~has~~Purchaser ~~the~~will ~~right~~cause toall ~~terminate~~indebtedness under the ~~contracts~~Company’s atCredit ~~any~~Facility ~~time~~to ~~for~~be ~~any reason~~paid in ~~accordance~~full ~~with~~or satisfied ~~the~~and ~~interests~~discharged, ofand the ~~FDOT.~~Notes Inwill ~~2006,~~be ~~the~~called ~~FDOT initiated~~for aredemption ~~competitive~~with ~~bidding~~the ~~process~~proceeds ~~for~~from the Merger ~~award~~deposited ofwith ~~a new contract following~~ the ~~scheduled~~trustee ~~expiration~~ of the ~~existing~~Indenture ~~contract.~~to Ineffect ~~that process,~~a ~~the~~defeasance. ~~FDOT~~Consummation ~~ranked~~of the ~~Company’s proposal behind those of~~ ~~two~~Merger ~~other~~is ~~bidders,~~subject ~~as a precursor~~ to ~~negotiations~~certain ~~toward~~closing ~~a new contract~~conditions, ~~although~~including aexpiration ~~new~~of ~~contract~~the ~~has~~waiting ~~not~~period ~~yet been awarded. On~~under ~~July 20, 2006,~~the anHart-Scott-Rodino ~~Administrative~~Antitrust ~~Law~~Improvements ~~Judge~~Act ~~issued~~of ~~a recommended~~1976, ~~order~~as ~~denying~~amended, the ~~Company’s~~accuracy ~~protest~~ of the ~~FDOT’s~~representations ~~ranking~~and warranties of ~~its proposal. In~~ the ~~event~~parties ~~that~~(subject ~~these contracts~~to ~~are~~certain ~~terminated or materially modified~~exceptions), orthe ifpro weforma ~~are not~~ratios ~~successful~~of innet ~~acquiring~~debt ~~the~~and ~~new~~net ~~contract,~~senior ~~our~~debt ~~revenues~~of ~~may~~the beCompany ~~reduced, which~~to ~~could~~EBITDA ~~have~~not aexceeding ~~negative~~certain ~~effect on our business~~thresholds, ~~financial condition~~ and other ~~results~~customary ofclosing ~~operations~~conditions.

1615

~~The discussion~~Item 2. ~~and~~Management’s ~~analysis~~Discussion ~~of financial condition~~ and ~~results~~Analysis of ~~operations~~ ~~are~~Financial ~~based~~Condition ~~upon financial statements which have been prepared in accordance with United States generally accepted accounting principles,~~ and ~~should~~Results ~~each be read together with the applicable~~of ~~consolidated financial statements, the notes to those financial statements and the other financial information appearing elsewhere in this Report on Form 10-Q~~Operations.

~~This~~ The ~~following~~ discussion ~~contains~~ ~~certain~~and ~~statements~~analysis of afinancial ~~forward-looking~~condition ~~nature~~and ~~that~~results ~~involve risks~~of ~~and~~operations ~~uncertainties.~~are Asbased aupon financial ~~result~~statements ofwhich ~~many~~have ~~factors,~~been ~~including~~prepared ~~those set~~in ~~forth~~accordance ~~under~~with ~~the~~U.S. ~~section~~Generally ~~entitled~~Accepted ~~‘‘Risk~~Accounting ~~Factors’’~~Principles in(“GAAP”), ~~our~~and ~~filings~~should each be read together with the ~~SEC,~~applicable ~~actual~~consolidated ~~results may~~financial ~~differ~~statements, ~~materially~~the ~~from~~notes to those ~~anticipated~~financial bystatements ~~such~~and ~~forward-looking~~the other financial information appearing ~~statements.~~elsewhere ~~See~~in ~~‘‘Statement~~this ~~Regarding~~Quarterly ~~Forward~~Report on Form 10-~~Looking Disclosure~~Q.’’

~~Overview~~ The following discussion contains certain statements of a forward-looking nature that involve risks and uncertainties. As a result of many factors, including those set forth under the section entitled ‘‘Risk Factors’’ in our filings with the SEC, actual results may differ materially from those anticipated by such forward-looking statements. See ‘‘Forward-Looking Statements.’’

~~We offer premium~~Overview contract security officer services to quality-conscious customers in nine vertical markets throughout the United States: commercial real estate management companies, corporate complexes, shopping centers, financial institutions, healthcare facilities, colleges and universities, manufacturing and distribution facilities, residential communities and government sites. We are responsible for recruiting, screening, hiring, training, uniform outfitting, scheduling and supervising our security officers. Our security officers work on-location at our customers' sites, and their responsibilities primarily include deterring, observing, detecting and reporting perceived, potential or actual security threats. In addition, we provide personnel for toll collection services to the FDOT. As of June 30, 2006, we employed approximately 37,100 security officers and toll collectors. As of June 30, 2006, we provided contract security officer services to over 2,100 clients, including approximately 140 of the Fortune 500 companies, in 42 states and the District of Columbia.

~~Recent~~ We ~~Acquisition~~offer premium contract security officer services to quality-conscious customers primarily in ten customer verticals throughout the United States: commercial real estate, corporate complexes, shopping centers and malls, financial institutions, healthcare facilities, colleges and universities, manufacturing and distribution facilities, residential communities, government facilities and chemical/petrochemical facilities. We are responsible for recruiting, screening, hiring, training, outfitting, scheduling and supervising our security officers. Our security officers work on-location at our customers’ sites and their responsibilities primarily include deterring, observing, detecting and reporting perceived, potential or actual security threats. As of July 1, 2008, we employed approximately 50,800 security officers and provided contract security officer services to over 3,600 clients, including approximately 200 of the Fortune 500 companies, in 45 states and the District of Columbia. We also provide background verification services under the tradenames “VanElla” and “HR Plus”.

~~On July 20, 2006~~Recent ~~the Company completed the acquisition of~~Development the Initial Acquisition for a net purchase price of approximately $73.0 million. The Company financed the Initial Acquisition (and related transaction fees and expenses) with borrowings under the New Credit Agreement. Initial Security provides manned guarding, mobile patrol and related services to more than 1,600 customers from 45 branch offices and employs approximately 8,000 security officers.

As previously disclosed on the Company’s Form 8-K filed with the SEC on July 29, 2008, on July ~~Revenues~~24, 2008, the Company entered into an Agreement and Plan of Merger with SpectaGuard Holding Corporation (“SpectaGuard”), MacAndrews & Forbes Holdings Inc, solely for certain sections specified therein, AB Capital Holdings LLC (“Purchaser”), and AB Merger Sub LLC (“Merger Sub”), a wholly-owned subsidiary of Purchaser, pursuant to which Merger Sub will merge with and into the Company (the “Merger”) and the Company will continue as a subsidiary of Purchaser. Purchaser and Merger Sub are controlled by a private equity fund affiliated with The Blackstone Group (“Blackstone”).

~~Our~~ The ~~revenues~~Merger ~~are~~will ~~primarily~~constitute a change of control under the Company’s Credit Agreement and the ~~generated~~Indenture ~~from~~governing ~~customer~~its ~~contracts~~11.375% ~~wherein~~Senior weSubordinated ~~are~~Notes ~~obligated~~due to2011. ~~provide~~At the closing of the Merger, ~~security~~the ~~officer~~Purchaser ~~services~~will atcause ~~agreed~~all ~~upon~~indebtedness ~~hourly~~under ~~billing~~the ~~rates~~Company’s Credit Facility to ~~our~~be paid in full or ~~customers.~~satisfied ~~Our~~and ~~standard~~discharged, ~~customer~~and ~~contract~~the isNotes awill ~~one-year~~be ~~contract~~called ~~that~~for redemption with the proceeds from the ~~can~~Merger bedeposited ~~terminated~~with bythe ~~either~~trustee ~~our~~of ~~customer~~the orIndenture usto oneffect 30a defeasance. Consummation of the ~~days'~~Merger ~~notice~~is atsubject ~~any~~to ~~time.~~certain ~~Many~~closing conditions, including expiration of ~~our~~the ~~larger~~waiting ~~contracts~~period ~~are~~under ~~multi~~the Hart-~~year,~~Scott-Rodino ~~and~~Antitrust weImprovements ~~have~~Act ~~found~~of ~~that~~1976, weas ~~generally~~amended, ~~have~~the ~~been~~accuracy ~~successful~~of inthe ~~extending~~representations ~~these~~and ~~contracts~~warranties ~~and~~of ~~negotiating~~the ~~increased~~parties ~~adjustments~~(subject to ~~billing~~ ~~rates.~~certain ~~Revenues~~exceptions), ~~from~~the ~~our~~pro ~~contracts~~forma ~~with~~ratios of ~~the~~net ~~FDOT~~debt ~~are~~and ~~generated in~~net ~~substantially~~senior ~~the~~debt ~~same~~of ~~manner~~the inCompany ~~which~~to weEBITDA ~~generate~~not ~~revenues~~exceeding ~~from~~certain ~~our~~thresholds, and ~~security~~other ~~officer~~customary ~~contracts~~closing conditions.

~~Our contract security officer~~16 revenues are dependent on our ability to attract and retain high-quality employees. We pay above market average wage rates to our contract security officers and provide benefits which many of our competitors do not. In addition, we engage in extensive candidate screening, training and development which supports employee retention. The turnover rate for our security officers and toll collectors was approximately 60% for the 12 months ended June 30, 2006, which compares favorably to our industry’s rate. This allows us to respond to our targeted customers who demand high-quality security officer services.

~~Cost of~~ Revenues

Our ~~largest~~ ~~operating~~revenues ~~expenses~~ are ~~payroll,~~generated ~~payroll~~primarily ~~taxes~~from ~~and~~customer ~~employee related~~contracts ~~benefits.~~obligating Weus ~~believe~~to ~~that~~provide ~~we have higher wages and related~~security ~~payroll~~officer ~~taxes~~services ~~and~~at ~~benefits~~agreed-upon ~~costs~~hourly ~~than~~billing ~~others in our industry due to our focus on attracting and retaining a highly qualified workforce~~rates. Our ~~expenses~~ ~~also~~standard ~~include~~customer ~~workers’~~contract ~~compensation~~is ~~and~~a ~~general~~one-year ~~liability~~contract ~~costs.~~that ~~The~~may ~~major~~be ~~components~~terminated ~~of cost of revenues are affected~~ by ~~general~~either ~~wage~~our ~~inflation,~~customer ~~payroll~~or ~~tax~~us ~~increases~~on ~~and~~30 days’ ~~insurance~~notice ~~premiums and~~at ~~related~~any ~~claim~~time. ~~costs, most~~ Many of ~~which we have been able to pass on to~~ our ~~customers~~larger ~~through~~contracts ~~bill~~are ~~rate increases~~multi-year.

