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EX-32.2 - Patent Properties, Inc.v210896_ex32-2.htm
EX-31.2 - Patent Properties, Inc.v210896_ex31-2.htm
EX-32.1 - Patent Properties, Inc.v210896_ex32-1.htm
EX-21.1 - Patent Properties, Inc.v210896_ex21-1.htm
EX-31.1 - Patent Properties, Inc.v210896_ex31-1.htm
EX-23.1 - Patent Properties, Inc.v210896_ex23-1.htm
EX-10.22 - Patent Properties, Inc.v210896_ex10-22.htm
EX-10.18 - Patent Properties, Inc.v210896_ex10-18.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
 (Mark One)
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Fiscal Year Ended December 31, 2010
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from __________________ to __________________
 
Commission file number: 001-33700
 
GLOBALOPTIONS GROUP, INC
(Exact Name of Registrant as Specified in Its Charter)

Delaware
 
30-0342273
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
     
75 Rockefeller Plaza, 27th Floor
New York, New York
 
10019
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (212) 445-6262

(Former name and former address, if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Name of Each Exchange on Which Registered
     
Common Stock, par value $0.001 per share
 
The NASDAQ Stock Market LLC
     
Preferred Stock Purchase Rights, par value $0.001 per share
 
The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12 (g) of the Act:  None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
Yes ¨   No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
 
Yes ¨  No x
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No ¨
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):
 
Large accelerated filer ¨
Accelerated filer ¨
   
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
Smaller reporting company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):  Yes ¨  No x
 
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter ($2.29) was $20,670,524.  Solely for the purposes of this calculation, shares held by directors, executive officers and 10% owners of the registrant have been excluded.  Such exclusion should not be deemed a determination or an admission by the registrant that such individuals are, in fact, affiliates of the registrant.
 
As of February 9, 2011, there were 13,381,153 shares of the registrant’s common stock outstanding.

 
 

 

GLOBALOPTIONS GROUP, INC. AND SUBSIDIARIES
Form 10-K
December 31, 2010
TABLE OF CONTENTS

PART I
   
1
 
FORWARD-LOOKING STATEMENTS
 
1
 
ITEM 1.
Business.
 
1
 
ITEM 1A.
Risk Factors.
 
5
 
ITEM 1B.
Unresolved Staff Comments.
 
11
 
ITEM 2.
Properties.
 
11
 
ITEM 3.
Legal Proceedings.
 
11
 
ITEM 4.
(Removed and Reserved)
 
11
PART II
   
12
 
ITEM 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
12
 
ITEM 6.
Selected Financial Data.
 
14
 
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
14
 
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk.
 
18
 
ITEM 8.
Financial Statements and Supplementary Data.
 
18
 
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
 
19
 
ITEM 9A
Controls and Procedures.
 
19
 
ITEM 9B.
Other Information.
 
19
PART III
   
20
 
ITEM 10.
Directors, Executive Officers and Corporate Governance.
 
20
 
ITEM 11.
Executive Compensation.
 
25
 
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
 
33
 
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence.
 
34
 
ITEM 14.
Principal Accountant Fees and Services.
 
35
PART IV
   
36
 
ITEM 15.
Exhibits, Financial Statement Schedules.
 
36
   
EXHIBIT 10.18
   
   
EXHIBIT 10.22
   
   
EXHIBIT 21.1
   
   
EXHIBIT 23.1
   
   
EXHIBIT 31.1
   
   
EXHIBIT 31.2
   
   
EXHIBIT 32.1
   
   
EXHIBIT 32.2
   

 
 

 
 
PART I
 
(Dollar amounts in thousands, except per share amounts)
 
FORWARD-LOOKING STATEMENTS

 This Annual Report on Form 10-K contains forward-looking statements (as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  To the extent that any statements made in this Annual Report on Form 10-K contain information that is not historical, these statements are essentially forward-looking.  Forward-looking statements may be identified by the use of words such as “expects,” “plans,” “will,” “may,” “anticipates,” “believes,” “should,” “intends,” “estimates” and other words or phrases of similar meaning.  Although we believe that the expectations reflected in these forward-looking statements are reasonable and achievable, these statements are subject to a number of risks and uncertainties discussed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual Report on Form 10-K.  All forward-looking statements attributable to us are expressly qualified by these and other factors.  We cannot assure you that actual results will be consistent with these forward-looking statements.
 
The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the statements are made.  We do not undertake any obligation to publicly update any forward-looking statements.  As a result, you should not place undue reliance on these forward-looking statements.

Item 1. Business
 
Overview
 
GlobalOptions Group, Inc. and its subsidiaries (collectively we, us, the “Company” or “GlobalOptions Group”) was an integrated provider of risk mitigation and management services. References herein to “GlobalOptions” refer to GlobalOptions, Inc., an operating subsidiary of the Company.
 
During the year ended December 31, 2010, we sold or closed all of our operating businesses. We completed the sale of our SafirRosetti business unit (“SafirRosetti”) on April 30, 2010, our Preparedness Services business unit (“Preparedness Services”) on July 16, 2010, our Fraud and SIU Services business unit (“Fraud and SIU Services”) on July 20, 2010, our subsidiary, The Bode Technology Group, Inc. which represented our Forensic DNA Solutions and Products Services business unit (“Bode”) on November 30, 2010 and on December 31, 2010, we closed our International Strategies business unit (“International Strategies”).
 
As a result of our sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode and the closure of International Strategies, the results and accounts of these business units are shown as discontinued operations in our financial statements. As of December 31, 2010 and February 15, 2011, continuing operations consist solely of executive and general corporate operations.  These executive and general corporate operations include services provided by the Company in support of the business units sold in connection with (i) transition service agreements, including services provided for cash and treasury management, information technology, employee benefits, general insurance and general transition services, and (ii) marketing and business development support that is intended to help drive sales revenues of the business units sold.   In addition, executive and general corporate operations include the monitoring and managing of the Company’s receipt of notes receivable, working capital adjustments, escrowed purchase price amounts and earnouts, the collection of which the Company expects will extend through approximately April 2012.
 
Prior to our sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode, we reported operating results in three financial reporting segments: Preparedness Services; Fraud and SIU Services; and Security Consulting and Investigations (which was re-named Forensic DNA Solutions and Products following the sale of SafirRosetti).  The Preparedness Services segment consisted of the operations of Preparedness Services, which implemented crisis management and emergency response plans and other emergency management issued for governments, corporations and individuals.  The Fraud and SIU Services segment consisted of the operations of Fraud and SIU Services and the International Strategies business unit, which provided multidisciplinary, international risk management and business solutions.  The Security Consulting and Investigations segment consisted of the operations of SafirRosetti, which provided security and investigative services, and Bode, which provided forensic DNA analysis services.  As a result of the sales and closure of these business units, we no longer report operating results in separate segments.

 
1

 

We have publicly announced that we currently intend to return the net proceeds from the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode to our stockholders, after satisfying existing contractual obligations and establishing appropriate reserves for contingencies and ongoing operating costs.  In connection with this intention, on December 1, 2010, we commenced a partial tender offer to purchase for cash up to 10,000,000 shares of our common stock at a price of $2.40 per share. The tender offer closed on December 29, 2010, after which we purchased a total of 1,119,978 shares at a cost of $2,688. In addition, during the year ended December 31, 2010, just prior to the aforementioned tender offer, we repurchased in the open market 16,627 shares of our common stock at a cost of $39.   On February 7, 2011, our board of directors approved a new program to purchase up to $3,000 of our common stock over a period of 18 months, at such times, amounts and prices as the Company shall deem appropriate.  We continue to explore the most efficient form of the distribution of the remaining proceeds from the sales of these units and have also explored alternative uses of the net proceeds from the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode in the event that we determine not to further distribute these proceeds to our stockholders.
 
Market Opportunity
 
Although we have publicly announced that we currently intend to return the remaining net proceeds from the sales of the SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode to our stockholders after satisfying existing contractual and banking obligations and establishing appropriate reserves for contingencies and ongoing operating costs, there is no guaranty that we will do so.  In the event that we decide to retain the proceeds from such sales, we may pursue a business combination or other type of corporate transaction.  We currently do not have any arrangement, agreement or understanding with respect to engaging in a business combination with a specific entity or within any specific industry and there can be no assurance that we will be successful in identifying and evaluating or in concluding any such business combination.
 
Corporate History

GlobalOptions, Inc., our wholly-owned operating subsidiary, was initially formed as a limited liability company in the state of Delaware in November 1998 and converted into a Delaware corporation on January 24, 2002. On June 24, 2005, we became a public company by completing a reverse merger transaction, in which GlobalOptions Acquisition Corp., a Delaware corporation and our newly created, wholly owned subsidiary, merged with and into GlobalOptions, Inc. As a result of the reverse merger, GlobalOptions, Inc. became our wholly owned operating subsidiary, with GlobalOptions, Inc.’s former security holders acquiring a majority of the outstanding shares of our common stock. At the time of the reverse merger, our corporate name was Creative Solutions with Art, Inc., a Nevada corporation. Following the reverse merger, we changed our name to GlobalOptions Group, Inc.  On December 8, 2006, we completed a reincorporation merger whereby we changed our state of incorporation from Nevada to Delaware.

