Allied Security Holdings LLC
Notes to Consolidated Financial Statements (Continued)
December 31, 2004

In connection with the February 19, 2003 formation of SpectaGuard, a $125,000,000 Refinanced Senior Secured Credit Facility was executed. The Refinanced Senior Secured Credit Facility consisted of (i) a $20,000,000 5-year Refinanced Revolver and (ii) a $105,000,000 7-year Refinanced Senior Term Loan. The Refinanced Senior Secured Credit Facility was amended on May 2, 2003 ("First Amended Refinanced Credit Facility") to reduce the Refinanced Senior Term Loan to $95,000,000. As a result of the First Amended Refinanced Credit Facility, an additional 67,778 Class A Units were issued for $10,000,000 to reduce the principal amount of the Refinanced Term Loan (see Note 13). The Refinanced Senior Term Loan bore interest on the outstanding principal balance at a rate equal to the three-month LIBOR (with a floor limit of 2.50%) plus a 5.00% margin.

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

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

In connection with the PSB Acquisition on December 19, 2003, the First Amended Refinanced Credit Facility was amended and restated (the "Second Amended Refinanced Credit Facility"). The Second Amended Refinanced Credit Facility provided for an add-on Refinanced Senior Term Loan in the amount of $30,000,000 and an additional $10,000,000 in Refinanced Revolver availability resulting in total availability under the Refinanced Revolver of up to $30,000,000. Other terms of the Second Amended Refinanced Credit Facility were substantially identical to the First Amended Refinanced Credit Facility.

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

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

Simultaneous with the closing of the Barton Acquisition on August 2, 2004, the Company entered into a new senior secured credit facility (the "New Credit Facility") with Bear Stearns Corporate Lending Inc., as Administrative Agent, and a syndicate of lenders arranged by Bear, Stearns & Co. Inc. The New Credit Facility provides for (i) a $210,000,000 six-year term loan facility (the "New Senior Term Loan") and (ii) a $50,000,000 five-year revolving loan (the "New 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 New Credit Facility, together with the net proceeds from the Notes, to finance the purchase price for Barton, to repay amounts outstanding under the Refinanced Credit Facility, to redeem the then outstanding Refinanced Senior Subordinated Notes and to pay related fees, expenses and redemption premiums. As of August 2, 2004 and prior to giving effect to the Transactions, the Company had $125,000,000 in term loans outstanding under the Refinanced Credit Facility, which term loans provided for interest at a rate of 7.50% per annum at such date. The Refinanced Senior

F-16

Allied Security Holdings LLC
Notes to Consolidated Financial Statements (Continued)
December 31, 2004

Subordinated Notes comprised $50,000,000 aggregate face value of senior subordinated notes due June 30, 2010 which provided for cash interest at 12.00% per annum and paid-in-kind interest at 3.00% per annum, each payable quarterly, and $10,500,000 aggregate face value of senior subordinated notes due June 30, 2010 which provided for cash interest at 12.00% per annum and paid-in-kind interest at 4.25% per annum, each payable quarterly. The Company had $61,900,000 principal outstanding, including paid-in-kind interest, of Refinanced Senior Subordinated Notes as of August 2, 2004 prior to redemption of the Refinanced Senior Subordinated Notes.

For the New Senior Term Loan, each eurodollar rate loan bears interest at a rate per annum equal to the eurodollar rate for such day plus 4.25%. Each base rate loan bears interest at a rate per annum equal to the base rate plus 3.25%. As of December 31, 2004, the principal amount outstanding was $206,000,000 bearing an interest rate of 6.23%.

The New Revolver includes a sublimit of up to $40,000,000 of letter of credit availability. The New Revolver availability is reduced by outstanding letters of credit, which totaled $26,387,670 as of December 31, 2004. For the New 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 New Revolver are due on August 2, 2009. As of December 31, 004, the interest rate was 4.50% and the outstanding New Revolver balance, excluding the outstanding letters of credit, was zero.

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

The New Credit Facility and the Notes are guaranteed by each of the Company's current and future domestic subsidiaries. These guarantees are joint and several obligations of the domestic subsidiaries. The Company has a non-guarantor subsidiary located in the United Kingdom, which generates less than one percent of the consolidated revenues and holds less than one percent of the consolidated assets as of December 31, 2004. The parent company, Allied Security Holdings LLC, has no independent assets or operations.