Our ~~payroll~~contract ~~tax expenses~~security ~~historically~~officer revenues are ~~higher~~dependent inon ~~the~~our ~~first~~ability ~~half~~to ofattract ~~the~~and ~~year~~retain high-quality, ~~due~~qualified toemployees. ~~a significant~~We ~~number~~pay ofabove ~~employees~~market ~~reaching~~average ~~their~~wage ~~taxable~~rates ~~wage~~to ~~limits~~our contract security ~~prior~~officers toand ~~the~~provide ~~second~~employee ~~half~~benefits which many of ~~the~~our ~~year~~competitors ~~resulting~~do not. In addition, we engage in ~~higher~~extensive ~~costs~~candidate ofscreening, training and development which supports employee retention. The ~~revenues~~turnover inrate for our service employees was approximately 56% for the ~~first~~12 months ~~half~~ended ofJune 30, 2008, which compares favorably to the ~~year~~average retention rates in our industry.

~~Basis~~ Cost of ~~Presentation~~Revenues ~~and Critical Accounting Policies~~

The direct cost of revenues is comprised primarily of direct labor, payroll taxes, medical and ~~Revenues~~life insurance benefits, workers’ compensation costs, general liability insurance costs and uniform purchases. We believe that we have higher wages and related payroll taxes and benefit costs than others in our industry, due to our focus on attracting and retaining a highly qualified workforce, which in turn allows us to maintain more favorable turnover rates. The major components of cost of revenues are affected by general wage inflation, payroll tax increases and insurance premiums and related claim costs, most of which we have been able to pass on to our customers through bill rate increases.

~~Revenues~~ Our ~~are~~payroll ~~recorded~~tax onexpenses ~~an accrual~~historically ~~basis through client billings. Billings~~ are ~~based~~higher onin ~~client contracts,~~the ~~which~~first ~~generally~~half ~~include~~of athe ~~markup~~year ondue ~~wages~~to ~~paid or~~ a ~~stated~~ ~~bill~~significant ~~rate~~number ~~for~~of ~~hours~~employees ~~worked.~~reaching ~~The~~their ~~vast~~taxable ~~majority~~wage oflimits ~~customers are billed a rate~~ for ~~hours~~employer ~~worked~~related ~~which includes wages and benefits. In certain~~employment ~~cases,~~taxes ~~clients~~prior ~~require~~to ~~specific~~the ~~items~~second behalf ~~excluded~~of ~~from~~ the ~~billed rate, such as medical benefits, vehicle leases and maintenance~~year. ~~In those~~ ~~cases, these items are billed separately, in certain cases with a negotiated markup and in other instances at cost as incurred. Clients are billed on a weekly, bi-weekly, monthly or quarterly basis.~~

~~Cost~~Critical ofAccounting ~~Revenues~~Policies and Estimates

~~The~~ A ~~direct~~description ~~cost~~ of ~~revenues~~ isthe ~~primarily~~Company’s ~~comprised~~critical ofaccounting ~~direct~~policies ~~labor, related payroll taxes, medical~~ and ~~life~~estimates ~~benefits~~was ~~and~~provided ~~workers’~~in ~~compensation and~~the ~~liability~~Management’s ~~insurance.~~Discussion ~~All security officers~~ and ~~account~~Analysis ~~manager payroll and payroll related expenses are classified as cost~~ of ~~revenues.~~Financial ~~Wages paid~~Condition ~~include regular pay, overtime, bonus, vacation, training, holiday~~ and ~~sick~~Results ~~time.~~of ~~The~~Operations ~~total~~section ~~hours paid normally exceed total hours billed~~of ~~mainly~~the ~~due~~Company’s toAnnual ~~overtime~~Report ~~premium and training time, which are generally not billable. Medical benefit costs are based~~ on ~~self~~Form 10-~~insured~~K ~~plans, which~~for ~~cover~~ the ~~majority~~year ofended ~~our workforce~~December 31, ~~and premium-based plans~~2007. ~~The self-insured~~There ~~medical~~were ~~costs are recorded by applying internal estimates~~no ~~based~~changes onto ~~actual~~these ~~claims~~critical ~~history.~~accounting ~~The~~policies ~~premium-based plan costs are charged based on actual premiums paid. Workers’ compensation~~ and ~~liability~~ ~~insurance~~estimates ~~costs~~during ~~are~~the ~~recorded~~six bymonths ~~applying~~ended ~~historical rates based on actual claims history and premium and administrative costs. The estimated charge covers all premiums~~June 30, ~~claims and administrative~~ ~~costs~~2008. ~~These charges are monitored closely against established~~ ~~reserves.~~

17 ~~Branch and Corporate Overhead Expense~~

~~Depreciation~~Results ~~and Amortization~~of ~~Expense~~Operations

~~Depreciation~~Three ~~expense~~months ~~consists~~ended ~~of depreciation of uniforms~~June 30, ~~furniture~~2008 ~~and~~compared ~~fixtures,~~to ~~computers,~~three ~~automotive equipment~~months ~~and~~ended ~~leasehold improvements. Amortization consists of the amortization of the value of the customer lists related to the Mafco~~June 30, ~~PSB,~~ ~~SSI, and Barton acquisitions. It also includes the amortization of~~2007 ~~covenants not-to-compete.~~

18 Revenues. Revenues increased by $34.9 million, or 9.7%, to $393.5 million for the three months ended June 30, 2008 from $358.6 million for the three months ended June 30, 2007. This increase is primarily attributable to revenue from new security service contracts together with rate increases, partially offset by the impact of security service contracts lost.

Cost of Revenues. Cost of revenues increased by $26.8 million, or 8.6%, to $337.6 million for ~~Interest~~the ~~Expense~~three months ended June 30, 2008 from $310.8 million for the three months ended June 30, 2007. This increase is attributable to additional costs associated with the additional revenues. Cost of revenues as a percentage of revenues decreased to 85.8% for the three months ended June 30, 2008 from 86.7% for the three months ended June 30, 2007. This decrease is the result of lower direct labor costs, payroll tax expense and operating insurance costs, partially offset by higher other direct costs.

~~Interest expense~~ Branch ~~consists~~and ofCorporate ~~the~~Overhead ~~cost~~Expenses. ofBranch ~~interest~~and ~~related~~corporate tooverhead ~~our~~expenses ~~Prior~~increased ~~Credit~~by ~~Agreement and~~$3.0 million, ~~following~~or ~~July 20~~10.1%, ~~2006,~~ ~~our~~to ~~New~~$32.8 million ~~Credit Agreement,~~for ~~Notes~~the ~~and~~three ~~related~~months ~~discount~~ended June 30, 2008 from $29.8 million for the ~~Prior~~three ~~Revolver~~months ~~and~~ended June 30, 2007. This increase is attributable to higher ~~following~~administrative ~~July 20~~labor costs, ~~2006,~~ ~~our~~administrative ~~New~~insurance ~~Revolver~~costs and ~~insurance~~legal expenses, partially offset by ~~premium~~lower ~~financing~~payroll taxes. ItAs ~~also~~a ~~includes~~percentage ~~amortization~~ of ~~deferred~~revenues, ~~financing fees~~branch and corporate overhead expenses remained flat at 8.3% for the ~~accretion~~three ofmonths ~~liabilities~~ended ~~related~~June 30, to2008 and 2007, due to ~~affiliate~~higher administrative labor costs, administrative insurance costs and legal expenses, fully offset by lower payroll taxes and ~~covenants~~other ~~not-to-compete~~overhead costs.

Depreciation and Amortization. Depreciation and amortization increased by $0.2 million, or ~~Critical~~2.7%, ~~Accounting~~to $7.7 million for the three months ended June 30, 2008 from $7.5 million for the three ~~Policies~~months ended June 30, 2007. This increase is primarily the result of increased amortization related to the customer lists and other assets acquired as part of the Van Ella and HR Plus acquisitions.

~~The~~ Operating ~~preparation~~Income. ofOperating ~~financial~~income ~~statements~~increased ~~in conformity~~by ~~with~~$4.7 million, ~~GAAP~~or ~~requires~~44.3%, ~~management~~ to ~~make~~$15.3 million ~~certain estimates and~~for ~~assumptions that affect~~ the ~~reported~~three ~~amounts~~months ofended ~~assets~~June 30, ~~and~~2008 ~~liabilities and~~from ~~disclosure~~$10.6 million offor ~~contingent assets and liabilities at~~ the ~~date~~three ofmonths ~~the financial~~ended ~~statements~~June 30, ~~and the reported amounts of revenues and expenses during the reporting period~~2007. ~~The following are critical accounting~~ ~~policies~~This ~~that~~increase weis ~~believe~~due ~~require us~~ to ~~make~~increased ~~significant~~revenue, ~~estimates~~partially ~~and judgments.~~offset ~~Actual~~by ~~results~~the ~~may~~items ~~differ~~discussed ~~from these estimates under different assumptions or conditions~~above.

~~Accounts~~ Interest ~~Receivable Reserve~~Expense, Net. ~~Our~~ ~~customers~~Interest ~~are~~expense, ~~located~~net ~~throughout~~decreased ~~the United States~~$2.0 million, Weor ~~grant~~17.1%, ~~credit~~ to ~~our customers and generally do not require collateral~~$9. ~~We maintain an allowance~~ 7 million for ~~doubtful~~the ~~accounts~~three ~~which management~~months ~~believes~~ended toJune 30, be2008 ~~sufficient~~from ~~to cover potential credit losses and estimated billing adjustments~~$11.7 million ~~Management~~for ~~reviews~~ the ~~components~~three ~~of their~~months ~~accounts~~ended ~~receivable balance on a monthly basis and performs~~June 30, ~~additional~~2007 ~~detail~~due ~~review~~to onlower aaverage ~~quarterly~~outstanding ~~basis.~~debt ~~This~~balances ~~process~~and ~~includes~~lower ~~an analysis~~interest ofrates ~~specific~~versus ~~reserves~~the ~~based~~same ~~upon known credit collection issues~~prior ~~and~~year ~~potential reserve adjustments~~period.

Income ~~Insurance Reserves~~Tax Expense (Benefit). We ~~maintain~~Our ~~insurance~~members ~~coverage,~~have ~~subject~~elected to ~~certain~~ ~~self~~be ~~insured~~treated ~~retentions,~~as ~~for~~a ~~workers’~~partnership ~~compensation,~~for both ~~medical~~federal ~~claims~~ and ~~general~~state ~~liability~~income tax reporting purposes. ~~Reserves~~In ~~have~~accordance ~~been~~with ~~provided~~applicable ~~for~~regulations, our ~~certain~~taxable ofincome ~~these~~or ~~claims~~loss ~~based~~is ~~upon~~required ~~insurance~~to ~~coverages~~be ~~and management's~~reported ~~judgment.~~in ~~Management~~the ~~reviews~~income ~~these~~tax ~~estimates~~returns onof aour members in ~~quarterly~~accordance ~~basis~~with ~~based~~our ~~upon~~Operating ~~currently~~Agreement. ~~available~~Accordingly, ~~information~~we ~~and~~do ~~adjusts the~~not ~~reserves~~have ~~accordingly.~~income Intax ~~the~~expense ~~opinion~~(benefit). In lieu of ~~management~~paying income taxes, we ~~believe~~pay distributions to our members with respect to income tax that ~~insurance~~they ~~reserves~~owe on earnings that are ~~sufficient~~allocated to ~~cover~~them in accordance with our Operating Agreement. The tax-related distributions paid in the ~~ultimate~~three ~~outcome~~months ofended June 30, 2008 were approximately $0.2 ~~these~~million. ~~claims~~No tax-related distributions were paid in the three months ended June 30, 2007.