Descriptions of and Sales or Closing of our Former Operating Businesses

Preparedness Services

The Preparedness Services unit developed and implemented crisis management and emergency response plans for disaster mitigation, continuity of operations and other emergency management issues for governments, corporations and individuals. The Preparedness Services unit was comprised of James Lee Witt Associates, LLC.
 
On July 16, 2010, pursuant to the Board of Directors approval on May 6, 2010 we completed the sale of Preparedness Services in accordance with an asset purchase agreement dated May 13, 2010 (the “Preparedness Services Purchase Agreement”), by and among us, GlobalOptions  and Witt Group Holdings, LLC, (“Witt Holdings”), of which James Lee Witt, Chief Executive Officer, Mark Merritt, Co-President, Barry Scanlon, Co-President, and Pate Felts, Senior Advisor, respectively, of Preparedness Services, are principals.
 
Pursuant to the terms of the Preparedness Services Purchase Agreement, we sold Preparedness Services to Witt Holdings for aggregate consideration of (i) $10,006 in cash, of which $1,000 is to be held in escrow for 12 months following the closing; (ii) an earnout payment equal to 40% of any revenues over $15,000 earned during the 12-month period following the closing, which payment may not exceed $12,000; and (iii) the assumption of all of Preparedness Services’ liabilities, including all termination and severance payments due to James Lee Witt, Mark Merritt, Barry Scanlon and Pate Felts upon the sale of Preparedness Services under their respective employment agreements, less $286, representing a payment in connection with Witt Holding’s, assumption of the lease for Preparedness Services’ Washington DC facility. The maximum total consideration payable to the Sellers under the Preparedness Services Purchase Agreement is $22,000.

 
2

 

In addition, on January 14, 2011, Witt Holdings paid us $1,652 representing the final closing date adjustment for working capital.  We also agreed to pay Witt Holdings (i) a “true-up” of up to $1,000 based on accounts receivable (other than accounts receivable originating from the State of Louisiana or its agencies) that remain uncollected as of six months following the closing, and (ii) the face amount of any uncollected receivables arising from the bankruptcy or dissolution of any non-governmental entity.  Witt Holdings has agreed that upon such “true-up” payment to transfer to the Sellers all rights with respect to such uncollected receivables.  On January 28, 2011, Witt Holdings notified us that they would not make a claim for either a “true-up” or bankrupt amount as described in (i) or (ii), herein..

Additionally, in connection with the Preparedness Services Purchase Agreement, we entered into (i) a license agreement pursuant to which we granted Witt Holdings a world-wide, perpetual, irrevocable, exclusive, royalty free, fully paid-up right and license to use our software in the field of emergency preparedness and disaster relief recovery, and we agreed not to license the Preparedness Services application of the software to any other business in such field, and (ii) a transition service agreement pursuant to which we provided Witt Holdings with certain specified transition services following the closing, including but not limited to certain information technology services.  The transition services agreement terminated on September 30, 2010.

The sale of Preparedness Services was subject to the approval of our stockholders, which approval was obtained at a special meeting of our stockholders held on July 15, 2010.
 
Fraud and SIU Services
 
The Fraud and SIU Services unit provided investigative surveillance, anti-fraud solutions and business intelligence services to the insurance industry, law firms and multinational organizations. These services were provided to clients nationally and regionally through licensed investigators in all 50 states.  Our investigators provided reports and intelligence on subjects such as workman’s compensation surveillance, unfair trade practices, political trends, economic forecasts, mortgage insurance fraud, profiles on competitors and satellite reconnaissance.  The Fraud and SIU Services unit was comprised of the following acquired companies: Confidential Business Resources; Hyperion Risk, Inc.; Secure Source, Inc; Facticon, Inc.; and First Advantage Investigative Services.

On July 20, 2010, we completed the sale of all assets used in Fraud and SIU Services in accordance with an asset purchase agreement dated June 11, 2010 (the “Fraud and SIU Services Purchase Agreement”), by and among us, GlobalOptions and GlobalOptions Services, Inc., a non-related third party (“Global Services”), of which Frank Pinder, the President of Fraud and SIU Services, together with David Finney, James Buscarini, Kevin McGinn and Mike Brantley, respectively the Vice Presidents of Operations, Business Development, Finance and IT, are officers and shareholders.  Balmoral Advisors, LLC, Private Equity Partners LLC and the North Atlantic Value LLP unit of JO Hambro Capital Management Ltd were the private equity sponsors.
  
Pursuant to the terms of the Fraud and SIU Services Purchase Agreement, we sold Fraud and SIU Services to Global Services for aggregate consideration of (i) $8,340 in cash at closing, inclusive of $34 for an estimated adjustment for working capital and $56 for the purchase real estate lease deposits, of which $825 is to be held in escrow for 15 months following the closing, (ii) an additional final post closing working capital adjustment of $275 which we received on December 30, 2010, and (iii) the assumption of substantially all of the liabilities of Fraud and SIU Services.
  
In connection with Fraud and SIU Services being classified as held for sale, during the three months ended June 30, 2010, we recorded a charge to discontinued operations of $4,475 to write down the carrying value of the assets of Fraud and SIU Services to fair value.

In connection with the Fraud and SIU Services Purchase Agreement, we entered into (i) certain license agreements with Global Services pursuant to which we granted Global Services worldwide, perpetual, irrevocable, exclusive, royalty-free, fully paid-up rights and licenses to certain of our intellectual property, including but not limited to the “GlobalOptions” corporate name, logo and websites (all of which Global Services has the right to purchase in the future for nominal consideration), and our Rapid Data Module and Rapid Video Module software and related source materials that are embedded within the GlobalTrak system for the Fraud and SIU Services business only and (ii) a transition service agreement pursuant to which we and Global Services will provide each other with certain transition services following the closing.  The term of such transition services agreement was extended until March 31, 2011.

 
3

 
 
Security Consulting and Investigations
 
The Security Consulting and Investigations unit delivered specialized security and investigative services to governments, corporations and individuals as well as forensic DNA analysis and casework, consisting of SafirRosetti and Bode. Our Security Consulting and Investigations unit was comprised of the following acquired companies: SafirRosetti, LLC; Bode and SPZ Oakland Corporation, dba On Line Consulting Services, Inc.
 
On April 30, 2010, we completed the sale of all of the assets of SafirRosetti in accordance with an asset purchase agreement dated April 23, 2010 (the “SafirRosetti Purchase Agreement”), by and among us, GlobalOptions and Guidepost Solutions LLC (Guidepost), a subsidiary of SolutionPoint International, Inc. (SolutionPoint), of which Joseph Rosetti, a former officer of SafirRosetti, is a principal.
 
Pursuant to the terms of the SafirRosetti Purchase Agreement, SafirRosetti was sold for aggregate consideration of (i) $3,500 in cash, subject to certain adjustments, of which $525 will be held in escrow for a period of 17 months; (ii) a secured promissory note (the “SafirRosetti Note”) in the aggregate face amount of $1,750, with an interest rate of 0.79% per annum of which principal of $875 and interest of $8 was received on December 17, 2010 and principal of $875 and related interest is payable to us on June 30, 2011; and (iii) contingent consideration based on 70% of the purchased accounts receivable in excess of $1,750 collected by Guidepost between the closing and the one year anniversary of the closing.  Contingent consideration received and recognized through December 31, 2010 was $705.  Through February 9, 2011, an additional $373 in contingent consideration was received.
 
The SafirRosetti Note provided a first priority lien against the sold accounts receivable of SafirRosetti and the post-closing accounts receivable of Guidepost arising from the customer accounts purchased, and a second priority lien against the remaining property of SafirRosetti transferred to Guidepost.  Guidepost will transfer all uncollected account receivables back to us on June 30, 2011, subject to a purchase right by Guidepost.
 
In connection with the SafirRosetti Purchase Agreement, we entered into a transition service agreement pursuant to which we provided Guidepost with certain specified transition services following the closing, including but not limited to certain information technology services.  The transition services agreement terminated on July 31, 2010.
 
On November 30, 2010, we completed the sale of Bode in accordance with a stock purchase agreement dated August 11, 2010 (“the Bode Purchase Agreement”) by and among, us, GlobalOptions, Bode and LSR Acquisition Corp. (which following a corporate reorganization, became SolutionPoint).
 
Pursuant to the terms of the Bode Purchase Agreement, we sold all of the equity securities and stock of Bode to SolutionPoint for an aggregate consideration of (i) $24,500 in cash, of which $2,450 will be held in escrow until December 31, 2011,  (ii) an earnout payment equal to 30% of any revenues over $27,000 earned by Bode during the 12-month period following the closing of the sale, which payment may not exceed $5,500, and (iii) a cash payment of $500 in connection with SolutionPoint’s tax election under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended.
 