Based on the borrowing rates currently available for loans with similar terms and maturities, the fair value of the long-term debt approximated its carrying value at December 31, 2004.

The New Credit Facility and the Notes contain various financial and other covenants. The Company was in compliance with all such financial covenants at December 31, 2004.

In the ordinary course of business, the Company enters into short-term financing agreements in order to fund its business insurance policy premiums. On August 4, 2003, the Company entered into such a financing agreement with Cananwill, Inc. for a total amount of $5,863,000. Payments were due in equal monthly installments through May 1, 2004 and bore an annual interest rate of 3.38%. As of December 31, 2004, all obligations of the Company under this financing agreement had been satisfied. On August 13, 2004, the Company entered into a new financing agreement with Cananwill, Inc. for a total amount of $11,242,000. Payments are due in equal monthly installments through May 1, 2005 and bear an annual interest rate of 2.99%. As of December 31, 2004, the remaining balance of this financing agreement including accrued interest was $6,246,000.

F-17

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Allied Security Holdings LLC
Notes to Consolidated Financial Statements (Continued)
December 31, 2004

Debt maturities for the succeeding five fiscal years are as follows (in thousands):

2005				$	22,246
2006					25,000
2007					30,000
2008					30,000
2009					30,000
Thereafter					252,966
Total				$	390,212

10.    Contingent Liabilities

In the normal course of operations, various legal claims are filed against the Company. The Company has provided for certain of these claims based upon insurance coverages, management's judgment, and 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.

11.    Comprehensive Income (Loss)

Comprehensive income (loss) is defined as net income (loss) and other changes in members' equity (deficit) from transactions and other events from sources other than members. A reconciliation of net income (loss) to other comprehensive income (loss) is as follows (in thousands):

				Year ended December 31, 2004				Period from February 19 through December 31, 2003				(Predecessor) Period from January 1 through February 18 2003				(Predecessor) Year ended December 31, 2002
Net income (loss)				$	(23,390	)		$	2,034			$	(9,775	)		$	5,373
Change in fair value of interest rate swap contracts					—				—				(352	)			(1,068	)
Realization of loss on hedge instruments					—				—				5,064				—
Foreign currency translation adjustments					37				—				—				—
Comprehensive income (loss)				$	(23,353	)		$	2,034			$	(5,063	)		$	4,305

12.    Income Taxes

The members of the 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 is 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 (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 were $2.3 million in 2003 and $0 for 2004. Due principally to differences in depreciation and amortization, taxable income may vary substantially from income reported for financial statement purposes.

F-18

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Allied Security Holdings LLC
Notes to Consolidated Financial Statements (Continued)
December 31, 2004

Under the Predecessor Company, Effective Holdings Inc. and its subsidiaries and AS Acquisition Inc. and its subsidiaries, all of which corporations were converted to limited liability companies, were taxed under Subchapter C of the Internal Revenue Code. The effective tax rate for the Predecessor Company differed from the federal statutory rate due primarily to state taxes, nondeductible items, and operating results not taxed at the corporate level.

13.    Units Subject to Put Rights and Members' Equity

The capital structure of the Company consists of three classes of interests 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 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.

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.

Upon formation of the Company on February 19, 2003, initial capital contributed was approximately $116,915,000. This consisted of $112,983,000 (739,733 Class A Units) from Mafco and its affiliates, $2,307,000 (19,584 Class A Units subject to put rights) from OCM, $1,538,000 (13,056 Class A Units subject to put rights) from Blackstone, and $50,000 (77,627 Class B Units) from members of the Company's senior management. The Class A Units subject to put rights for both OCM and Blackstone are classified as a liability, outside of Members' Equity. Members of senior management also contributed $37,000 for 110,000 unvested Class C Units.

On May 2, 2003, an additional 67,778 Class A Units were issued for $10,000,000 to reduce the principal amount outstanding under the Refinanced Senior Term Loan (see Note 9). Of these units, 1,562 units were subject to put rights and had a fair value of $230,000.