~~Goodwill~~ Net ~~and~~Income ~~Intangible Assets~~(Loss). ~~Under~~ ~~SFAS~~Net Noincome (loss) increased by $6.8 million ~~142,~~to ~~goodwill~~a ~~and~~net ~~intangible~~income ~~assets~~of $5.6 million ~~with~~for ~~indefinite~~the ~~lives~~three ~~are~~months ~~not~~ended ~~amortized; rather~~June 30, ~~they~~2008 ~~are~~from ~~tested~~a ~~for impairment~~net onloss atof ~~least~~$1.2 million anfor ~~annual~~the ~~basis.~~three ~~Additionally,~~months ~~intangible~~ended ~~assets~~June 30, ~~such~~2007, as ~~customer~~a ~~lists,~~result ~~with~~of ~~finite~~the ~~lives~~items ~~continue~~described ~~to be amortized over their useful lives~~above.

~~SFAS No. 142 requires a~~18 two-step impairment test for goodwill. The first step is to compare the carrying amount of the reporting unit's assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying amount exceeds the fair value then the second step is required to be completed, which involves allocating the fair value of the reporting unit to each asset and liability, with the excess being implied goodwill. An impairment loss occurs if the amount of the recorded goodwill exceeds the implied goodwill. The determination of the fair value of our reporting unit is based, among other things, on estimates of future operating performance of the reporting unit being valued. We are required to complete an impairment test for goodwill and record any resulting impairment losses annually. Changes in market conditions, among other factors, may have an impact on these estimates.

19Six months ended June 30, 2008 compared to Six months ended June 30, 2007

~~Results~~ Revenues. Revenues increased by $59.5 million, or 8.2%, to $780.8 million for the six months ended June 30, 2008 from $721.3 million for the six months ended June 30, 2007. This increase is primarily attributable to revenue from new security service contracts together with rate increases, partially offset by the impact of ~~Operations~~security service contracts lost and by the expiration of the State of Florida, Department of Transportation (“FDOT”) toll collection services contract on March 31, 2007.

Cost of Revenues. Cost of revenues increased by $49.7 million, or 7.9%, to $677.1 million for ~~Three~~ the six months ended June 30, ~~2006~~ ~~compared~~2008 from $627.4 million for the six months ended June 30, 2007. This increase is attributable to ~~three~~additional costs associated with the additional revenues. Cost of revenues as a percentage of revenues decreased to 86.7% for the six months ended June 30, 2008 from 87.0% for the six months ended June 30, 2007. This decrease is the result of lower payroll tax ~~2005~~expense and other direct costs, partially offset by higher direct labor costs and operating insurance costs, reflecting the loss of lower direct labor costs associated with the FDOT toll collection contract.

~~Revenues~~ Branch and Corporate Overhead Expenses. ~~Revenues~~ Branch and corporate overhead expenses increased by $53.9 5 million, or 25.17%, to $~~282~~64.3 7 million for the ~~three~~ six months ended June 30, ~~2006~~ 2008 from $~~276~~61.4 2 million for the ~~three~~six months ended June 30, ~~2005~~ 2007. This increase is attributable to ~~the~~higher ~~revenue~~administrative labor costs, administrative insurance costs and legal expenses resulting primarily from ~~new~~the settlement ~~security~~of ~~service~~a lawsuit, partially offset by lower payroll taxes. As a percentage of revenues, ~~contracts~~branch and corporate overhead expenses decreased to 8.3% for the six months ended June 30, ~~together~~2008 from ~~with~~8.5% ~~rate~~for ~~increases~~the six months ended June 30, 2007. This decrease is due to lower payroll taxes and other overhead costs, partially offset by ~~the~~higher ~~impact of~~administrative ~~contracts~~labor ~~lost~~costs and administrative insurance costs.

~~Cost~~ Depreciation ofand ~~Revenues~~Amortization. ~~Cost~~ ~~of revenues~~Depreciation and amortization increased by $60.8 3 million, or 2.90%, to $~~241~~15.9 4 million for the ~~three~~six months ended June 30, ~~2006~~ 2008 from $~~235~~15.1 million for the ~~three~~six months ended June 30, ~~2005~~ 2007. ~~The~~This increase ~~was~~is ~~mainly~~primarily ~~due to~~ the ~~cost~~result ~~associated with~~of increased ~~revenues,~~amortization ~~mainly~~related ~~direct~~to ~~labor. Cost of revenues as a~~the ~~percentage~~customer oflists ~~revenues~~and ~~increased~~other toassets ~~85.7%~~acquired ~~for~~as ~~the~~part ~~three~~of ~~months ended June 30, 2006 from 85.1% for~~ the ~~three months ended June 30~~Fox, ~~2005.~~ ~~The~~Van ~~increase~~Ella ~~was due mainly to increased direct labor costs from margin pressure on contract renewals~~ and ~~new~~HR ~~business,~~Plus ~~partially offset by lower business insurance costs~~acquisitions.

~~Branch~~ Operating ~~and Corporate Overhead Expenses~~Income. ~~Branch~~ ~~and~~Operating ~~corporate~~income ~~overhead~~increased ~~expenses decreased~~ by $16.7 0 million, or 734.1%, to $~~22.1 million for the three months ended June 30, 2006 from $~~23.8 6 million for ~~the three months ended June 30, 2005. As a~~ ~~percentage of revenues, branch and corporate overhead expenses decreased to 7.8% for~~ the ~~three~~six months ended June 30, ~~2006~~ 2008 from 8$17.6% million for the ~~three~~six months ended June 30, ~~2005~~ 2007. This increase ~~decrease~~ is ~~primarily~~due ~~the~~to ~~result~~increased ~~of a decrease in administrative labor costs and incentive-related compensation~~revenue, partially offset by ~~increased~~the ~~professional~~items ~~fees~~discussed above.

~~Depreciation~~ Interest ~~and~~Expense, ~~Amortization~~Net. ~~Depreciation~~ ~~and amortization~~Interest ~~increased~~expense, bynet decreased $02.4 7 million, or 11.4%, to $820.~~8 million~~9 million for the ~~three~~six months ended June 30, ~~2006~~ 2008 from $823.4 6 million for the ~~three~~six months ended June 30, ~~2005. This~~ ~~increase~~2007 isdue ~~primarily~~to ~~the~~lower ~~result~~average ofoutstanding andebt ~~increased~~balances ~~amount~~and oflower ~~uniform~~interest rates versus the same prior ~~purchases~~year period.

Income ~~Operating~~Tax ~~Income~~Expense (Benefit). ~~Operating~~ ~~income~~Our members have elected to be treated as a partnership for both ~~increased~~federal byand $0state income tax reporting purposes.~~4 million~~ In accordance with applicable regulations, our taxable income or 4loss is required to be reported in the income tax returns of our members in accordance with our Operating Agreement.4% Accordingly, towe $9do not have income tax expense (benefit).5 ~~million~~In ~~for~~lieu ~~the~~of ~~three~~paying ~~months~~income ~~ended June 30~~taxes, ~~2006~~ ~~from~~we pay distributions to our members with respect to income tax that $9they owe on earnings that are allocated to them in accordance with our Operating Agreement.~~1 million~~ ~~for~~The tax-related distributions paid in the ~~three~~six months ended June 30, 2008 were approximately $0.3 ~~2005~~million. ~~This~~No ~~increase~~tax-related ~~was~~distributions ~~primarily~~were ~~related~~paid toin the ~~items~~six ~~discussed above~~months ended June 30, 2007.

~~Interest~~ Net ~~Expense,~~Income ~~Net~~(Loss). ~~Interest~~ ~~expense,~~Net ~~net~~ income (loss) increased by $08.4 7 million, orto ~~4.0%,~~a tonet income of $102.3 7 million for the ~~three~~six months ended June 30, ~~2006~~ 2008 from a net loss of $96.9 0 million for the ~~three~~six months ended June 30, ~~2005.~~ ~~The increase~~2007, ~~was~~as ~~due~~a toresult ~~higher~~of ~~interest~~the ~~rates~~items ~~which~~described ~~were partially offset by lower outstanding debt balances~~above.

19 Income Tax Expense (Benefit). Subsequent to the Mafco Acquisition, our members have elected to be treated as a partnership for both federal and state income tax purposes. In accordance with applicable regulations, our taxable income or loss is required to be reported in the income tax returns of our members in accordance with our Operating Agreement. Accordingly, we do not have income tax expense (benefit). In lieu of paying income taxes, we pay distributions to our members with respect to income tax that they owe on earnings that are allocated to them in accordance with our Operating Agreement. Tax-related distributions paid for the three months ended June 30, 2006 and for the three months ended June 30, 2005 were $0.2 million and $0, respectively.

20Supplemental Non – GAAP financial information

EBITDA is defined as net income (loss) before interest expense, income taxes and depreciation ~~Six~~and ~~months~~amortization. ~~ended~~EBITDA ~~June~~is presented because we believe it is useful to investors as a widely ~~30, 2006~~accepted ~~compared~~financial indicator of a company’s ability to ~~six~~service ~~months~~and/or ~~ended~~incur ~~June 30,~~indebtedness and ~~2005~~because such disclosure provides investors with additional criteria used by us to evaluate our operating performance.

EBITDA and Adjusted EBITDA (as defined below) are not defined under GAAP, should not be ~~Revenues. Revenues~~considered ~~increased~~in byisolation or as a substitute for a measure of our liquidity or performance prepared ~~$16~~in accordance with GAAP and are not indicative of income from operations as determined under GAAP.~~1 million,~~ EBITDA and Adjusted EBITDA and other non-GAAP financial measures have limitations which should be considered before using these measures to evaluate the Company’s liquidity or 2financial performance.9% EBITDA and Adjusted EBITDA do not include interest expense, which has required significant uses of the Company’s cash in the past and will require the Company to ~~$566.7 million~~expend significant ~~for~~cash resources in the future. EBITDA and Adjusted EBITDA also do not include income tax ~~six~~expense ~~months~~or ~~ended~~depreciation ~~June 30~~and amortization expense, ~~2006~~ ~~from~~which ~~$550~~may be necessary in evaluating the Company’s operating results and liquidity requirements or those of businesses we may acquire.~~6 million~~ Our management compensates for ~~the~~these ~~six~~limitations ~~months~~by ~~ended~~using ~~June 30, 2005.~~EBITDA ~~This~~and ~~increase~~Adjusted isEBITDA as a supplement to ~~attributable~~GAAP results to provide a more comprehensive understanding of the ~~revenue~~factors ~~from~~and ~~new~~trends ~~security~~affecting ~~service~~our business ~~contracts,~~or any business we may acquire. Our computation of EBITDA and Adjusted EBITDA may not be ~~together~~comparable ~~with~~to ~~rate~~other ~~increases,~~similarly ~~partially~~titled ~~offset~~measures provided by ~~the~~other ~~impact~~companies, ofbecause all companies do ~~contracts~~not ~~lost~~calculate this measure in the same manner.