  In addition, SolutionPoint has agreed to pay us the amount by which the working capital of Bode at closing exceeds $5,600, and we have agreed to pay SolutionPoint the amount by which the working capital of Bode at closing is less than $5,600, provided that in either case no such payment will be required unless it is in excess of $150.  At December 31, 2010, we have estimated that SolutionPoint will pay to us a working capital adjustment of $2,192.  As set forth in the Bode Purchase Agreement, there are a series of steps in which SolutionPoint and ourselves determine, review and approved the computation of the working capital adjustment.  These steps have not yet been completed.  Accordingly, this estimate of the working capital adjustment is subject to change.
 
We have also agreed to pay SolutionPoint a “true-up” of up to $1,000, based on accounts receivable that remain uncollected 180 days after the closing and SolutionPoint has agreed to transfer to us all rights with respect to such uncollected receivables after SolutionPoint’s receipt of such “true-up” payment.
 
In connection with the Bode Purchase Agreement, we entered into a transition service agreement pursuant to which we provided Bode with certain specified transition services following the closing, including but not limited to certain information technology services.  Unless otherwise extended by the parties, the transition services agreement will terminate on February 28, 2011.
 
The sale of Bode was subject to approval by our stockholders, which approval was obtained at a special meeting of our stockholders held on November 11, 2010.

International Strategies
 
The International Strategies unit provided multidisciplinary, international risk management and business solutions to foreign and domestic governments, corporations and individuals. The International Strategies unit was our original core business.  International Strategies was not a separate reporting segment and as such we attributed its revenues to the Fraud and SIU Services unit.

 
4

 
 
Effective on December 31, 2010, we closed International Strategies.
 
Employees
 
As of February 9, 2011 the Company had 4 full-time employees. We enjoy good employee relations. None of our employees are members of any labor union, and we are not a party to any collective bargaining agreement.

Item 1A. Risk Factors

Any investment in our common stock involves a high degree of risk. You should consider carefully the specific risk factors described below in addition to the other information contained in this Annual Report on Form 10-K,, including our consolidated financial statements and related notes included elsewhere in this Annual report on Form 10-K, before making a decision to invest in our common stock. If any of these risks actually occurs, our business, financial condition, results of operations or prospects could be materially and adversely affected. This could cause the trading price of our common stock to decline and a loss of all or part of your investment.
 
Risks Related to Our Business and Industry
 
We currently have no business revenues or operations.
 
In the past year, we have sold SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode and the closure of International Strategies and our continuing operations consist solely of our executive and general corporate operations.  We currently have no plans to resume or acquire any additional business operations.  We may never establish additional revenues in the future other than future cash flows from earnouts, escrows and working capital adjustments as a result of the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode.
 
We will continue to incur operating expenses for SEC reporting, auditing and similar functions, as well as normal operating expenses associated with any ongoing business, such as rent, annual taxes, filing fees, and the like.  Accordingly, in the absence of revenues, the Company will incur losses.
 
We have limited financial resources.

Other than (i) the cash proceeds received upon the closings of the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode, (ii) earnouts from the sales of Preparedness and Bode, (iii) the receipt of payment from a promissory note issued in connection with the sale of SafirRosetti, (iv) the receipt of payment of a percentage of account receivables collected by the purchaser of SafirRosetti, (v) potential working capital adjustments from the sales of Preparedness Services and Bode, and (vi) payments from escrow accounts established in connection with the sales of SafirRosetti, Preparedness, FSIU and Bode, we may have no future cash flows and may not receive any of the payments set forth in (ii) through (vi) above.  

We have stated our current intention that we currently intend to return the net proceeds from these sales to our stockholders after satisfying existing contractual and banking obligations and establishing appropriate reserves for contingencies and ongoing operating costs. During the year ended December 31, 2010, we repurchased in the open market 16,627 shares of our common stock at a cost of $39.  On December 1, 2010, we commenced a partial tender offer to purchase for cash up to 10,000,000 shares of our common stock at a price of $2.40 per share. The tender offer closed on December 29, 2010, in which we purchased a total of 1,119,978 shares at a cost of $2,688.  If we make additional distributions or commence additional buybacks, there is no guaranty that the amount of such cash that we decide to maintain will be enough to cover our future expenses, including, (i) reporting obligations under the Exchange Act, (ii) other general and administrative expenses in connection with the continued operations of our business, and/or (iii) the repayment of certain of the proceeds received from the sales either pursuant to a working capital adjustment, a guaranty of receivables or any other claim by a purchaser of any of the units.

We are highly dependent on the release of funds from escrow accounts.

In connection with the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode, a portion of the proceeds from each sale was placed into escrow to protect against indemnification claims brought by the purchasers of such business units.  If such purchasers bring any claims pursuant to the agreements, such claims will first be against such escrow amounts, but could be brought in excess of such escrow amounts.  If such claims are proven successful, we may not receive the anticipated amounts from the escrow accounts or may have to pay claims in excess of the escrow amounts directly from the Company, and the receipt of funds in the escrow account may be delayed pending the final outcome of such claims.

We are highly dependent on earnout payments.

In connection with the sales of Preparedness Services and Bode, a substantial part of the purchase price from the sale of Preparedness Services and a portion of the purchase price from the sale of Bode, consists of an earnout payment.  Depending on the revenue actually earned by Preparedness Services and Bode during the earnout period, there could be no earnouts received by us.

 
5

 
 
We are dependent on the collection of Accounts Receivable.

In connection with the sales of SafirRosetti, Preparedness Services and Bode, part of the proceeds of each transaction is dependent upon the ability of the purchasers of each such unit to collect the accounts receivable existing at the time of closing of the respective units.  The purchasers of SafirRosetti are collecting the accounts receivable of SafirRosetti from which we will receive a portion of the proceeds of such collection.  The respective purchasers of Bode have the right to have us pay them up to a certain amount if they are unable to collect the accounts receivable for such unit within a given period of time.  If the purchasers of SafirRosetti or Bode do not collect the accounts receivable existing on the books of each such unit at the time of closing of the respective transactions, we may receive no additional proceeds from the sale of SafirRosetti or we may have to return a portion of the proceeds received from the Bode sale.

We may be unable to realize the benefits of our net operating loss (“NOL”) and capital loss carryforwards.

The amount of NOL and capital loss carryforwards that we have claimed have not been audited or otherwise validated by the U.S. Internal Revenue Service (the “IRS”).  The IRS could challenge our calculation of the amount of our NOL and capital loss or our determinations as to when a prior change in ownership occurred and other provisions of the Code may limit our ability to utilize our NOL and capital loss to offset taxable income and capital gains.  If the IRS was successful with respect to any such challenge, the tax benefit of our NOL and capital loss carryforwards to us could be substantially reduced.

Our arrangements with members of our senior management team, or our failure to retain or recruit key personnel, could negatively impact our ability to sell our products and services and grow our business.
 
Our future success will depend to a significant extent upon the abilities, level of service, reputation and relationships of our Chairman and Chief Executive Officer and Chief Financial Officer, the members of senior management of our former business units (with respect to the maintenance and growing of their respective business units in order to maximize our potential earnouts and to collect the outstanding accounts receivable) and our Board of Directors. Some members of our senior management team work on a part-time basis. These arrangements, or any reduction or loss of these individuals’ services, could have a material adverse effect upon our business.
 
We are subject to the risk of possibly becoming an investment company.
 
Under Section 3(a)(1)(C) of the Investment Company Act of 1940 (the “1940 Act”), an issuer is deemed to be an investment company if it is engaged in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire "investment securities" having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. The 1940 Act defines “investment securities” broadly to include virtually all securities except U.S. government securities and securities issued by majority-owned subsidiaries that are not themselves regulated or exempt investment companies. Rule 3a-1 under the 1940 Act exempts an issuer if no more than 45% of its total assets consist of, and not more than 45% of its net income (for the last four fiscal quarters combined) is derived from, securities other than U.S. government securities, securities issued by employees’ securities companies, securities of majority-owned subsidiaries and primarily controlled companies.
 
We currently have no plans to invest the proceeds of the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode. If we do invest the proceeds in investment securities, it is possible that we could inadvertently be deemed to be an investment company under the 1940 Act. If we were to inadvertently become an investment company, we would have one year to divest of a sufficient amount of investment securities and/or acquire other assets sufficient to cause us to no longer be an investment company. Registered investment companies are subject to extensive, restrictive and potentially adverse regulation relating to, among other things, operating methods, management, capital structure, dividends and transactions with affiliates. If it were established that we are an unregistered investment company, there would be a risk, among other material adverse consequences, that we could become subject to monetary penalties or injunctive relief, or both, in an action brought by the SEC, that we would be unable to enforce contracts with third parties or that third parties could seek to obtain rescission of transactions with us undertaken during the period it was established that we were an unregistered investment company.
 
We do not believe that our planned principal activities will subject us to the Investment Company Act. If we are deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would increase our operating expenses.
 
We have limited management and other resources.

If we do have any future operations, our ability to manage such future operations effectively will require us to hire new employees, to integrate new management and employees into any future operations, financial and management systems, controls and facilities. Our failure to handle the issues we face effectively, including any failure to integrate new management controls, systems and procedures, could materially adversely affect our company, results of operations and financial condition.