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

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

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

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

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

On August 2, 2004, 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.

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

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Allied Security Holdings LLC
Notes to Consolidated Financial Statements (Continued)
December 31, 2004

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

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

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 exercised. As of December 31, 2004, no fair value adjustments to the Class A redemption amounts were required.

Pursuant to the Operating Agreement, a member of senior management has the right to cause the Company to purchase all, but not less than all, of his outstanding Class B Units during a 90 day period beginning on February 19, 2006 in accordance with a specified calculation as defined in the Operating Agreement. The fair value of the Class B Units subject to put rights was $0 for units issued during 2003. As of December 31, 2004, no adjustments to the Class B redemption amounts were required. There were no Class B Units issued in 2004.

14.    Related Party 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 $15,730,000 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 affiliates. 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.

Gryphon charged the Predecessor Company an administrative fee for management services that Gryphon performed on behalf of the Predecessor Company. The total expense incurred by the Predecessor Company related to this fee for the period from January 1, 2003 through February 18, 2003 was approximately $96,000 which has been included in branch and corporate overhead expenses on the consolidated statements of operations.

The Predecessor Company reimbursed Gryphon for certain costs that Gryphon incurred in connection with its services to the Predecessor Company. The amount reimbursed for the period from January 1, 2003 through February 18, 2003 was $92,000.

The Predecessor Company had a note receivable from an executive and stockholder in the amount of approximately $268,000 plus interest payable of 10%. The loan was settled and subsequently paid on February 19, 2003 in conjunction with the sale of the Predecessor Company. (See Note 4.)

During fiscal 2004 and fiscal 2003, we provided contract security officer services to Revlon and its subsidiaries. For fiscal 2004 and fiscal 2003, we received aggregate payments from Revlon for such services of $0.40 million and $0.02 million, respectively.

During fiscal 2004 and fiscal 2003, we provided contract security officer services to Panavision Inc. and its subsidiaries. For fiscal 2004 and fiscal 2003, we received aggregate payments from Panavision Inc. for such services of $0.14 million and $0.05 million, respectively.

During fiscal 2004 and fiscal 2003, we provided contract security officer services to M & F Worldwide and its subsidiaries. For fiscal 2004 and fiscal 2003, we received aggregate payments from M & F Worldwide for such services of $0.27 million and less than $0.01 million, respectively.

F-20

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Allied Security Holdings LLC
Notes to Consolidated Financial Statements (Continued)
December 31, 2004

Mafco is the controlling stockholder of each of Revlon and Panavision Inc. and as of December 31, 2004, beneficially owned approximately 37.9% of the outstanding common stock of M & F Worldwide. The rates charged for these services were competitive with industry rates for similarly situated security firms.

15.    Leases

The Company has commitments under operating leases for certain equipment and facilities used in its operations. Total rental expense for the year ended December 31, 2004, the period from February 19, 2003 through December 31, 2003, and for the period from January 1, 2003 through February 18, 2003, and for the year ended December 31, 2002, was approximately $6,399,000, $3,833,000, $561,000, and $3,928,000, respectively. Future minimum rental payments required under those operating leases that have an initial or remaining noncancelable lease term in excess of one year are as follows (in thousands):

2005				$	7,830
2006					6,139
2007					4,132
2008					2,086
2009					1,236
Thereafter					1,060
Total				$	22,483

F-21

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ALLIED SECURITY HOLDINGS LLC

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

				Balance at Beginning of Period				Additions Charged to Costs and Expenses				Deductions				Balance at End of Period
				(In Thousands)
Year ended December 31, 2002:
Allowance for doubtful accounts				$	1,908				111				(313	)		$	1,706
Period from January 1, 2003 to February 18, 2003:
Allowance for doubtful accounts				$	1,706				160				(6	)		$	1,860
Period from February 19, 2003 to December 31, 2003:
Allowance for doubtful accounts (a)				$	—				1,502				(219	)		$	1,283
Year ended December 31, 2004:
Allowance for doubtful accounts				$	1,283				648				(538	)		$	1,393

(a)	Beginning balance is $0 as a result of a change in ownership related to the Mafco acquisition as discussed in Note 1 to the Consolidated Financial Statements.

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