~~Cost of Revenues. Cost of revenues increased by $15.1 million, or 3.2%, to $487.3 million for the six months ended June 30, 2006 from $472.2 million for the six months ended June 30, 2005.~~ The ~~increase~~following ~~was~~table ~~mainly~~and ~~due~~related tonotes ~~the~~reconciles ~~cost~~net ~~associated with~~income ~~increased revenues. Cost of revenues as a percentage of revenues increased~~ (loss) to ~~86.0%~~EBITDA ~~for~~and ~~the~~then ~~six months ended June~~EBITDA ~~30, 2006 from 85.8% for the six months ended June 30, 2005. The increase was due mainly~~ to ~~increased~~Adjusted ~~direct~~EBITDA ~~labor costs~~(in ~~from margin pressure on contract renewals and new business,~~thousands): ~~partially offset by lower business insurance costs.~~

Branch and Corporate Overhead Expenses. Branch and corporate overhead expenses decreased by $1.3 million, or 2.7%, to $46.4 million for the six months ended June 30, 2006 from $47.7 million for the six months ended June 30, 2005. As a percentage of revenues, branch and corporate overhead expenses decreased to 8.2% for the six months ended June 30, 2006 from 8.7% for the six months ended June 30, 2005. This decrease is primarily the result of the achievement of planned cost savings related to the integration of Barton and lower incentive-related compensation partially offset by increased professional fees.


	Three months ended					Six months ended
	June 30,					June 30,
	2008		2007			2008		2007
	(Unaudited)
Reconciliation of Net Income (Loss) to Adjusted EBITDA:
Net income (loss)	$	5,599	$	(1,186	)	$	2,670	$	(6,021	)
Interest expense, net		9,748		11,741			20,943		23,629
Depreciation and amortization		7,729		7,468			15,424		15,071

EBITDA (a)(b)		23,076		18,023			39,037		32,679
Uniform purchases		2,264		2,520			4,682		5,465

Adjusted EBITDA (a)(b)	$	25,340	$	20,543		$	43,719	$	38,144

~~Depreciation~~(a) ~~and Amortization~~Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. ~~Depreciation~~ See also certain factors set forth under “Forward Looking Statements” and ~~amortization~~additional ~~increased~~factors ~~by $0.7 million~~set toforth ~~$17.5 million~~under ~~for~~the section entitled “Risk Factors” in the ~~six~~Company’s ~~months~~Annual ~~ended June 30, 2006~~Report ~~from~~on ~~$16.8 million~~Form 10-K for the ~~six months~~year ended ~~June 30~~December 31, ~~2005~~ 2007. ~~This~~Our ~~increase~~payroll istax ~~primarily~~ expenses historically are higher in the ~~result~~first half of anthe ~~increased~~year ~~amount~~due to a significant number of ~~uniform purchases~~employees reaching their taxable wage limits prior to the second half of the year. This seasonality relating to payroll taxes consistently results in higher cost of revenues in the first half of the year.

20 Operating Income. Operating income increased by $1.7 million, or 12.2%, to $15.6 million for the six months ended June 30, 2006 from $13.9 million for the six months ended June 30, 2005. This increase was primarily related to the items discussed above.

~~Income Tax Expense~~ (~~Benefit~~b)~~. Subsequent~~ toThe Company believes that the ~~Mafco Acquisition~~Credit Agreement is a material agreement, ~~our~~that ~~members~~the ~~have~~financial ~~elected~~covenants are material terms of the Credit Agreement and that information about the financial covenants are material to bean ~~treated~~investor’s asunderstanding aof ~~partnership for~~the ~~both~~Company’s ~~federal~~financial condition and/or ~~state~~liquidity. ~~income~~Financial ~~tax~~covenants ~~purposes~~which are based on Adjusted EBITDA are material terms of the Credit Agreement. InOur ~~accordance~~Credit ~~with applicable~~Agreement ~~regulations,~~uses ~~our~~the ~~taxable~~term ~~income~~“Consolidated orEBITDA” ~~loss~~to refer to “Adjusted EBITDA,” which is ~~required~~defined in the Credit Agreement as Consolidated Net Income (as defined in the Credit Agreement) for any period plus, without duplication and to ~~be reported~~the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax ~~returns~~expense, (b) interest expense, amortization or write-off of ~~our~~debt ~~members~~discount and debt issuance costs and commissions, discounts and other fees and charges associated with indebtedness (including loans, letters of credit and senior subordinated notes), (c) depreciation and amortization expense, (d) any extraordinary non-cash expenses and losses, (e) any costs and expenses incurred in ~~accordance~~connection with ~~our~~ ~~Operating~~(i) the transactions consummated under the Transaction Documents (as defined in the Credit Agreement.) ~~Accordingly~~and (ii) the Initial Consent Solicitation (as defined in the Credit Agreement), we(f) doone-time severance expense in an aggregate amount not ~~have~~to ~~income~~exceed ~~tax~~$900 ~~expense~~ in the fiscal quarters ended December 31, 2005 and March 31, 2006, in the aggregate, (~~benefit~~g). Inany ~~lieu~~other non-cash charges, expenses or losses, (h) expenses for the purchase of ~~paying~~uniforms ~~income~~in ~~taxes~~the ordinary course of business, weand ~~pay~~(i) ~~distributions~~reasonable costs and expenses reasonably attributable to ~~our members~~any ~~with~~Permitted ~~respect~~Acquisition (as defined in the Credit Agreement) whether or not consummated provided that any such costs and expenses attributed to ~~income~~any ~~tax~~Permitted Acquisition which is not consummated shall not exceed $2,500 over the term of the Credit Agreement; provided further, that ~~they~~to ~~owe~~the onextent ~~earnings~~any of the income of any Person is excluded from Consolidated Net Income pursuant to the definition thereof for such period, any amounts set forth in the preceding clauses (a) through (i) that are ~~allocated~~ attributable to ~~them~~such Person shall not be included herein for such period, and minus, (a) to the extent included in ~~accordance~~the ~~with~~statement ~~our~~of ~~Operating~~such ~~Agreement. Tax~~Consolidated Net Income for such period, the sum of (i) interest income, (ii) any extraordinary or non-~~related~~recurring ~~distributions~~income ~~paid~~or gains (including, whether or not otherwise includable as a seperate item in the statement of such Consolidated Net Income for such period, gains on the ~~six~~sales ~~months~~of ~~ended~~assets ~~June 30~~outside of the ordinary course of business), ~~2006~~ (iii) income tax credits (to the extent not netted from income tax expense) and ~~for~~(iv) any other non-cash income and (b) any cash payments made during such period in respect of items described in clause (d) or (g) above subsequent to the ~~six~~fiscal ~~months~~quarter ~~ended~~in which the relevant non-cash expenses or losses were reflected as a charge in the statement of Consolidated Net Income, all as determined on a consolidated basis. As of June 30, ~~2005~~ ~~were~~2008, $0the financial covenants include a consolidated leverage ratio of 5.~~4 million~~5 to 1 of consolidated total debt as defined in our Credit Agreement to Consolidated EBITDA (inclusive of certain other pro forma adjustments related to expected cost savings and ~~$0,~~pre-acquisition ~~respectively~~results) and a consolidated interest ratio of 1.75 to 1 for Consolidated EBITDA (inclusive of other pro forma adjustments related to expected cost savings) to consolidated interest expense as defined in our Credit Agreement. Failure to meet these financial covenants could result in all of the current oustanding debt to be called by the lenders.

21 Net Loss. Net loss for the six months ended June 30, 2006 was $5.1 million compared to a net loss of $5.8 million for the six months ended June 30, 2005, as a result of the items described above.

~~Supplemental~~Liquidity ~~Non~~and –Capital ~~GAAP financial~~Resources ~~information~~

~~EBITDA~~ Our isprimary ~~defined~~liquidity asrequirements ~~net~~are ~~income~~for ~~(loss)~~debt ~~before interest expense~~service, ~~income~~potential ~~taxes~~acquisitions and ~~depreciation and amortization.~~working ~~EBITDA~~capital. isOur ~~presented~~primary ~~because~~source weof ~~believe~~liquidity it is ~~useful~~cash toprovided ~~investors as a widely accepted financial indicator of a company's ability to service and/or incur indebtedness and because such disclosure provides investors with additional criteria used~~ by ~~us to evaluate our~~ operating ~~performance~~ activities.

~~EBITDA~~ Cash isprovided ~~not~~by ~~defined~~operating ~~under~~activities ~~GAAP, should not be considered in isolation or as a substitute~~ for athe ~~measure~~six ofmonths ~~our liquidity~~ended orJune 30, ~~performance~~2008 ~~prepared in accordance with GAAP~~ and is2007 ~~not~~was ~~indicative of income from operations as determined under GAAP~~$37.1 million ~~EBITDA~~ and ~~other~~$22.3 million, ~~non-GAAP financial measures have limitations which you should consider if you use these measures to evaluate our liquidity or financial performance~~respectively. ~~EBITDA~~For ~~does~~the ~~not~~six ~~include~~months ~~interest~~ended ~~expense~~June 30, ~~which has~~2008 ~~required significant uses of our cash in the past~~ and ~~will require~~2007, ~~us to expend significant~~ cash ~~resources~~provided inby ~~the~~operating ~~future.~~activities ~~EBITDA~~was ~~also~~generated ~~does not~~from ~~include~~a net income ~~tax~~of ~~expense~~$2.7 million ~~or depreciation~~ and ~~amortization expense,~~a ~~which may be necessary in evaluating our operating results and~~net ~~liquidity~~loss ~~requirements or those~~ of ~~businesses we may acquire~~$6.0 million, ~~Our management~~respectively, ~~compensates~~adjusted for ~~these~~non-cash ~~limitations~~expenses byof ~~using~~$16.8 million ~~EBITDA~~and ~~as a~~$16.6 ~~supplement~~million, torespectively, ~~GAAP~~as ~~results~~well toas ~~provide~~favorable aworking ~~more~~capital ~~comprehensive understanding~~changes of ~~the~~$17.6 million ~~factors~~ and ~~trends affecting our business or the businesses we may acquire~~$11. ~~Our computation of EBITDA may not be~~7 ~~comparable to other similarly titled measures provided by other companies~~million, ~~because all companies do not calculate this measure in the same fashion~~respectively.

~~The~~ Cash ~~following~~used ~~table~~in ~~reconciles~~investing ~~net~~activities ~~loss~~for the six months ended June 30, as2008 and 2007 was $23.5 ~~reported~~million inand $4.8 million, respectively. For the six months ended June 30, 2008, the Company’s ~~consolidated~~paid approximately ~~statements~~$15.7 million for the acquisition of ~~operations~~HR Plus, made a payment due to affiliate of $5.8 million relating to ~~EBITDA~~a ~~(in~~contractual payment due to a member of senior management and purchased $1.5 ~~thousands):~~million of property and equipment and $0.5 million of marketable securities. For the six months ended June 30, 2007, the Company paid approximately $2.8 million for the acquisition of Fox and purchased $1.6 million of property and equipment and $0.5 million of marketable securities.