 
6

 

Because a small number of clients account for a substantial portion of our former Preparedness Services unit’s revenues, the loss of any of these clients, or a decrease in their use of services, could cause the amount of our anticipated earnout to decline.
 
Revenues from our former Preparedness Services unit’s largest client, the State of Louisiana, accounted for 63% and 68% of the revenues generated by it during the years ended December 31, 2009 and 2008, respectively.  Its current contract with the State of Louisiana is a time and materials contract under which the State is not required to purchase a minimum amount of its services. Therefore, this contract could cease producing revenues at any time with little or no notice and significantly reduce or eliminate the amount of earnout we may receive.
 
The State of Louisiana can terminate its engagement with short notice or with no notice.
  
The engagement by the State of Louisiana is a project-based engagement and is terminable by it on short-term notice. As a result, it is not obligated to continue using our former Preparedness Services unit’s services at historical levels or at all, and may cancel its arrangement without penalty. Identifying and engaging new clients can be a lengthy and difficult process. Therefore, this contract could be terminated at any time with little or no notice and significantly reduce or eliminate the amount of earnout we may receive.

Bode is vulnerable to fluctuations in government spending and subject to additional risks as a result of the government contracting process, which often involves risks not present in the commercial contracting process.
 
Because many of Bode’s contracts are with government entities, its business is subject to a number of risks, including global economic developments, wars, political and economic instability, election results, changes in the tax and regulatory environments, foreign exchange rate volatility and fluctuations in government spending. Because many of its clients are federal, state or municipal government agencies with variable and uncertain budgets, the amount of business that Bode might receive from them may vary from year to year, regardless of the perceived quality of its business.
 
Moreover, competitive bidding for government contracts presents a number of risks that are not typically present in the commercial contracting process, including:
 
 
the need to devote substantial time and attention of its management team and key personnel to the preparation of bids and proposals for contracts that may not be awarded to Bode; and
 
 
the expenses that Bode might incur and the delays and revenue loss that it might suffer if its competitors protest or challenge contract awards made to it pursuant to competitive bidding. Such a protest or challenge could result in the resubmission of bids based on modified specifications, or in the termination, reduction or modification of the awarded contract.
 
If Bode is unable to consistently win new government contract awards over an extended period, or if it fails to anticipate all of the costs and resources that will be required to secure such contract awards, it may significantly reduce or eliminate the amount of earnout we may receive.

Preparedness Services and Bode’s professional reputations, which are critical to their businesses, are vulnerable to circumstances outside of their control.

Both Bode and Preparedness Services depend upon the reputation and the individual reputations of members of their respective senior management teams to obtain new client engagements. Each of Bode and Preparedness Services also obtain a substantial number of new engagements from existing clients or through referrals from existing clients. Anything that diminishes their respective reputations may make it more difficult to compete for new engagements or to retain existing clients and, therefore, could materially adversely affect their respective business. Any circumstances, including those where Preparedness Services or Bode are not at fault, and including any repercussions from events, that might publicly damage either of their goodwill, injure their reputation or damage their business relationships may lead to a broader material adverse effect on their respective business or prospects through loss of business, goodwill, clients, agents or employees, significantly reducing or eliminate the amount of earnout we may receive.

Bode is a worldwide business and is therefore influenced by factors and regulations in many countries.

Bode undertakes its business worldwide. The occurrence of any of the following risks relating to the conduct of Bode’s business in foreign countries could have a material adverse effect on the market for its services, their value to its clients or its ability to provide them:

 
changes in, and difficulty in complying with, laws and regulations of the different countries, including authority to trade or perform our existing and future services;

 
nullification, modification and renegotiation of contracts;

 
7

 

 
reversal of current policies, including favorable tax policies, encouraging foreign investment or foreign trade, or relating to the use of local agents;

 
restrictive actions by local governments, including tariffs and limitations on imports and exports;

 
adverse economic conditions which might impact the generation and flow of capital; and

 
difficulty in collecting accounts receivable and longer collection times.

The occurrence of any of these risks could significantly reduce or eliminate the amount of earnout we may receive.

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and operating results. In addition, current and potential stockholders could lose confidence in our financial reporting, which could cause our stock price to decline.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our business could be harmed. 

As a public company, we are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of our internal control over financial reporting.

Failure to maintain an effective internal control environment could cause us to face regulatory action, result in delays or inaccuracies in reporting financial information or cause investors to lose confidence in our reported financial information, any of which could cause our stock price to decline.

We may become subject to significant legal proceedings.
 
We are subject from time to time to litigation and other adverse claims related to our former businesses, some of which may be substantial.  These claims have in the past been, and may in the future be, asserted by persons who are screened by us, regulatory agencies, former clients or other third parties. Matters such as these, in which we may become defendants, may negatively impact our cash flows 

Our exposure in a future liability action could exceed our insurance coverage.
 
Some of our former service offerings involved high risk activities. We may not be able to maintain insurance at levels of risk coverage or policy limits that we deem adequate for any of our former activities and cannot guarantee that every contract contains or will contain limitations on our liability below these policy limits. Because of the increasing cost of liability insurance, purchasing sufficient amounts of insurance coverage, or additional insurance when needed, could be prohibitively expensive. If we are sued for any injury caused by our any of our former business offerings, our liability could exceed our total assets. Any claims against us for our former service offerings, regardless of their merit or eventual outcome, could have a detrimental effect upon our financial condition.
 
Risks Related To Our Stock
 
Our shares may be delisted from the Nasdaq Capital Market.
 
On January 18, 2011, the staff of The NASDAQ Stock Market, Inc. (“NASDAQ”) delivered a determination letter (the “Determination Letter”) to us indicating its belief that we no longer meet its listing standards as that we are not in compliance with Listing Rule 5101 and may be a “public shell” with no operating business following the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode and the discontinuation of International Strategies.  Marketplace Rule 5100 provides NASDAQ with discretionary authority to apply more stringent criteria for continued listing and can terminate the inclusion of particular securities based on any event that occurs that in the opinion of NASDAQ makes inclusion of the securities in the NASDAQ inadvisable or unwarranted.

The Determination Letter stated that we have the right to appeal the delisting decision and that absent such an appeal, trading in our common stock will be suspended at the opening of business on January 27, 2011.  On January 25, 2011, we sent a letter to NASDAQ stating that in accordance with the NASDAQ Listing Rule 5800 Series, we would appeal the determination.  As of the date hereof, our appeal is pending.
 
If our shares are delisted from the Nasdaq Capital Market, it would be our intention that our securities would be eligible for quotation on the OTC Bulletin Board, but there could be a smaller market for our shares and this may increase our shares’ volatility.  Accordingly an investor may find it difficult to sell our securities.

 
8

 

Our common stock price has fluctuated considerably and stockholders may not be able to resell their shares at or above the price at which their shares were purchased.
 
Since our reverse merger in June 2005, the high and low bid price for our common stock has been $32.00 and $1.14 per share, respectively. The market price of our common stock may still fluctuate significantly in response to a number of factors, some of which are beyond our control, including the following:

 
·
Change in financial estimates by securities analysts
 
 
·
Changes is market valuation of comparable companies
 
 
·
Additions or departures of key personnel
 
 
·
Future sales of our common stock
 
 
·
Changes in the national and global economic outlook.
 
Some or all of which may affect us or our former business units and the amount of the earnouts and receipt of payments from escrow, so these factors still apply to us.

The stock market in general has experienced extreme price fluctuations.  Continued market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock.  Price volatility might be worse if the trading volume of our common stock continues to be low, as we expect it to be.
 
The volume of trading of our stock will remain low and the market for selling our shares may be limited.

Our common stock has historically been sporadically or thinly traded.  As a result of the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode, our trading volume may decrease even further. As a result, the number of persons interested in purchasing our common stock at or near ask prices at any given time may be relatively small or non-existent. In addition to the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode, this situation is attributable to a number of factors, including the fact that stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume may be reluctant to follow a company with limited, if any, operations, or purchase or recommend the purchase of our common stock until we demonstrate that we can consistently operate profitably. As a consequence, there may be periods of several days or more when trading activity in our shares is low and a stockholder may be unable to sell his shares of common stock at an acceptable price, or at all. We cannot give stockholders any assurance that a broader or more active public trading market for our common stock will develop or be sustained, that current trading levels will be sustained or that we will continue to meet the requirements for listing on Nasdaq.  If we are removed from Nasdaq, this issue of limited volume of trading and market for selling our shares could be exacerbated.

Our stockholders may no longer be allowed to use the exception under Rule 144 of the Securities Act.
 
Selling stockholders may not be able rely upon Rule 144 under the Securities Act (“Rule 144”) to sell their shares in open market transactions if we are determined to be a “public shell.”  Under Rule 144(i), Rule 144 is not available to companies that have no or nominal operations and the company’s assets consist solely of cash and cash equivalents and nominal other assets.
 
If we are delisted from Nasdaq we may be deemed a “penny stock.”
 
