Tri-S Security Announces Adjusted Results for the 4th Quarter and Year Ended December 31, 2007

ATLANTA, March 31 /PRNewswire-FirstCall/ -- Tri-S Security Corp. (NASDAQ:TRIS), a provider of security services and equipment for government and private entities, today announced its adjusted results of operations for the fourth quarter and year ended December 31, 2007. Tri-S provides security services through its two wholly-owned subsidiaries, The Cornwall Group, Inc. ("Cornwall") and Paragon Systems, Inc. ("Paragon").

Fourth Quarter and Year Ended December 31, 2007

Subsequent to the issuance of its press release on March 26, 2008, the company decided not to recognize a deferred tax asset of $482,000. As a result of this determination, the net loss (1) for the three months ended December 31, 2007 has been adjusted to $2.2 million, or 0.59 cents per share, from the previously published loss of $1.7 million, or 0.46 cents per share, and (2) for the year ended December 31, 2007 has been adjusted to $4.3 million, or 1.02 cents per share, from the previously published loss of $3.8 million, or 0.91 cents per share. The effect of this adjustment is reflected in the accompanying financial statements for the fourth quarter and year ended December 31, 2007.

About Tri-S Security Corp.

Based in Atlanta, GA, Tri-S Security Corp. (NASDAQ:TRIS) is a provider of security services and equipment for government and private entities. Security services include uniformed guards, electronic monitoring systems, personnel protection, access control, crowd control and the prevention of sabotage, terrorist and criminal activities. As a leading aggregator of elite security companies, Tri-S Security is designed to build a strong enterprise in which to service a unique customer base that ensures America's safety at home and work. Tri-S Security assumes responsibility for the marketing, infrastructure and overall operational performance for its subsidiaries. Tri-S Security's management leverages highly trained government officers, experienced industry leaders, proven financial executives and infrastructure experts to consolidate the fragmented security industry into one efficient and effective security force.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Federal securities laws. Forward-looking statements are commonly identified by such terms and phrases as "should", "expects", "plans", "anticipates", "believes", "estimates", "projects" and other terms with similar meaning indicating potential impact on our business. Although we believe that the assumptions upon which such forward looking statements are based are reasonable, we can give no assurance that these assumptions will prove to be correct. Important factors that could cause actual results to differ materially from our projections and expectations are disclosed in our filings with the Securities and Exchange Commission, including the "Risk Factors" section set forth in our Annual Report on Form 10-K for the year ended December 31, 2006. All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to their underlying assumptions. We do not undertake to publicly update the forward-looking statements contained herein to conform to actual results or changes in our expectations, whether as a result of new information, future events or otherwise. You may obtain and review our filings with the Securities and Exchange Commissions by visiting http://www.sec.gov/.

Tri-S Security Corporation and Subsidiaries
Statements of Operations

Audited
(In thousands, except per share data)

Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2007 2006 2007 2006

Revenues $23,507 $20,664 $88,943 $75,725

Cost of revenues:
Direct labor 15,006 13,115 56,681 47,353
Indirect labor and other
contract support costs 7,271 5,280 25,173 19,256
Amortization of customer
contracts 404 405 1,617 1,638
22,681 18,800 83,471 68,247

Gross profit 826 1,864 5,472 7,478

Selling, general and administrative 2,981 2,987 11,370 11,682
Amortization of intangible assets 251 232 927 928
3,232 3,219 12,297 12,610

Operating (loss) (2,406) (1,355) (6,825) (5,132)

Income from investment in Army
Fleet Support, LLC - - - 384

Other income (expense):
Interest expense, net (570) (441) (2,454) (3,134)
Interest on series C
redeemable preferred stock - (75) (211) (300)
Gain on sale of Army Fleet
Support, LLC - - - 1,903
Other income 98 (102) 2,549 752
(472) (618) (116) (779)

Loss before income taxes (2,878) (1,973) (6,941) (5,527)