	Three months ended June 30,								Six months endedJune 30,
	2006				2005				2006				2005
					(in thousands)(Unaudited)
Reconciliation of Net Loss to EBITDA:
Net loss		$	(801	)		$	(797	)		$	(5,094	)		$	(5,787	)
Interest expense, net			10,348				9,870				20,663				19,715
Depreciation and amortization			8,799				8,436				17,510				16,780
EBITDA (a)		$	18,346			$	17,509			$	33,079			$	30,708

Financing activities have consisted primarily of borrowings and repayments on long-term debt associated with acquisitions of businesses. Cash used in financing activities for the six months ended June 30, 2008 was $5.8 million, comprised primarily of the borrowing in March 2008 and the subsequent repayment in full in April 2008 of $17.0 million of proceeds from the Revolver, $5.2 million of scheduled senior term loan payments, $0.2 million of capital lease obligation payments and $0.3 million of member tax distributions. Cash used in financing activities for the six months ended June 30, 2007 was $5.2 million due to $5.0 million of scheduled term loan payments and $0.2 million of capital lease payments.

~~(a)~~ As ~~Results~~of ~~for~~June 30, ~~any~~2008, ~~interim~~we ~~period~~had ~~are~~approximately ~~not~~$436.5 million ~~necessarily indicative~~ of ~~results~~indebtedness, ~~for~~which ~~any~~includes ~~future interim period or for~~ the Notes, ~~entire~~amounts ~~year.~~outstanding ~~See also certain factors set forth~~ under ~~‘‘Forward~~our ~~Looking~~Credit ~~Statements’’~~Facility and ~~additional~~capital ~~factors~~lease ~~set~~obligations. ~~forth~~In ~~under~~addition, ~~the~~as of ~~section~~June 30, ~~entitled~~2008, ~~‘‘Risk~~we ~~Factors’’~~had ~~in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005~~$17.6 million ~~Our payroll tax expenses historically are higher in the first half~~ of ~~the~~unused ~~year~~borrowing ~~due~~capacity tounder aour ~~significant~~Credit ~~number~~Facility, net of ~~employees reaching their taxable wage limits prior to~~ the ~~second~~issuance ~~half~~ of ~~the year~~$32.4 million ~~This seasonality relating to payroll taxes consistently results in higher cost~~ of ~~revenues~~outstanding inletters ~~the first half~~ of ~~the year~~credit.

~~Liquidity~~ In lieu of paying federal and ~~Capital~~state ~~Resources~~income taxes, we pay distributions to our members with respect to income tax that they owe on earnings that are allocated to them in accordance with our Operating Agreement. Member tax distributions paid for the six months ended June 30, 2008 were approximately $0.3 million. No member tax distributions were paid for the six months ended June 30, 2007.

~~Our primary~~ The ~~liquidity~~contract ~~requirements~~security ~~are~~services ~~for~~industry ~~debt~~is becoming increasingly competitive as more customers select security service providers through competitive bid processes intended to procure quality services at lower prices. The Company’s ability to achieve revenue growth depends not only on its ability to win new customer accounts, ~~working~~but ~~capital~~also on its ability to retain its current customer accounts. There can be no assurance that the Company will continue to retain customer accounts at historic levels in an increasingly competitive industry. In addition, there can be no assurance that the Company will be able to acquire new customer accounts and ~~capital~~retain ~~expenditures~~existing customer accounts on terms as favorable as those previously available, which may negatively affect profitability. ~~Our~~These ~~primary~~factors ~~source~~also ofmay ~~liquidity~~limit isthe ~~cash~~Company’s ability to obtain rate increases from ~~provided~~existing bycustomers ~~operating~~to ~~activities~~fully offset cost increases.

~~Cash provided by operating~~22 activities for the six months ended June 30, 2006 and for the six months ended June 30, 2005 was $31.2 million and $39.2 million, respectively. For the six months ended June 30, 2006 and for the six months ended June 30, 2005, cash provided by operating activities was generated primarily from operating income of $15.6 million and $13.9 million, respectively, as well as favorable working capital changes, primarily in the form of accounts receivable for the six months ended June 30, 2006. For the six months ended June 30, 2005, the favorable working capital changes were primarily in the form of favorable other current assets and liabilities and accounts receivable changes.

~~Cash~~Description used in investing activities for the six months ended June 30, 2006 and for the six months ended June 30, 2005 was $17.7 million and $6.4 million, respectively. Investing activities historically have consisted of ~~purchases of property and equipment, primarily~~Indebtedness uniforms. For the six months ended June 30, 2006, we purchased $7.1 million of property and equipment and made due to affilate payments of $10.2 million. For the six months ended June 30, 2005, we purchased $6.5 million of property and equipment. We expect approximately $19.0 million of capital expenditures in 2006.

~~Financing~~ On ~~activities~~August 2, ~~have~~2004, ~~consisted primarily~~the ofCompany ~~borrowings~~issued ~~and~~$180.0 million ~~repayments~~in onaggregate ~~long-term~~principal ~~debt~~amount ~~associated~~of the ~~with~~Notes, ~~acquisitions~~at a discount of ~~businesses~~$2.1 million ~~Cash~~and ~~used~~bearing ininterest ~~financing~~of ~~activities~~11.375%, ~~for the~~which ~~six~~mature ~~months~~on ~~ended June 30~~July 15, ~~2006~~ 2011. ~~and~~The ~~for~~fair value of the ~~six~~Notes ~~months ended~~at June 30, ~~2005~~ ~~were~~2008 ~~$9.5 million~~was ~~and $12.4 million,~~lower ~~respectively,~~than ~~primarily~~its ~~related~~carrying tovalue ~~insurance~~by ~~financing~~approximately ~~payments and scheduled repayment of term loan principal~~$24.1 million.

As On ~~of June 30~~July 20, 2006, wethe ~~had~~Company ~~approximately~~ entered into the Credit Agreement governing its $~~368~~325.4 0 million senior ofsecured ~~indebtedness~~credit facility with Bear Stearns Corporate Lending Inc., ~~which~~as ~~includes~~Administrative Agent, the ~~Notes~~financial institutions party thereto as lenders, Sovereign Bank, as syndication agent, and CIT ~~amounts~~Lending ~~outstanding~~Services ~~under~~Corporation, ~~our~~ING ~~Prior~~Capital ~~Credit~~LLC ~~Facility.~~and InPNC ~~addition~~Bank, asNational ofAssociation, as ~~June 30~~co-documentation agents. The Credit Agreement amended, ~~2006,~~ werestated ~~had~~and superseded the Prior Credit Agreement. The Credit Agreement consists of a $25275.2 0 million ofterm ~~unused~~loan facility which was drawn at ~~borrowing~~the ~~capacity~~closing ~~under~~of ~~our~~the ~~Prior~~Initial ~~Credit~~Acquisition ~~Facility~~and which matures on June 30, ~~net~~2010 of(with such date being automatically extended to July 20, 2012 if the ~~issuance~~Notes are refinanced as permitted under the Credit Agreement by new indebtedness having a term of at least six years and six months after July 20, 2006) and a $2450.8 0 million ofRevolver ~~outstanding~~that matures on August 2, 2009. The Revolver includes a $50.0 million sub-limit for letters of credit. The fair value of the Senior Term Loan approximates its carrying value at June 30, 2008.

In The ~~lieu of~~indebtedness ~~paying~~under ~~income~~the ~~taxes,~~Credit weAgreement ~~pay~~is ~~distributions~~guaranteed toby ~~our~~the ~~members~~Company ~~with~~and its subsidiaries ~~respect~~(collectively, tothe ~~income~~“Guarantors”). ~~tax~~The ~~that~~Company’s ~~they~~obligations ~~owe~~under onthe ~~earnings~~Credit ~~that~~Agreement and the guarantees of the Guarantors are ~~allocated~~secured ~~to them~~by a first-priority security interest in ~~accordance~~substantially ~~with~~all of ~~our~~the ~~operating~~Company’s ~~agreement~~and the Guarantors’ assets, other than leased real property. ~~Member~~Borrowings ~~tax~~under the ~~distributions~~Credit ~~paid~~Agreement ~~for~~bear ~~the~~interest, ~~six~~at ~~months~~the ~~ended~~Company’s ~~June 30~~option, ~~2006~~ at either an adjusted Eurodollar rate plus ~~and~~an ~~for~~applicable margin of 4.50% in the ~~six~~case ~~months~~of ~~ended~~revolving ~~June 30~~loans or 3.00% in the case of term loans, ~~2005~~ ~~were~~or ~~approximately~~an $0alternative base rate plus an applicable margin of 3.~~4 million~~50% ~~and~~in ~~$0,~~the ~~respectively~~case of revolving loans or 2.00% in the case of term loans.

The ~~Company~~ ~~provides~~Credit ~~contract~~Agreement ~~employees~~contains ~~for~~affirmative toll operator services to the FDOT pursuant to contracts that expire on November 30, 2006. These contracts generated an aggregate of approximately $50.1 million, or approximately 4.5%, of our 2005 revenues and ~~approximately~~negative ~~$25.0 million,~~covenants orcustomary ~~approximately 4.4%, of our revenues~~ for ~~the six months ended June~~such ~~30, 2006~~financings. The ~~FDOT~~Credit ~~has~~Agreement ~~the~~also ~~right~~requires ~~to terminate~~ the ~~contracts~~Company ~~at any~~to ~~time~~maintain, ~~for~~as ~~any~~further ~~reason~~specified in ~~accordance with~~ the ~~interests of the FDOT.~~ InCredit ~~2006~~Agreement, ~~the FDOT initiated~~ a ~~competitive~~minimum ~~bidding~~ratio ~~process for the award~~ of aConsolidated ~~new~~EBITDA ~~contract~~(as ~~following~~defined ~~the~~in ~~scheduled expiration of~~ the ~~existing contract.~~Credit InAgreement) ~~that process, the FDOT ranked the Company’s~~to ~~proposal~~total ~~behind~~consolidated ~~those~~cash ofinterest ~~two~~expense ~~other~~and ~~bidders, as a precursor~~ to ~~negotiations~~ ~~toward~~not aexceed ~~new contract, although~~ a ~~new~~maximum ~~contract~~ratio ~~has~~of ~~not~~total ~~yet~~consolidated ~~been~~debt ~~awarded.~~outstanding Onto ~~July 20, 2006,~~Consolidated anEBITDA ~~Administrative~~as ~~Law Judge issued a recommended order denying the Company’s protest~~ of the ~~FDOT’s~~last ~~ranking~~day of ~~its~~each ~~proposal~~calendar quarter. InAs ~~the~~of ~~event that these~~June 30, ~~contracts are terminated or materially modified~~2008, orthe ifCompany weis ~~are not successful~~ in ~~acquiring~~compliance ~~the~~with ~~new~~all ~~contract,~~covenants ~~our~~under ~~revenues~~the ~~may~~Credit ~~be reduced, which could have a negative effect on our business, financial condition and results of operations~~Agreement.