If we are delisted from Nasdaq we may be considered a “penny stock” as defined in the Exchange Act and the rules thereunder, unless the price of our shares of common stock is at least $5.00. We expect that our share price will be less than $5.00. Unless our common stock is otherwise excluded from the definition of “penny stock”, the penny stock rules apply. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its sales person in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination that the penny stock is suitable for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. So long as our common stock is subject to the penny stock rules, the level of trading activity could be limited and it may be difficult for investors to sell our common stock.

 
9

 
 
We may never pay any dividends to stockholders.
 
We have never declared or paid any cash dividends or distributions on our capital stock.  We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future.
 
The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.
 
We may not make additional distributions of net proceeds to our stockholders.

We have stated our current intention that we currently intend to return the net proceeds from the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode, to our stockholders after satisfying existing contractual and banking obligations and establishing appropriate reserves for contingencies and ongoing operating costs.   During the year ended December 31, 2010, we repurchased in the open market 16,627 shares of our common stock at a cost of $39.  On December 1, 2010, we commenced a partial tender offer to purchase for cash up to 10,000,000 shares of our common stock at a price of $2.40 per share. The tender offer closed on December 29, 2010, in which we purchased a total of 1,119,978 shares at a cost of $2,688.
 
Following the completion of the tender we continue to explore the most efficient form of the distribution of the remaining proceeds from the sales of these units, and have also explored alternative uses of the net proceeds from the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode in the event that we determine not to further distribute these proceeds to our stockholders.
 
In the event that we decide to retain the proceeds from the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode, we may pursue a business combination or other type of corporate transaction.  We currently do not have any arrangement, agreement or understanding with respect to engaging in a business combination with a specific entity and there can be no assurance that we will be successful in identifying and evaluating or in concluding a business combination.
 
Our executive officers, directors and 10% stockholders have significant voting power and may vote their shares in a manner that is not in the best interest of other stockholders.
 
Our executive officers, directors and 10% stockholders control approximately 80% of the voting power represented by our outstanding common stock.  If these stockholders act together, they may be able to exert significant control over our management and affairs requiring stockholder approval, such as the election of directors or the dissolution of the company.  This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of all our stockholders.

Provisions in our certificate of incorporation and by-laws may deter third parties from acquiring us and could lead to the entrenchment of our Board of Directors.
 
 Our certificate of incorporation and by-laws contain provisions that may make the acquisition of our company more difficult without the approval of our Board of Directors, including the following:
 
 
·
we have authorized undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval;
 
 
·
stockholder action by written consent must be unanimous;
 
 
·
stockholders may only remove directors for cause;
 
 
·
vacancies on the Board of Directors may be filled only by the directors;
 
 
·
we have a stockholder rights plan in place; and
 
 
·
we require advance notice for stockholder proposals.
 
These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take other corporate actions that you desire. The anti-takeover defenses in our certificate of incorporation and by-laws could discourage, delay or prevent a transaction involving a change in control of our company.  These deterrents could adversely affect the price of the Company’s common stock and make it difficult to remove or replace members of the Board of Directors or management of the Company.  See “Description of Capital Stock” below for a discussion of some of these provisions that make the acquisition of the company more difficult.

 
10

 

Item 1B. Unresolved Staff Comments

Not applicable

Item 2.    Properties
 
Our administrative headquarters is located in New York, New York.  This office is leased on a month to month basis and we do not consider such leased facility to be material to our operations. We believe that equally suited facilities are otherwise available to us, if needed.

Item 3.    Legal Proceedings
 
On April 22, 2010 a case was filed against us stating that we conspired to divert work from the plaintiff.  The claims are for $2,400 in this case.  We believe that the suit is completely without merit and intend to vigorously defend our position.
 
On October 2, 2010, we along with others were notified that we are a defendant in a lawsuit filed by a third party for alleged conversion of assets, tortuous interference and defamation, among other claims.  The suit asks for actual and punitive damages totaling $4.2 billion.  We believe that the suit is completely without merit and intend to vigorously defend our position.
 
On November 4, 2010, we entered into a settlement agreement with each of Howard Safir, the former Chief Executive Officer of the Company’s Security Consulting and Investigations unit and Adam Safir, Howard Safir’s son and a former officer of the Company’s Security Consulting and Investigations unit (the “Safirs”), in order to resolve and settle disputes regarding alleged payments owing to the Safirs under their respective consulting agreements, employment agreements and any further obligation to issue our common stock to the Safirs.  Furthermore, we received an indemnification from the Safirs for any claims that may be made against us for legal issues arising from the actions of SafirRosetti, LLC.  The settlement agreement provides a cash payment to the Safirs in the amount of $375 and release from the Safirs for any future claims against us and our receiving a full release and indemnification of any claims or legal matters arising from SafirRosetti, LLC.  On November 9, 2010, the $375 settlement was deposited into an escrow account, and on December 3, 2010, the $375 amount was fully disbursed out of escrow after our receipt of full releases for certain potential claims against us and SafirRosetti, LLC.

Item 4.    (Removed and Reserved)

 
11

 

PART II
 
(Dollar amounts in thousands, except per share amounts)

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market for Common Equity

Our common stock is quoted on the NASDAQ Capital Market under the symbol “GLOI”. Based upon information furnished by our transfer agent, as of February 9, 2011, we had 214 holders of record of our common stock.
 
The following table sets forth the high and low sales prices for our common stock for the periods indicated as reported by NASDAQ Capital Market:

Fiscal Year 2009
 
High
   
Low
 
First Quarter
  $ 2.15     $ 1.14  
Second Quarter
    2.15       1.25  
Third Quarter
    2.10       1.55  
Fourth Quarter
    2.08       1.30  
                 
Fiscal Year 2010
 
High
   
Low
 
First Quarter
  $ 1.92     $ 1.37  
Second Quarter
    2.50       1.53  
Third Quarter
    3.07       1.95  
Fourth Quarter
    2.57       1.80  
                 
Fiscal Year 2011
 
High
   
Low
 
First Quarter through February 9, 2011
  $ 2.65     $ 2.37  

            We have not paid any cash dividends on our common stock during the periods presented above. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock.

On January 18, 2011, the staff of NASDAQ delivered the Determination Letter to us indicating its belief that we no longer meet its listing standards as that we are not in compliance with Listing Rule 5101 and may be a “public shell” with no operating business following the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode and the discontinuation of International Strategies.  Marketplace Rule 5100 provides NASDAQ with discretionary authority to apply more stringent criteria for continued listing and can terminate the inclusion of particular securities based on any event that occurs that in the opinion of NASDAQ makes inclusion of the securities in the NASDAQ inadvisable or unwarranted.

The Determination Letter stated that we have the right to appeal the delisting decision and that absent such an appeal, trading in our common stock will be suspended at the opening of business on January 27, 2011.  On January 25, 2011, we sent a letter to NASDAQ stating that in accordance with the NASDAQ Listing Rule 5800 Series, we would appeal the determination.  As of the date hereof, our appeal is pending.  If our appeal fails and our stock is delisted by NASDAQ, it would be our intention that our securities would be eligible for quotation on the OTC Bulletin Board.

 
12

 

Securities Authorized for Issuance Under Equity Compensation Plans
 
The following table contains information about our common stock that may be issued upon the exercise of options and upon the vesting of restricted stock units (“RSUs”) under all of our equity compensation plans as of December 31, 2010. See “Executive Compensation—Benefit Plans” for a description of our stock option and incentive plans.
 
Plan Category
 
Number of securities
to be issued upon
exercise of
outstanding options
and upon vesting of RSUs
(a)
   
Weighted average
exercise price of
outstanding
options
(does not include
RSUs)
(b)
   
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in
column (a)) 
(c)
 
                   
Equity compensation plans approved by security holders(1)
    573,983     $ 2.64       3,246,529
(2)
Equity compensation plans not approved by security holders
    -       -       -  
Total
    573,983     $ 2.64       3,246,529  
 
(1) Our Amended and Restated 2006 Long-Term Incentive Plan and Amended and Restated 2006 Employee Stock Purchase Plan were adopted by our stockholders on July 24, 2008.
(2)The number of securities remaining available for future issuances includes 1,368,917 under the Amended and Restated 2006 Long-Term Incentive Plan and 1,877,612 under the Amended and Restated 2006 Employee Stock Purchase Plan.
 
Purchases of Securities by the Company

The following table provides information about shares of our common stock purchased by the Company during the quarter ended December 31, 2010:

Period
 
(a)
Total Number
of Shares
(or Units)
Purchased
   
(b)
Average
Price Paid
per Share
(or Unit)
   
(c)
Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that May Yet Be
Withheld Under the Plans or
Programs
 
10/1/10 – 10/31/10
                 
11/1/10 – 11/30/10(1)
     16,627     $ 2.30        -  
12/1/10 – 12/31/10(2)
    1,119,978     $ 2.40       -  
Total
    1,136,605     $ 2.40       -  

(1)  On October 28, 2010, we announced that our Board of Directors authorized the repurchase of up to $3,000 of our common stock over a period of 18 months, at such times, amounts and prices as we shall deem appropriate.  During the year ended December 31, 2010, just prior to the aforementioned tender offer, we repurchased in the open market 16,627 shares of our common stock at a cost of $39.   The stock repurchase program terminated on December 1, 2010, upon the commencement of our tender offer.

