923796--2/22/2010--GEO_GROUP

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{loss, insurance, financial}

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{stock, price, share}

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Risks Related to Our High Level of Indebtedness We are currently incurring significant indebtedness in connection with substantial ongoing capital expenditures. Capital expenditures for these existing and future projects may materially strain our liquidity. Our significant level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt service obligations. Despite current indebtedness levels, we may still incur more indebtedness, which could further exacerbate the risks described above. Future indebtedness issued pursuant to our universal shelf registration statement could have rights superior to those of our existing or future indebtedness. The covenants in the indenture governing our 7 3 / 4 % Senior Notes and our Senior Credit Facility impose significant operating and financial restrictions which may adversely affect our ability to operate our business. Servicing our indebtedness will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. Because portions of our senior indebtedness have floating interest rates, a general increase in interest rates will adversely affect cash flows. We depend on distributions from our subsidiaries to make payments on our indebtedness. These distributions may not be made. Risks Related to Our Business and Industry We do not have management contracts with clients to operate new beds at two facilities that we are currently expanding and cannot assure you that such contracts will be obtained. Failure to obtain management contracts for these new beds will subject us to carrying costs with no corresponding management revenue. The prevailing negative conditions in the capital markets could prevent us from obtaining financing, which could materially harm our business. We are subject to the loss of our facility management contracts, due to terminations, non-renewals or competitive re-bids, which could adversely affect our results of operations and liquidity, including our ability to secure new facility management contracts from other government customers. Our growth depends on our ability to secure contracts to develop and manage new correctional, detention and mental health facilities, the demand for which is outside our control. We may not be able to meet state requirements for capital investment or locate land for the development of new facilities, which could adversely affect our results of operations and future growth. We depend on a limited number of governmental customers for a significant portion of our revenues. The loss of, or a significant decrease in business from, these customers could seriously harm our financial condition and results of operations. A decrease in occupancy levels could cause a decrease in revenues and profitability. State budgetary constraints may have a material adverse impact on us. Competition for inmates may adversely affect the profitability of our business. We are dependent on government appropriations, which may not be made on a timely basis or at all and may be adversely impacted by budgetary constraints at the federal, state and local levels. Public resistance to privatization of correctional and detention facilities could result in our inability to obtain new contracts or the loss of existing contracts, which could have a material adverse effect on our business, financial condition and results of operations. Our GEO Care business, which has become a material part of our consolidated revenues, poses unique risks not associated with our other businesses. Adverse publicity may negatively impact our ability to retain existing contracts and obtain new contracts. We may incur significant start-up and operating costs on new contracts before receiving related revenues, which may impact our cash flows and not be recouped. Failure to comply with extensive government regulation and applicable contractual requirements could have a material adverse effect on our business, financial condition or results of operations. We may face community opposition to facility location, which may adversely affect our ability to obtain new contracts. Our business operations expose us to various liabilities for which we may not have adequate insurance. We may not be able to obtain or maintain the insurance levels required by our government contracts. Our international operations expose us to risks which could materially adversely affect our financial condition and results of operations. We conduct certain of our operations through joint ventures, which may lead to disagreements with our joint venture partners and adversely affect our interest in the joint ventures. We are dependent upon our senior management and our ability to attract and retain sufficient qualified personnel. Our profitability may be materially adversely affected by inflation. Various risks associated with the ownership of real estate may increase costs, expose us to uninsured losses and adversely affect our financial condition and results of operations. Risks related to facility construction and development activities may increase our costs related to such activities. The rising cost and increasing difficulty of obtaining adequate levels of surety credit on favorable terms could adversely affect our operating results. We may not be able to successfully identify, consummate or integrate acquisitions. Adverse developments in our relationship with our employees could adversely affect our business, financial condition or results of operations. Risks Related to the 7 3 / 4 % Senior Notes The notes and the related guarantees are effectively subordinated to our and the subsidiary guarantors senior secured indebtedness and the indebtedness of our subsidiaries that do not guarantee the notes. We may not be able to repurchase the notes in the event of a change of control because the terms of our indebtedness or lack of funds may prevent us from doing so. Fraudulent conveyance laws may permit courts to void the subsidiary guarantees of the notes in specific circumstances, which would interfere with the payment of the subsidiary guarantees. Risks Related to our Common Stock Fluctuations in the stock market as well as general economic, market and industry conditions may harm the market price of our common stock. Future sales of our common stock in the public market could adversely affect the trading price of our common stock that we may issue and our ability to raise funds in new securities offerings. Various anti-takeover protections applicable to us may make an acquisition of us more difficult and reduce the market value of our common stock. Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have an adverse effect on our business and the trading price of our common stock. We may issue additional debt securities that could limit our operating flexibility and negatively affect the value of our common stock.

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923796--2/22/2010--GEO_GROUP_INC