The ~~contract~~Credit ~~security~~Agreement ~~services~~contains ~~market is~~events ~~becoming~~of ~~increasingly~~default ~~competitive~~customary asfor ~~more~~such ~~customers~~financings, ~~select~~including ~~security~~but ~~service~~not ~~providers~~limited ~~through~~to ~~competitive~~non-payment ~~bid~~of ~~processes~~principal, ~~intended~~interest, tofees ~~procure quality~~or ~~services~~other atamounts ~~lower~~when ~~prices. The~~due; ~~Company’s~~violation ~~ability~~of tocovenants; ~~achieve~~failure ~~revenue~~of ~~growth~~any ~~depends~~representation ~~not~~or ~~only~~warranty ~~on its ability~~ to ~~win~~be ~~new customer~~true ~~accounts,~~in ~~but~~all ~~also~~material onrespects ~~its~~when ~~ability~~made or todeemed ~~retain~~made; ~~its~~cross ~~current customer~~default ~~accounts. There~~and ~~can~~cross beacceleration noto ~~assurance~~certain ~~that~~indebtedness; ~~the~~certain ~~Company~~ERISA events; ~~will~~change ~~continue~~of tocontrol; ~~retain~~dissolution, ~~customer~~insolvency ~~accounts~~and atbankruptcy ~~historic~~events; ~~levels~~material injudgments; anthe ~~increasingly~~subordination ~~competitive~~provisions ~~market. In~~under ~~addition,~~the ~~there~~Indenture ~~can~~being berevoked, ~~no assurance~~invalidated ~~that~~or ~~the~~otherwise ~~Company~~ceasing ~~will~~to be in ~~able~~full toforce ~~acquire~~and ~~new~~effect; ~~customer accounts~~ and ~~retain~~actual ~~existing~~or ~~customer~~asserted ~~accounts~~invalidity onof ~~terms~~the asguarantees ~~favorable~~or assecurity ~~those previously available, which may negatively affect profitability~~documents. ~~These~~ ~~same~~Some ~~competitive~~of ~~market~~these ~~factors~~events ~~have negatively affected our cost~~ of ~~revenues~~default ~~during~~allow ~~the~~for ~~three~~grace ~~months~~periods ~~ended~~and ~~June 30, 2006. These~~are ~~factors~~subject ~~also may limit the Company’s ability~~ to ~~obtain~~materiality ~~rate~~qualifications. ~~increases~~See ~~from~~also ~~existing~~Note ~~customers~~15, toSubsequent ~~offset fully cost increases~~Event.

23 The Revolver availability with a lending capacity of $50.0 million is reduced by outstanding letters of credit, which totaled $32.4 million as of June 30, 2008. On March 17, 2008, the Company borrowed $17.0 million under the Revolver for general corporate purposes. In April 2008, the $17.0 million Revolver borrowing was repaid in full. At June 30, 2008, the remaining amount available for borrowing under the Revolver was $17.6 million.

The Company is obligated under capital leases for vehicles that expire at various dates during ~~Description~~the ofnext 24 months totaling $0.4 million. ~~Indebtedness~~

~~Simultaneous with the closing of the Barton~~23 Acquisition on August 2, 2004, the Company entered into the Prior Credit Facility with Bear Stearns Corporate Lending Inc., as Administrative Agent, and a syndicate of lenders arranged by Bear, Stearns & Co. Inc. The Company executed Amendment No. 1 to the Prior Credit Facility on May 10, 2005 modifying certain of its terms. The Prior Credit Facility initially provided for (i) the Senior Term Loan and (ii) the Prior Revolver with certain sub-limits for letters of credit and swingline loans. In addition, the Company issued $180,000,000 in aggregate principal amount of Notes, at a discount of $2,118,600 and bearing interest of 11.375%, which mature on July 15, 2011. The Company used initial borrowings under the Prior Credit Facility, together with the net proceeds from the Notes, to finance the purchase price for Barton, to repay amounts outstanding under its previously existing credit facility, to redeem its previously outstanding senior subordinated notes and to pay related fees, expenses and redemption premiums.

~~The~~ Based ~~Prior~~upon ~~Credit~~our current level of operations, we believe that our existing cash and cash ~~Facility~~equivalents ~~contained~~balances ~~financial~~and ~~covenants~~our ~~requiring~~cash ~~the~~from ~~Company~~operating activities, together with available borrowings under our Credit Agreement, will be adequate to meet our anticipated requirements for working ~~maintain~~capital, ascapital atexpenditures, commitments and interest payments for the ~~last~~foreseeable ~~day~~future. As of June 30, 2008, we do not have any ~~period~~material ofcommitments ~~four~~related ~~consecutive~~to ~~fiscal~~capital expenditures. There can ~~quarters:~~be ~~(i)~~no aassurance, ~~maximum~~however, ~~senior~~that ~~consolidated~~our business will continue to generate cash flow at current levels or that currently anticipated improvements will be achieved. If we are unable to generate sufficient cash flow from operations to service our debt, ~~ratio;~~we ~~(ii)~~may abe ~~maximum~~required to sell assets, reduce ~~total~~capital ~~consolidated~~expenditures, ~~leverage~~refinance ~~ratio;~~all ~~(iii)~~or a ~~minimum~~portion ~~consolidated~~of our indebtedness or obtain additional financing. Our ability to make scheduled principal payments or to pay interest ~~coverage~~on ~~ratio;~~or to refinance our indebtedness depends on our future performance and ~~(iv)~~financial results, which, to a ~~maximum~~certain extent, ~~capital~~are ~~expenditure~~subject ~~limit~~to general conditions in or affecting our industry and to general conditions and factors that are beyond our control. There can be no assurance that sufficient funds will be ~~The~~available ~~Prior~~to ~~Credit~~enable ~~Facility~~us ~~contained~~to ~~customary~~service ~~events~~our ofindebtedness ~~default~~or to make capital expenditures. For additional factors that may affect the Company’s liquidity position, please see the factors set forth in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

The Prior Credit Facility and the Notes were guaranteed by each of the Company’s current and future domestic subsidiaries. These guarantees were joint and several obligations of the domestic subsidiaries. The Company had a nonOff-~~guarantor~~Balance ~~subsidiary~~Sheet ~~located in the~~Arrangements ~~United Kingdom, which ceased all operations as of July 2005 and held less than one percent of the Company’s consolidated assets as of June 30, 2006.~~

~~The~~ We ~~Prior~~are ~~Revolver availability~~not ~~was~~currently ~~reduced by outstanding letters of credit, which totaled $24,799,000 as of June 30, 2006. For the Prior Revolver, each eurodollar rate loan bore interest at~~ a ~~rate~~party ~~per annum equal~~ to ~~the~~any ~~eurodollar rate for such day plus 4.50%. Each base rate loan bore interest at a rate per annum equal to the base rate plus 3.50%. As of June 30, 2006, the outstanding Prior Revolver~~ off-balance, ~~excluding~~sheet ~~the outstanding letters of credit, was zero~~arrangements.

~~Based~~Item 3. onQuantitative ~~the borrowing rates currently available for loans with similar terms~~ and ~~maturities,~~Qualitative ~~the~~Disclosures ~~fair~~about ~~value~~Market ~~of the long-term debt approximated its carrying value at June 30, 2006 and December 31, 2005, respectively~~Risk.

~~The~~ We ~~Prior~~are ~~Credit Facility~~exposed ~~required~~to aninterest ~~excess~~rate ~~cash~~risk ~~flow~~related ~~calculation~~to ~~commencing~~changes ~~with the fiscal year ending December 31, 2005. If such excess cash flow existed as defined~~ in ~~the~~interest ~~Prior~~rates ~~Credit~~for ~~Facility,~~borrowings ~~prepayment of the~~under our Senior Term ~~Loans~~Loan ~~was~~and ~~required~~Revolver. noThese ~~later~~borrowings ~~than~~bear ~~five~~interest ~~days~~at ~~after~~variable ~~the earlier~~rates. ofAt ~~(i)~~June 30, 2008, ~~the~~a ~~date~~hypothetical on10% ~~which~~increase ~~the~~in ~~financial~~interest ~~statements~~rates ~~were~~applicable ~~required~~ to beour ~~delivered~~Credit toFacility ~~the~~would ~~lenders,~~have increased ~~and~~our ~~(ii)~~annual ~~the~~interest ~~date~~expense ~~such~~by ~~financial statements~~approximately ~~were actually delivered~~$1.4 million Weand ~~made~~would anhave ~~excess~~decreased our annual cash flow ~~prepayment~~ offrom ~~the~~operations ~~term~~by ~~loans under the Prior Credit Agreement of~~ approximately $~~668,000 on March 31, 2006~~1.4 million.

24 Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2007 presents quantitative and qualitative disclosures about market risk as of December 31, 2007. There have been no material changes to this disclosure as of June 30, 2008.

~~On July 20, 2006, the Company entered into the New Credit Agreement governing its $325~~Item 4.~~0 million~~ ~~senior~~Controls ~~secured credit facility with Bear Stearns Corporate Lending Inc., as administrative agent, the financial institutions party thereto as lenders, Sovereign Bank., as syndication agent,~~ and ~~CIT Lending Services Corporation, ING Capital LLC and PNC Bank, National Association, as co-documentation agents~~Procedures. ~~The New Credit~~ Agreement amended, restated and superseded the Prior Credit Agreement. The New Credit Agreement consists of a $275.0 million term loan facility which was drawn at the closing of the Initial Acquisition and matures on June 30, 2010 (with such date being automatically extended to July 20, 2012 if the Notes are refinanced as permitted under the New Credit Agreement by new indebtedness having a term of at least six years and six months after July 20, 2006) and a $50.0 million New Revolver that matures on August 2, 2009. The New Revolver includes a $50.0 million sublimit for letters of credit. As of July 20, 2006, no amounts were drawn under the New Revolver, with approximately $24.8 million of letters of credit outstanding. The Company used the initial borrowings under the New Credit Agreement to finance the Initial Acquisition (and pay related fees and expenses) and to repay amounts outstanding under the Prior Credit Facility.

~~The~~ (a) Disclosure ~~indebtedness~~Controls ~~under~~and ~~the~~Procedures. ~~New~~Our ~~Credit Agreement~~management, iswith ~~guaranteed by~~ the ~~Company's~~participation ~~domestic~~of ~~subsidiaries (collectively,~~our ~~the ‘‘Guarantors’’). The~~Chief ~~Company's~~Executive ~~obligations~~Officer ~~under~~and ~~the~~Chief ~~New~~Financial ~~Credit~~Officer, ~~Agreement~~has ~~and~~evaluated the ~~guarantees~~ effectiveness of ~~the~~our ~~Guarantors~~disclosure controls ~~are~~and ~~secured~~procedures by(as asuch ~~first-priority~~term ~~security interest~~is defined in ~~substantially~~Rules 13a-15(e) ~~all~~and of15d-15(e) ~~the~~under ~~Company's and~~ the ~~Guarantors'~~Securities ~~assets~~Exchange ~~other~~Act ~~than~~of ~~leased~~1934, ~~real~~as ~~property.~~amended ~~Borrowings under~~ (the ~~New~~“Exchange ~~Credit~~Act”)) ~~Agreement~~as ~~bear~~of ~~interest,~~the atend of the ~~Company's~~period ~~option,~~covered atby ~~either~~this ~~an adjusted Eurodollar rate plus an applicable margin of 4~~report.~~50%~~ inBased ~~the~~on ~~case~~such ofevaluation, ~~revolving~~our ~~loans~~Chief orExecutive ~~3.00%~~Officer inand ~~the~~Chief Financial ~~case~~Officer ofhave ~~term~~concluded ~~loans,~~that orour andisclosure ~~alternative~~controls ~~base~~and ~~rate~~procedures ~~plus~~were aneffective ~~applicable margin~~as of ~~3.50% in~~ the ~~case~~end of ~~revolving loans or 2.00%~~ in the ~~case~~period ofcovered ~~term~~by ~~loans~~this report.