(2) On December 1, 2010, we commenced a partial tender offer to purchase for cash up to 10,000,000 shares of our common stock at a price of $2.40 per share. The tender offer closed on December 29, 2010, after which we purchased and canceled a total of 1,119,978 shares at a cost of $2,688.  This purchase represented approximately 7.7% of the outstanding shares of our common stock.

On February 7, 2011 the Board of Directors authorized the repurchase of up to $3,000 of our common stock over a period of six months, at such times, in such amounts and at such prices as we deem appropriate.  As of February 9, 2011 no shares have been purchased under the repurchase program.

 
13

 

Item 6.  Selected Financial Data
 
Not applicable.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The following discussion of results of operations and financial condition is based upon, and should be read in conjunction with, our consolidated financial statements and accompanying notes thereto included elsewhere in this Form 10-K. This discussion contains forward-looking statements. Actual results could differ materially from the results discussed in the forward-looking statements. Please see “Forward-Looking Statements” and “Risk Factors” for a discussion of some of the uncertainties, risks and assumptions associated with these statements.
 
Overview
 
We were an integrated provider of risk mitigation and management services to government entities, Fortune 1,000 corporations and high net-worth and high-profile individuals.  Prior to the sale of our business operations, our strategy was to develop a comprehensive risk mitigation solutions company.  
 
During the year ended December 31, 2010, we sold or closed all of our operating businesses. We completed the sale of SafirRosetti on April 30, 2010, Preparedness Services on July 16, 2010 Fraud and SIU Services on July 20, 2010, Bode on November 30, 2010 and on December 31, 2010, we closed International Strategies.
 
Prior to our sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode and the closure of International Strategies, we reported operating results in three financial reporting segments: Preparedness Services; Fraud and SIU Services; and Security Consulting and Investigations (which was re-named Forensic DNA Solutions and Products following the sale of SafirRosetti).  The Preparedness Services segment consisted of the operations of Preparedness Services, which implemented crisis management and emergency response plans and other emergency management issued for governments, corporations and individuals.  The Fraud and SIU Services segment consisted of the operations of Fraud and SIU Services and our International Strategies business unit, which provided multidisciplinary, international risk management and business solutions.  The Security Consulting and Investigations segment consisted of the operations of SafirRosetti, which provided security and investigative services, and Bode, which provided forensic DNA analysis services.  As a result of the sales of these business units, we no longer report operating results in separate segments.
 
Return of Proceeds to Stockholders
 
We have publicly announced that we currently intend to return the net proceeds from the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode to our stockholders, after satisfying existing contractual obligations and establishing appropriate reserves for contingencies and ongoing operating costs.  In connection with this intention, on December 1, 2010, we commenced a partial tender offer to purchase for cash up to 10,000,000 shares of our common stock at a price of $2.40 per share. Through December 29, 2010, the closing date of the tender offer, we accepted for purchase a total of 1,119,978 shares which were tendered and not withdrawn. In connection therewith, through December 31, 2010, we returned a total of $2,688 to our stockholders.  In addition, during the year ended December 31, 2010, just prior to the aforementioned tender offer, we repurchased in the open market 16,627 shares of our common stock at a cost of $39.  On February 7, 2011, our board of directors approved a new program to purchase up to $3,000 of our common stock over a period of 18 months, at such times, amounts and prices as the Company shall deem appropriate.  Following the completion of the tender we continue to explore the most efficient form of the distribution of the remaining proceeds from the sales of these units and have also explored alternative uses of the net proceeds from the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode in the event that we determine not to further distribute these proceeds to our stockholders.

 
14

 

Results of Operations
 
Continuing Operations
 
Our continuing operations consist of executive and general corporate functions, consisting principally of salaries and professional fees. These executive and general corporate operations include the services provided and being provided by the Company in connection with transition service agreements.  Transition services in support of the business units sold include services provided for financial services, information technology, marketing and business development, employee benefits, general insurance and general transition services.   In addition, significant executive and general corporate attention is focused upon monitoring and managing the Company’s collection of the post business unit cash receipts, including notes receivable, working capital adjustments, escrowed purchase price amounts and earnouts.
 
Operating Expenses
 
Our selling and marketing expenses primarily include salaries, stock based compensation, as well as travel and other expenses. Our general and administrative expenses consist primarily of salaries, bonuses and stock-based compensation, as well as corporate support expenses such as legal and professional fees, investor relations, human resources, facilities, telecommunication support services and information technology.

Discontinued Operations

As a result of our sales of SafirRosetti, Preparedness Services, Fraud and SIU Services, Bode, and our closing of International Strategies, the results and accounts of these business units are now presented in our financial statements as discontinued operations for the year ended December 31, 2010 and all prior periods. As of December 31, 2010, continuing operations consist solely of our executive and general corporate operations.

GlobalOptions’ Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009
 
Operating Expenses
 
Selling and marketing expenses were $1,755 for the year ended December 31, 2010, as compared to $2,266 for the year ended December 31, 2009, representing a $511 decrease, related to decreased selling activities related to sale of business units and discontinuation of operations.  General and administrative expenses were $14,138 for the year ended December 31, 2010, as compared to $8,882 for the year ended December 31, 2009.  The increase of $5,256 is attributable to an increase in costs related to evaluating strategic alternatives and the sales of our business units, as well as approximately $4,400 in compensation costs, principally related to contractual compensation for our chief executive officer and chief financial officer incurred contractually in connection with the sale of Preparedness Services.
 
Results of Discontinued Operations
 
Income from discontinued operations, net of tax, was $840 and $6,369 for the years ended December 31, 2010 and 2009 respectively.  The decrease in the income from discontinued operations for the year ended December 31, 2010 is primarily due to an impairment charge of $4,475 taken with respect to Fraud and SIU Services and lack of a full year of operations for the year ended December 31, 2010.

Net Loss

Net loss for the years ended December 31, 2010 and 2009 was $15,274 and $5,311, respectively.  Net loss for the year ended December 31, 2010 was comprised of a loss from continuing operations of $16,114 and income from discontinued operations, net of tax, of $840.  Net loss for the year ended December 31, 2009 was comprised of a loss from continuing operations of $11,680 and income from discontinued operations, net of tax, of $6,369.  The increase in net loss is principally the result of a $4,475 goodwill impairment charge taken with respect to Fraud and SIU Services upon our entering into an agreement to sell that unit, the elimination of operating margins from sold business units and executive compensation costs incurred in connection with the sale of Preparedness Services.
 
GlobalOptions’ Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008
 
Operating Expenses

Selling and marketing expenses were $2,266 for the year ended December 31, 2009, as compared to $1,876 for the year ended December 31, 2008, representing a $390 increase principally from the executive forum and marketing expenses.  General and administrative expenses were $8,882 for the year ended December 31, 2009, as compared to $8,329 for the year ended December 31, 2008.  The increase of $553 is principally attributable to an increase in costs related to evaluating strategic alternatives for the company.

 
15

 
 
Results of Discontinued Operations
 
Income from discontinued operations, net of tax, was $6,369 and $2,570 for the years ended December 31, 2009 and 2008 respectively.  The increase in the income from discontinued operations for the year ended December 31, 2009 is primarily due to an improvement in the operating results of Bode.
 
Net Loss
 
Net loss for the years ended December 31, 2009 and 2008 was $5,311 and $7,956, respectively.  Net loss for the year ended December 31, 2009 was comprised of a loss from continuing operations of $11,680 and income from discontinued operations, net of tax, of $6,369.  Net loss for the year ended December 31, 2008 was comprised of a loss from continuing operations of $10,526 and income from discontinued operations, net of tax, of $2,570.  The decrease in net loss is principally the result of a decrease in headcount and professional fees.

Liquidity and Capital Resources

We had a cash and cash equivalent balance of $26,126 as of December 31, 2010.

Cash (used in) provided by operating activities was approximately $(7,839) and $6,082 for the year ended December 31, 2010 and 2009, respectively.  Cash used in operating activities for the year ended December 31, 2010 resulted primarily from our net loss from continuing operations of $15,274, offset by stock based compensation of $2,325, as well as a goodwill impairment charge of $4,475 in connection with the Fraud and SIU business unit.

Cash provided by (used in) investing activities was $36,060 and $(2,865) for the years ended December 31, 2010 and 2009, respectively.  Of the cash provided by investing activities for the year ended December 31, 2010, $39,897 related to the proceeds received upon the disposition of our business units, offset by investments of the rabbi trust holding our nonqualified deferred compensation plan assets in connection with the compensation earned by our chief executive officer and chief financial officer upon the sale of Preparedness Services.