~~The~~ (b) Change ~~New~~in ~~Credit~~Internal ~~Agreement~~Control ~~contains affirmative~~Over ~~and~~Financial ~~negative covenants customary for such financings~~Reporting. ~~The New~~There ~~Credit~~have ~~Agreement~~not ~~also~~been ~~requires~~any ~~the~~changes ~~Company~~in our tointernal ~~maintain~~control aover ~~minimum ratio~~financial ofreporting ~~consolidated~~(as ~~EBITDA~~such toterm ~~total~~is ~~consolidated~~defined ~~cash~~in ~~interest expense~~Rules 13a-15(f) and 15d-15(f) tounder ~~not~~the ~~exceed~~Exchange aAct) ~~maximum~~during ~~ratio~~our ofmost ~~total~~recent ~~consolidated~~fiscal ~~debt outstanding~~quarter tothat ~~consolidated~~have ~~EBITDA~~materially affected, asor ofare ~~the~~reasonably ~~last~~likely ~~day~~to ofmaterially ~~each~~affect, ~~fiscal quarter~~our ~~commencing~~internal ~~with~~control ~~the~~over ~~fiscal quarter ending September~~financial ~~30, 2006~~reporting.

~~The New Credit Agreement contains events of~~24 default customary for such financings, including but not limited to non-payment of principal, interest, fees or other amounts when due; violation of covenants; failure of any representation or warranty to be true in all material respects when made or deemed made; cross default and cross acceleration to certain indebtedness; certain ERISA events; change of control; dissolution, insolvency and bankruptcy events; material judgments; the subordination provisions under the Indenture being revoked, invalidated or otherwise ceasing to be in full force and effect; and actual or asserted invalidity of the guarantees or security documents. Some of these events of default allow for grace periods and materiality qualifications.

25Forward-Looking Statements

In This Quarterly Report for the ~~ordinary~~period ~~course~~ended ofJune 30, ~~business~~2008, ~~the~~as well as certain written, ~~Company~~electronic ~~enters~~and ~~into~~oral ~~short-term~~disclosures ~~financing~~made ~~agreements~~by inus ~~order~~from time to ~~fund its~~time, ~~business~~contain ~~insurance~~forward-looking ~~policy~~statements that ~~premiums.~~involve Onrisks ~~August 13~~and uncertainties, ~~2004,~~ ~~the~~which ~~Company~~are ~~entered~~based ~~into~~on ~~such~~estimates, aobjectives, ~~financing~~projections, forecasts, ~~agreement~~plans, ~~with Cananwill~~strategies, ~~Inc.~~beliefs, ~~for~~intentions, aopportunities ~~total~~and ~~amount~~expectations of ~~$11,242,000~~our management. ~~Payments~~Such ~~were~~statements ~~due~~are made in ~~equal~~ ~~monthly~~reliance ~~installments~~upon ~~through~~the ~~May 1, 2005~~safe ~~and~~harbor ~~bore~~provisions of the Private anSecurities ~~annual~~Litigation ~~interest~~Reform ~~rate~~Act of 21995.~~99%.~~ AsActual ofresults ~~May 1,~~may differ materially from anticipated ~~2005,~~results ~~this~~or ~~financing~~expectations ~~agreement,~~and ~~including~~investors ~~accrued~~are ~~interest,~~cautioned ~~was~~not ~~repaid~~to place undue reliance on any inforward-looking ~~full~~statements. OnStatements ~~August 15~~that are not historical facts, ~~2005,~~ including statements about the Company’s ~~entered~~strategy, ~~into~~future operations, financial position, estimated revenues, projected costs ~~such~~or athe ~~financing~~projections, ~~agreement~~prospects, ~~with~~plans ~~Cananwill~~and objectives of management, ~~Inc~~are forward-looking statements. Forward-looking ~~for~~statements acan ~~total~~be ~~amount~~identified by, among other things, the use of forward-looking ~~$10~~language,~~564,000.~~ ~~Payments~~such ~~were~~as ~~due~~‘‘believes,’’ in‘‘estimates,’’ ~~equal~~‘‘expects,’’ ~~monthly~~‘‘projects,’’ ~~installments~~‘‘forecasts,’’ ~~through~~‘‘may,’’ ~~May 1~~‘‘will, ~~2006~~’’ ~~and~~‘‘should,’’ ~~bear~~‘‘seeks,’’ an‘‘plans,’’ ~~annual~~‘‘scheduled ~~interest~~to,’’ ~~rate~~‘‘anticipates’’ ofor ‘‘intends’’ or the ~~4.99%.~~negative Asof those terms, or other variations of ~~June 30~~those terms or comparable language, ~~2006,~~ ~~this~~or ~~financing~~by ~~agreement,~~discussions ~~including~~of ~~accrued~~strategy ~~interest~~or intentions, ~~was~~although ~~repaid~~not inall ~~full~~forward-looking statements contain such words.

~~Based upon~~ The ~~our~~following ~~current level of operations~~factors, weamong ~~believe that our existing cash and cash equivalents balances and our cash from operating activities~~others, ~~together~~ ~~with~~could ~~available~~cause ~~borrowings under~~ our ~~New~~actual ~~Credit~~results ~~Agreement, will be adequate~~ to ~~meet~~differ ~~our~~materially anticipated requirements for working capital, capital expenditures, commitments and interest payments for the foreseeable future. As of June 30, 2006, we do not have any material commitments related to capital expenditures. There can be no assurance, however, that our business will continue to generate cash flow at current levels or that currently anticipated improvements will be achieved. If we are unable to generate sufficient cash flow from ~~operations~~those toexpressed service our debt, we may be required to sell assets, reduce capital expenditures, refinance all or a portion of our indebtedness or obtain additional financing. Our ability to make scheduled principal payments or to pay interest on or to refinance our indebtedness depends on our future performance and financial results, which, to a certain extent, are subject to general conditions in ~~or affecting~~any ~~our~~forward-looking ~~industry~~statements ~~and~~made toby ~~general conditions and factors that are beyond our control. There can be no assurance that sufficient funds will be available to enable~~ us ~~to service our indebtedness or to make~~: capital expenditures. For additional factors that may affect the Company’s liquidity position, please see the factors set forth in the section entitled ‘‘Risk Factors’’ in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.

~~Off~~• The Company’s dependence on its relationships with its customers and reputation for providing high-~~Balance~~quality ~~Sheet Arrangements~~contract security services, as well as the risk that the Company’s reputation may be damaged as a result of a publicized incident involving its services; • The Company’s ability to retain existing security officer service contracts (which contracts typically may be terminated by either party on 30 days’ written notice and which may also be subject to periodic bidding procedures) and to obtain new security service contracts, including in each case on terms which are favorable to the Company; • The Company’s exposure to liability, particularly to the extent not covered by insurance and/or where state law prohibits insurance coverage, for certain damages arising from services it provides to its customers, including by reason of the acts or omissions of the Company’s agents or employees or with respect to events that are not within the control of such agents or employees, and the Company’s indemnification obligations under certain service contracts for events occurring on client premises; • The Company’s inability to pass cost increases to customers in light of the price-sensitive nature of the contract security officer industry and the fixed hourly bill rates or limited fee adjustments provided for in many of the Company’s customer contracts; • Competitive pressures resulting from (i) new or existing security service providers, some of which have greater resources than the Company and/or are willing to provide security services at lower prices, (ii) increasing consolidation in the contract security officer industry, (iii) local and regional companies that may be better able to secure and retain customers in their regions, and (iv) decreasing expenditures of client resources on quality security services; • The Company’s ability to (i) attract, retain, train and manage security officers and administrative staff (and the costs associated therewith) in light of the significant number of officers the Company requires to operate its business and increasing demand and competition for such persons, and (ii) attract and retain senior operations employees and key executives and the potential loss of business resulting from the departure of key employees; • The effects of work stoppages and other labor disturbances; • The Company’s failure or inability to comply with city, county, state or federal laws and regulations, including security industry-related laws and regulations and occupational health and safety laws and regulations and, in each case, the costs associated with such compliance, as well as the costs of complying with new laws and regulations, changes in existing laws and regulations or the manner in which existing laws and regulations are interpreted;

~~We are not currently a party to any off-balance~~25 ~~sheet arrangements.~~

We• ~~are~~The ~~exposed to~~risk ~~interest~~that ~~rate~~non-compliance ~~risk~~with ~~related~~state tosecurity licensing regulations could result in the Company being prohibited from operating its business in all or part of a given state; • The effect of changes in ~~interest~~security ~~rates~~technology, including advances in technology that may decrease demand for ~~borrowings~~ ~~under~~security ~~our~~officers, ~~Senior~~as ~~Term~~well ~~Loan~~as the Company’s ability to acquire and ~~Revolver.~~effectively ~~These~~integrate ~~borrowings bear~~available ~~interest~~technologies atinto ~~variable~~its ~~rates.~~business Atmodel; ~~June 30~~• Delays, ~~2006~~ difficulties or risks in implementing the Company’s business strategy, successfully integrating acquired businesses, including retaining acquired contracts and achieving cost savings, and the Company’s exposure to risks associated with acquired businesses, including the possibility of undisclosed or unforeseen liabilities resulting from such acquisitions; • The effects of terrorist activity or the threat of terrorism at locations serviced by the Company or elsewhere, including the Company’s exposure to liabilities not covered by insurance for terrorist attacks; • The Company’s ability to obtain insurance coverage on a ~~hypothetical~~ ~~10%~~cost ~~increase~~effective basis or at all; • The insufficiency of the Company’s existing working capital, together with cash available under its Credit Facility and anticipated cash flow from operating activities, to meet the Company’s expected operating, capital spending and debt service requirements for the foreseeable future and the inability of the Company to comply with the financial covenants in ~~interest~~the ~~rates~~Company’s ~~applicable~~financing arrangements and/or to ~~our Prior~~obtain amendments; • The Company’s level of indebtedness, the restrictions including financial covenants or obligations imposed on the Company by the Credit Facility ~~would~~and ~~have~~the ~~increased~~Indenture ~~our~~governing ~~annual~~the Notes, and the Company’s exposure to fluctuations in interest ~~expense by~~rates ~~approximately~~under ~~$1.7 million~~the Credit Facility; and ~~would~~• ~~have~~Unanticipated ~~decreased~~internal ~~our annual~~control ~~cash~~deficiencies ~~flow~~or ~~from~~weaknesses ~~operations~~or byineffective ~~approximately~~disclosure $1controls and procedures.~~7 million.~~

In addition, we encourage investors to read the discussion of risk factors included in Item 1A ‘‘Risk 7AFactors’’ and the discussion of critical accounting policies included in Item 7 under the heading ‘‘Critical Accounting Policies and Estimates’’ included in our Annual Report on Form 10-K for the year ended December 31, ~~2005~~ ~~presents~~2007 ~~quantitative~~which ~~and~~we have filed with the SEC, as such discussions may be ~~qualitative~~modified ~~disclosures~~or ~~about~~supplemented ~~market~~by ~~risk~~subsequent reports that we file with the SEC. Forward-looking statements speak only as of ~~December 31~~the date they are made, ~~2005~~ and except for our ongoing obligations under the U.S. ~~There~~federal ~~have~~securities ~~been~~laws, nowe ~~material~~undertake ~~changes~~no obligation to ~~this~~publicly ~~disclosure~~update any forward-looking statements, whether as a result of ~~June 30~~new information, ~~2006~~ future events or otherwise.