Cash used in financing activities by continuing operations was $5,316 and $5,272 for the year ended December 31, 2010 and 2009, respectively.  The net cash used in financing activities for the year ended December 31, 2010 was primarily due to the tender offer of shares in which we repurchased a total of 1,119,978 shares at a cost of $2,688, repayments from the line of credit of $2,163, as well as our stock buy-back program, in which we purchased 16,627 shares of our common stock at a cost of $39.

On November 30, 2010, in connection with the sale of Bode, our line of credit facility was terminated with a balance of $0.

For the year ended December 31, 2010, we have met our cash needs through cash generated by the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode. At December 31, 2010, we had working capital of $29,721.

Subject to our satisfaction of and compliance with existing contractual and banking obligations, and the establishment of appropriate reserves, we currently  intend to distribute the remaining net proceeds from the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode to our stockholders.  We returned $2,688 to our stockholders in connection with the tender of 1,119,978 shares of our common stock in connection with our tender offer, which concluded in December 2010.  We expect that any later distributions, to the extent that no earnouts are achieved and no proceeds are released from escrow, would be in an aggregate amount between $20,000, to as much as $22,000.  There is no guarantee, however, that we will make this later distribution or any other distribution.  In the event that we decide to retain the proceeds from such sales, we may pursue a business combination or other type of combination with a specific entity or within any specific industry.  There can be no assurance, however, that we would be successful in identifying, evaluating or concluding any such business combination if we chose to retain such proceeds.

We also note that these distribution amounts are net of our current estimates of the amounts needed for required reserves,  for contingencies and for financial and operating costs, but do not consider the effects of working capital adjustments, guarantees of receivables sold, tax or other reserves which we may later conclude are necessary.

We believe that the cash generated by the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode, the cash that we expect to receive from the release of escrow amounts, the earnouts, and the payment of the remaining balance on the SafirRosetti Note, less any distributions to our stockholders, will be sufficient to finance our operations through December 31, 2011.

 
16

 
 
In addition to the fixed portion of the purchase price for SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode, each agreement provides for contingent proceeds in the form of earnouts and/or the return of an escrow deposit. The following table represents the minimum and maximum aggregate contingent proceeds that may be realized from the sales of SafirRosetti, Fraud and SIU Services, Preparedness Services, and Bode.

   
SafirRosetti
   
Fraud and SIU Services
   
Preparedness Services
   
Bode
   
Total
 
   
Min
   
Max
   
Min
   
Max
   
Min
   
Max
   
Min
   
Max
   
Min
   
Max
 
Earnout
  $ 1,077     $ 1,600     $ -     $ -     $ -     $ 12,000     $ -     $ 5,500     $ 1,077     $ 19,100  
Return of escrow
    -       525       -       825       -       1,000       -       2,450       -       4,800  
Totals
  $ 1,077     $ 2,125     $ -     $ 825     $ -     $ 13,000     $ -     $ 7,950     $ 1,077     $ 23,900  

The minimum amount in connection with the sale of SafirRosetti includes $1,077 of contingent consideration that was realized and recognized through February 9, 2011.  There is no assurance that any of these contingent proceeds in excess of amounts already received will be realized.  Accordingly, in each case the future minimum amount is $0. Neither the maximum nor the minimum amounts represent management’s expectation of the amount of contingent proceeds to be realized.  Additionally, these contingent proceeds do not reflect certain potential working capital adjustments and accounts receivable guarantees that we provided for with respect to the above mentioned transactions.
 
If we receive the contingent proceeds discussed above, we intend to distribute them to stockholders, less deductions comparable to those described above with respect to the distribution of the other proceeds of the transactions.  However, we have not made a final decision as to, and continue to explore the most efficient form of, any such distribution and any alternative uses of the net proceeds from the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode in the event that we determine not to further distribute these proceeds to our stockholders.
 
Off-Balance Sheet Arrangements
 
We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

Critical Accounting Policies

Our significant accounting policies, including the assumptions and judgments underlying them, are more fully described in our “Notes to Consolidated Financial Statements” included elsewhere within this Annual Report on Form 10-K. Some of our accounting policies require the application of significant judgment by management in the preparation of the consolidated financial statements and, as a result, they are subject to a greater degree of uncertainty. In applying these policies, management uses its judgment to determine the appropriate assumptions to be used in calculating estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. We have identified certain of our accounting policies as the ones that are most important to the portrayal of our consolidated financial condition and results of operations and which require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our critical accounting policies include the following:

Intangible Assets, Goodwill and Impairment

In accordance with accounting standards, we recognize certain intangible assets acquired in acquisitions, primarily goodwill, trade names, covenants not to compete and client relationships.  On a regular basis, we perform impairment analysis of the carrying value of goodwill and certain other intangible assets by assessing the recoverability when there are indications of potential impairment based on estimates of undiscounted future cash flows.
 
Funds held in escrow related to the sales of business units
 
A portion of the proceeds from the sale of each of the business units has been held in escrow, to cover potential post-closing indemnification obligations. Funds held in escrow are recorded at net realizable value.
 
Amounts due from buyers related to the sales of business units.
 
Amounts due from buyers in connection with the sales of the business units include a note receivable and amounts due in connection with working capital adjustments, and are recorded at net realizable value.  Contingent consideration is recognized when realized due to the uncertainty of realization.
 
Income Taxes
 
Certain contingent consideration that was not recorded on our books as of December 31, 2010, due to the uncertainty of realization was included in income for income tax purposes.  The effect of this contingent consideration, which is included in our determination of taxable income at fair value, is treated as a temporary difference in the calculation of our deferred tax asset at December 31, 2010.
 
Stock-Based Compensation

We have adopted the fair value recognition provisions Accounting Standards Codification 718 “Compensation—Stock Compensation” (“ASC 718”).  Stock-based compensation expense for all share-based payment awards granted after December 31, 2005 is based on the grant-date fair value estimated in accordance with the provisions ASC 718. We recognize these compensation costs over the requisite service period of the award, which is generally the vesting term of the options associated with the underlying employment agreement, where applicable.

 
17

 
 
ASC 718 also requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience. Prior to the adoption of ASC 718, we accounted for forfeitures as they occurred.
 
We account for equity instruments issued to non-employees in accordance with the provisions of ASC 718 which requires that such equity instruments be recorded at their fair value on the measurement date, which is typically the date the services are performed. Stock-based compensation for non-employees is accounted for under ASC 718 and is reflected within general and administrative expenses.

Discontinued Operations

We account for our discontinued operations under the provisions of ASC 205-20 “Presentation of Financial Statements – Discontinued Operations”. Accordingly, the results of operations and related charges for discontinued operations with respect to the sales of SafirRosetti, Preparedness Services, Fraud and SIU Services and Bode and the closure of International Strategies, are reflected in net loss discontinued operations.  Assets and liabilities of the discontinued operations have been reclassified and are reflected on our Consolidated Balance Sheet as “Current assets of discontinued operations”, “Assets of discontinued operations”, “Current liabilities of discontinued operations” and “Liabilities of discontinued operations”. Additionally, certain corporate overhead costs that were clearly identifiable as costs of the disposed business units were attributed to discontinued operations under the provisions of ASC 205-20.
 
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 8. Financial Statements and Supplementary Data.

Our consolidated financial statements and the related notes to the financial statements called for by this item appear under the caption “Index to Consolidated Financial Statements” beginning on Page F-1 attached hereto of this Annual Report on Form 10-K.

 
18

 

GLOBALOPTIONS GROUP, INC. AND SUBSIDIARIES
Table of Contents to Consolidated Financial Statements

 
Page(s)
Report of Independent Registered Public Accounting Firm
F-2
   
Consolidated Balance Sheets as of December 31, 2010 and 2009
F-3
   
Consolidated Statements of Operations for the Years Ended December 31, 2010,  2009 and 2008
F-4
   
Consolidated Statements of Stockholders' Equity for the Years Ended December 2010, 2009 and 2008
F-5
   
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008
F-8
   
Notes to Consolidated Financial Statements
F-10

 
F-1

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee of the Board of Directors and Stockholders
Of GlobalOptions Group, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheets of GlobalOptions Group, Inc. and Subsidiaries (the “Company”) as of December 31, 2010 and 2009 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2010, 2009 and 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of GlobalOptions Group, Inc. and Subsidiaries as of December 31, 2010 and 2009 and the consolidated results of their operations and their cash flows for the years ended December 31, 2010, 2009 and 2008 in conformity accounting principles generally accepted in the United States of America.