~~Item 4. Controls and~~26 ~~Procedures.~~

~~(b)~~PART ~~Internal Control Over Financial Reporting~~II. ~~There~~OTHER ~~have not been any changes in our internal control over~~INFORMATION financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the six months ended June 30, 2006 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

26Item 1. Legal Proceedings.

~~Forward-Looking~~ There ~~Statements~~was no material development with regard to legal proceedings during the three months ended June 30, 2008.

This Quarterly Report for the period ended June 30, 2006, as well as certain written, electronic and oral disclosures made by us from time to time, contain forward-looking statements that involve risks and uncertainties, which are based on estimates, objectives, projections, forecasts, plans, strategies, beliefs, intentions, opportunities and expectations of our managementItem 1A. ~~Such~~Risk ~~statements are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995~~Factors. ~~Actual results may differ~~ materially from anticipated results or expectations and investors are cautioned not to place undue reliance on any forward-looking statements. Statements that are not historical facts, including statements about the Company's strategy, future operations, financial position, estimated revenues, projected costs or the projections, prospects, plans and objectives of management, are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as ‘‘believes’’, ‘‘estimates’’, ‘‘expects’’, ‘‘projects’’, ‘‘forecasts’’, ‘‘may’’, ‘‘will’’, ‘‘should’’, ‘‘seeks’’, ‘‘plans’’, ‘‘scheduled to’’, ‘‘anticipates’’ or ‘‘intends’’ or the negative of those terms, or other variations of those terms or comparable language, or by discussions of strategy or intentions, although not all forward-looking statements contain such words.

~~The~~ There ~~following~~were ~~factors,~~no ~~among others,~~material ~~could~~changes ~~cause~~to ~~our~~the ~~actual~~Company’s ~~results~~risk tofactors ~~differ~~that ~~materially~~were ~~from~~disclosed ~~those~~in the Annual ~~expressed~~Report inon ~~any~~Form ~~forward~~10-~~looking~~K ~~statements~~for ~~made~~the byyear ended December 31, 2007. ~~us:~~

•Item 2. ~~The~~Unregistered ~~Company's~~Sales ~~dependence~~of onEquity ~~its~~Securities ~~relationships with its customers~~ and ~~reputation~~Use ~~for providing high-quality contract security services, as well as the risk that the Company's reputation may be damaged as a result~~ of ~~a publicized incident or breach of security;~~Proceeds.

• The Company's ability to retain existing security officer service contracts (which contracts can typically be terminated by either party on 30 days' written notice and which may also be subject to periodic bidding procedures) and to obtain new security service contracts, including in each case on terms which are favorable to the Company; None.

•Item 4. ~~The~~Submission ~~failure~~ of ~~the~~Matters ~~Company~~ to ~~retain~~a ~~its~~Vote ~~toll~~of ~~collection~~Security ~~services contracts with the FDOT;~~Holders.

• The Company's exposure to liability, particularly to the extent not covered by insurance and/or where state law prohibits insurance coverage, for certain damages arising from services it provides to its customers, including by reason of the acts or omissions of the Company's agents or employees or with respect to events that are not within the control of such agents or employees, and the Company's indemnification obligations under certain service contracts for events occurring on client premises; None.

•Item 5. ~~The~~Other Company's inability to pass cost increases to customers in light of the price-sensitive nature of the contract security officer industry and the fixed hourly bill rates or limited fee adjustments provided for in many of the Company's customer contracts;Information.

• Competitive pressures resulting from (i) new or existing security service providers, some of which have greater resources than the Company and/or are willing to provide security services at lower prices, (ii) increasing consolidation in the contract security officer industry, (iii) local and regional companies that may be better able to secure and retain customers in their regions, and (iv) decreasing expenditures of client resources on quality security services; None.

• The Company's ability to (i) attract, retain, train and manage security officers and administrative staff (and the costs associated therewith) in light of the significant number of officers the Company requires to operate its business and increasing demand and competition for such persons, and (ii) attract and retain senior operations employees and key executives and the potential loss of business resulting from the departure of key employees;27

•Item 6. The Company's failure or inability to comply with city, county, state or federal laws and regulations, including security industry-related laws and regulations and occupational health and safety laws and regulations and, in each case, the costs associated with such compliance, as well as the costs of complying with new laws and regulations, changes in existing laws and regulations or the manner in which existing laws and regulations are interpreted;Exhibits.


Exhibit No.		Description of Exhibit

	10.1	Agreement and Plan of Merger, dated as of July 24, 2008, by and among Allied Security Holdings LLC, SpectaGuard Holding Corporation, MacAndrews & Forbes Holding Inc, solely for certain sections specified therein, AB Capital Holdings LLC, and AB Merger Sub LLC.

	31.1	Certification of Chief Executive Officer of Allied Security Holdings LLC pursuant to Rule 13a- 14(a) or 15d-14(a) of the Securities Exchange Act of 1934

	31.2	Certification of Chief Financial Officer of Allied Security Holdings LLC pursuant to Rule 13a- 14(a) or 15d-14(a) of the Securities Exchange Act of 1934

	32.1	Certifications of Chief Executive Officer and Chief Financial Officer of Allied Security Holdings LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~• The risk that non-compliance with state security licensing regulations could result in the Company being prohibited from operating its business in all or part of a given state;~~28

Exhibit No.

Description of Exhibit

Certification of Chief Executive Officer of Allied Security Holdings LLC pursuant to Rule 13a− 14(a) or 15d-14(a) of the Securities Exchange Act of 1934

Certification of Chief Financial Officer of Allied Security Holdings LLC pursuant to Rule 13a− 14(a) or 15d-14(a) of the Securities Exchange Act of 1934

Certifications of Chief Executive Officer and Chief Financial Officer of Allied Security Holdings LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

• Delays, difficulties or risks in implementing the Company's business strategy, successfully integrating acquired businesses, including retaining acquired contracts and achieving cost savings (including with respect to businesses recently acquired by the Company), and the Company's exposure to risks associated with acquired businesses, including the possibility of undisclosed or unforeseen liabilities resulting from such acquisitions;SIGNATURES

• Pursuant ~~The~~to ~~effects~~the requirements of ~~terrorist~~the ~~activity~~Securities orExchange ~~the~~Act ~~threat~~ of ~~terrorism~~1934, atthis ~~locations~~report ~~serviced~~has been signed below by the ~~Company~~following orpersons ~~elsewhere,~~on ~~including~~behalf of the ~~Company's~~registrant ~~exposure~~and toin ~~liabilities~~the ~~not~~capacities ~~covered~~and byon ~~insurance~~the dates ~~for attacks;~~indicated:

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


Signature	Title	Dates

/s/ William C. Whitmore, Jr.	Chairman, President, Chief Executive Officer and Manager	August 6, 2008
William C. Whitmore, Jr.	(Principal Executive Officer)

/s/ William A. Torzolini	Senior Vice President and Chief Financial Officer (Principal	August 6, 2008
William A. Torzolini	Financial Officer)

/s/ Mitchell L. Weiss	Vice President and Chief Accounting Officer (Principal	August 6, 2008
Mitchell L. Weiss	Accounting Officer)

• The insufficiency of the Company's existing working capital, together with cash available under its New Credit Agreement and anticipated cash flow from operating activities, to meet the Company’s expected operating, capital spending and debt service requirements for the foreseeable future and the inability of the Company to comply with the financial covenants in the Company’s financing arrangements and/or to obtain amendments;29

• The Company's level of indebtedness, the restrictions or obligations imposed on the Company by the New Credit Agreement and the Indenture and the Company's exposure to fluctuations in interest rates under the New Credit Agreement; and

• Unanticipated internal control deficiencies or weaknesses or ineffective disclosure controls and procedures.

In addition, we encourage investors to read the discussion of risk factors included in Item 1A. ‘‘Risk Factors’’ and the discussion of critical accounting policies included in Item 7 under the heading ‘‘—Basis of Presentation and Critical Accounting Policies’’ included in our Annual Report on Form 10-K for the year ended December 31, 2005 which we have filed with the SEC, as such discussions may also be modified or supplemented by subsequent reports that we file with the SEC. Forward-looking statements speak only as of the date they are made, and except for our ongoing obligations under the U.S. federal securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We may be held liable for the negligent acts or misconduct of our agents or employees performed while on duty and in the course and scope of their employment. We experience a significant volume of claims and litigation in the ordinary course of business asserting that we are liable for damages as a result of the conduct of our employees or others. Individuals may bring personal injury lawsuits against us seeking substantial damages based on alleged negligence or other theories of liability in our provision of security services, including with respect to injuries not directly caused by, or within the control of, our security officers. Under principles of common law, we generally can be held liable for wrongful acts or omissions to act of our agents or employees during the course, and within the scope, of their agency or employment with us.

In addition, many of our customer contracts contain provisions whereby we are contractually obligated to defend, indemnify and hold harmless our clients. These provisions vary from indemnification for our own negligence and misconduct to providing indemnification for any claims related to our services regardless of our fault. In a limited number of situations, we may also be required to indemnify our customers in cases of their own contributory negligence.

We maintain self-insurance programs and insurance coverage for this general liability risk, which we believe adequately insure us. We also seek to mitigate this risk exposure through indemnification or liability limitations in our contracts, analysis of customer facilities and implementation of programs for employee screening, training, supervision and safety and anonymous reporting by our employees. We believe that we have established adequate reserves for litigation liabilities in our consolidated financial statements. From time to time, we are involved in arbitrations or legal proceedings that arise in the ordinary course of business. We cannot predict the timing or outcome of these claims and proceedings. Currently, we are not involved in any arbitration and/or legal proceeding that we expect to have a material effect on our business, financial condition or results of operations. Exposure to litigation is inherent in our ongoing business and may harm our business in the future.

Item 1A. Risk Factors.

There were no material changes to the Company’s risk factors that were disclosed in the annual report for the year ended December 31, 2005.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

SIGNATURES

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

Signature	Title	Dates
/s/ William C. Whitmore, Jr.	President, Chief Executive Officer, Chairman of the Board of Managers (Principal Executive Officer)	August 14, 2006
William C. Whitmore, Jr.
/s/ William A. Torzolini	Senior Vice President and Chief Financial Officer (Principal Financial Officer)	August 14, 2006
William A. Torzolini
/s/ Frank J. Conforti	Corporate Controller (Principal Accounting Officer)	August 14, 2006
Frank J. Conforti

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