/s/ Marcum LLP

New York, New York
 
February 15, 2011

 
F-2

 
 
GLOBALOPTIONS GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets
(dollars in thousands, except per share amounts)

   
December 31,
   
December 31,
 
   
2010
   
2009
 
ASSETS
           
             
Current assets:
           
Cash and cash equivalents
  $ 26,126     $ 3,221  
Restricted cash equivalents - deferred compensation
    2,506       -  
Funds held in escrow related to the sales of business units
    4,800       -  
Amounts due from buyers related to the sales of business units
    5,002       -  
Prepaid expenses and other current assets
    426       350  
Current assets of discontinued operations
    12       23,476  
                 
Total current assets
    38,872       27,047  
                 
Property and equipment, net
    -       36  
                 
Other assets of discontinued operations
    -       31,731  
                 
Total assets
  $ 38,872     $ 58,814  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
Current liabilities:
               
Line of credit
  $ -     $ 2,163  
Accounts payable
    570       358  
Accrued compensation and related benefits
    896       195  
Deferred compensation
    2,506       -  
Other current liabilities
    1,614       795  
Current liabilities of discontinued operations
    3,565       8,180  
                 
Total current liabilities
    9,151       11,691  
                 
Long-term liabilities of discontinued operations
    -       1,300  
Total long-term liabilities
    -       1,300  
                 
Total liabilities
    9,151       12,991  
                 
Commitments and contingencies
               
                 
Stockholders'  equity:
               
Preferred stock, $0.001 par value, 14,880,000 shares authorized, no shares issued or outstanding;
    -       -  
Series D convertible preferred stock, non-voting, $0.001 par value, 100,000 shares authorized, no shares issued or outstanding;
    -       -  
Series A junior participating preferred stock, $0.001 par value, 20,000 shares authorized, no shares issued or outstanding;
    -       -  
Common stock, $0.001 par value, 100,000,000 shares authorized; 13,716,794 shares issued and 13,372,819 shares outstanding at December 31, 2010, and 14,472,363 shares issued and 14,348,469 shares outstanding at December 31, 2009
    14       14  
Additional paid-in capital
    111,525       111,909  
Accumulated deficit
    (81,131 )     (65,857 )
Treasury stock; at cost, 343,975 and 123,894 shares at December 31, 2010 and December 31, 2009, respectively
    (687 )     (243 )
Total stockholders' equity
    29,721       45,823  
Total liabilities and stockholders' equity
  $ 38,872     $ 58,814  
 
See notes to these consolidated financial statements.
 
 
F-3

 

GLOBALOPTIONS GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(dollars in thousands, except share and per share amounts)

   
For the Years Ended December 31,
 
   
2010
   
2009
   
2008
 
                   
Operating expenses:
                 
                   
Selling and marketing
  $ 1,755     $ 2,266     $ 1,876  
                         
General and administrative
    14,138       8,882       8,329  
                         
Total operating expenses
    15,893       11,148       10,205  
                         
Loss from operations
    (15,893 )     (11,148 )     (10,205 )
                         
Other income (expense):
                       
                         
Interest income
    2       1       24  
                         
Interest expense
    (223 )     (533 )     (345 )
                         
Other expense, net
    (221 )     (532 )     (321 )
                         
Loss from continuing operations
    (16,114 )     (11,680 )     (10,526 )
                         
Discontinued Operations:
                       
                         
Income from discontinued operations, including tax benefit
    959       6,369       2,570  
Loss on disposals, net of tax
    (119)       -       -  
Income from discontinued operations, net of tax
    840       6,369       2,570  
                         
Net loss
  $ (15,274 )   $ (5,311 )   $ (7,956 )
                         
Basic and diluted net loss (income) per share:
                       
Continuing operations
    (1.13 )     (0.91 )     (1.07 )
Discontinued operations, net of tax
    0.06       0.49       0.26  
                         
Net loss per share
    (1.07 )     (0.42 )     (0.81 )
                         
Weighted average number of common shares outstanding - basic and diluted
    14,320,505       12,870,729       9,834,069  
 
See notes to these consolidated financial statements.
 
 
F-4

 

GLOBALOPTIONS GROUP, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
For the Year Ended December 31, 2010
(dollars in thousands)

                           
Additional
             
   
Common Stock
   
Treasury Shares
   
Paid-in
   
Accumulated
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
   
Total
 
Balance, January 1, 2010
    14,472,363     $ 14       123,894     $ (243 )   $ 111,909     $ (65,857 )   $ 45,823  
                                                         
Issuance of shares to consultants for services provided
    26,309       -       -       -       45       -       45  
                                                         
Issuance of common stock in connection with vesting of restricted stock units
    155,561       -       -       -       -       -       -  
                                                         
Purchase of treasury shares in connection with cashless vesting of restricted stock units
    -       -       33,654       (69 )     -       -       (69 )
                                                         
Purchase of treasury shares in connection with cashless vesting of restricted stock
    -       -       169,800       (336 )     -       -       (336 )
                                                         
Purchase of treasury shares under stock repurchase program
    -       -       16,627       (39 )     -       -       (39 )
                                                         
Purchase and cancellation of shares in connection with tender offer
    (1,119,978 )     (1 )     -       -       (2,687 )     -       (2,688 )
                                                         
Issuance of common stock upon exercise of stock options
    151,250       1       -       -       272       -       273  
                                                         
Issuance of common stock under employee stock purchase plan
    31,289       -       -       -       45       -       45  
                                                         
Stock-based compensation - restricted stock vested
    -       -       -       -       1,468       -       1,468  
                                                         
Repurchase of stock-based compensation award
    -       -       -       -       (339 )     -       (339 )
                                                         
Stock based compensation - employee stock purchase plan
    -       -       -       -       16       -       16  
                                                         
Amortization of consultant stock option costs
    -       -       -       -       132       -       132  
                                                         
Amortization of employee stock option costs
    -       -       -       -       82       -       82  
                                                         
Amortization of consultant restricted stock unit costs
    -       -       -       -       7       -       7  
                                                         
Amortization of employee restricted stock unit costs
    -       -       -       -       575       -       575  
                                                         
Net loss
    -       -       -       -       -       (15,274 )     (15,274 )
                                                         
Balance, December 31, 2010
    13,716,794     $ 14       343,975     $ (687 )   $ 111,525     $ (81,131 )   $ 29,721  
 
See notes to these consolidated financial statements.
 
 
F-5

 

GLOBALOPTIONS GROUP, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
For the Year Ended December 31, 2009
(dollars in thousands)

                           
Series D
                   
                           
Convertible
   
Additional
             
   
Common Stock
   
Treasury Shares
   
Preferred Stock
   
Paid-in
   
Accumulated
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
   
Total
 
Balance, January 1, 2009
    10,486,935     $ 10       107,067     $ (208 )     55,388.37     $ -     $ 108,989     $ (60,546 )   $ 48,245  
                                                                         
Stock issued to consultants for services
    89,577       -       -       -       -       -       165       -       165  
                                                                         
Shares issued upon the exercise of stock options
    44       -       -       -       -       -       -       -       -  
                                                                         
Shares issued in connection with the vesting of RSUs
    134,274       -       -       -       -       -       -       -       -  
                                                                         
Treasury shares acquired in satisfaction of income tax withoholding
    -       -       16,827       (35 )     -       -       -       -       (35 )
                                                                         
Issuance of common stock in connection with the conversion of Series D Convertible Preferred Stock
    3,692,552       4       -       -       (55,388.37 )     -       (4 )     -       -  
                                                                         
Issuance of common stock under employee stock purchase plan
    68,981       -       -       -       -       -       93       -       93  
                                                                         
Stock based compensation - restricted stock vested
    -       -       -       -       -       -       1,041       -       1,041  
                                                                         
Stock based compensation - employee stock purchase plan
    -       -       -       -       -       -       31       -       31  
                                                                         
Amortization of consultant stock option costs
    -       -       -       -       -       -       96       -       96  
                                                                         
Amortization of employee stock option costs
    -       -       -       -       -       -       394       -       394  
                                                                         
Amortization of consultant restricted stock unit costs
    -       -       -       -       -       -       4       -       4  
                                                                         
Amortization of employee restricted stock unit costs
    -       -       -       -       -       -       1,100       -       1,100  
                                                                         
Net loss
    -       -       -       -       -       -       -       (5,311 )     (5,311 )
                                                                         
Balance, December 31, 2009
    14,472,363     $ 14       123,894     $ (243 )     -     $ -     $ 111,909     $ (65,857 )   $ 45,823  
 
See notes to these consolidated financial statements.
 
 
F-6

 

GLOBALOPTIONS GROUP, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
For the Year Ended December 31, 2008
(dollars in thousands)

                           
Series D
                   
                           
Convertible
   
Additional
             
   
Common Stock
   
Treasury Shares
   
Preferred Stock
   
Paid-in
   
Accumulated
       
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
   
Total
 
Balance, January 1, 2008
    9,660,269     $ 10       -     $ -       55,989.32     $ -     $ 102,537     $ (52,590 )   $ 49,957  
                                                                         
Stock issued to consultants for services
    26,984       -       -       -       -       -       167       -       167  
                                                                         
Treasury shares acquired in satisfaction of income tax withoholding
    -       -       19,567       (50 )     -       -       -       -       (50 )
                                                                         
Treasury shares acquired in connection with settlement of Facticon matters
    -       -       87,500       (158 )     -       -       -       -       (158 )
                                                                         
Issuance of common stock in connection with the purchase of Preparedness Services
    300,000       -       -       -       -       -       2,880       -       2,880  
                                                                         
Issuance of common stock in connection with the conversion of Series D Convertible Preferred Stock
    40,064       -       -       -       (600.95 )     -       -       -       -