Income tax benefit (691) (662) (2,638) (1,694)

Net loss $(2,187) $(1,311) $(4,303) $(3,833)

Basic and diluted net
(loss) per common share $(0.59) $(0.37) $(1.02) $(1.11)
Basic and diluted weighted
average number of common shares 3,723 3,544 4,203 3,448

Tri-S Security Corporation and Subsidiaries
Balance Sheets
(In thousands, except per share data)

Audited Audited
December 31, December 31,
2007 2006

Assets
Current assets:
Cash and cash equivalents $465 $66
Trade accounts receivable, net 13,993 13,313
Prepaid expenses and other assets 701 649

Total current assets 15,159 14,028

Property and equipment, less accumulated
depreciation 476 597
Goodwill 16,078 16,078
Intangibles
Customer contracts 2,647 4,264
Deferred loan costs 515 1,143
Other 769 991

Total assets $35,644 $37,101

Liabilities and Stockholders' Equity

Current liabilities:
Trade accounts payable $1,983 $1,104
Other accrued expenses 895 1,227
Accrued salary and benefits 3,940 3,240
Factoring facility 11,625 7,506
Income taxes payable 586 1,269
10% convertible notes 7,473
Series C preferred stock subject to mandatory
redemption - 6,000
Long-term debt - current portion 8 284

Total current liabilities 26,510 20,630

Other liabilities:
10% convertible notes - 7,273
Deferred income taxes - 1,974
2007 term loan 2,500 - Accrued interest expense - long term 353 400
Series D preferred stock subject to
mandatory redemption 1,500 - 4,353 9,647

Total liabilities 30,863 30,277

Stockholders' equity: 4 3
Common stock, $0.001 par value,
25,000,000 shares authorized,
4,248,704 and 3,503,280 shares issued and
outstanding at December 31, 2007 and
December 31, 2006, respectively

Treasury stock (105) (105)
Additional paid-in capital 16,368 14,109
Retained deficit (11,486) (7,183)

Total stockholders' equity 4,781 6,824

Total liabilities and stockholders' equity $35,644 $37,101

Tri-S Security Corporation and Subsidiaries
Statements of Cash Flows
Audited
(In thousands)

Twelve Months Twelve Months
Ended Ended
December 31, December 31,
2007 2006

Cash flow from operating activities:
Net (loss) $(4,303) $(3,833)
Adjustments to reconcile net (loss) to
net cash (used) by operating activities:
Gain on Paragon settlement (1,888) - Gain on Cornwall settlement (250) - Gain on sale of non-core assets - (2,381)
Payment made for Paragon settlement (1,250) - Income from joint venture, net - (384)
Bad debt expense 488 59
Depreciation and amortization 2,920 2,909
Deferred income tax benefits (1,974) (3,095)
Common shares, options and warrants in
exchange for services and interest 238 377
Non-cash interest expense 837 875
Changes in operating assets and liabilities:
Unbilled revenues and trade accounts
receivable (1,168) (2,345)
Prepaid expenses and other assets (52) 418
Trade accounts payable 878 (95)
Accrued liabilities 319 (1,486)
Income taxes payable (683) 1,426

Net cash (used) by operating activities (5,888) (7,555)

Cash flow from investing activities:
Acquisition of subsidiary, net of cash acquired (3)
Proceeds from sale of investment in joint venture - 10,810
Distributions from investment in joint venture - 175
Proceeds from sale of assets - 1,301
Purchase of property and equipment (254) (203)

Net cash provided (used) by investing
activities (254) 12,080

Cash flow from financing activities:
Proceeds from exercise of stock options 9
Proceeds from factoring facility, net 4,119 315
Proceeds of (repayments on) of term loans 2,500 (5,092)
Deferred financing costs (78) (43)
Deferred initial public offering costs - (111)
Net cash provided (used) by financing
activities 6,541 (4,922)

Net increase (decrease) in cash and cash
equivalents 399 (397)
Cash and cash equivalents at beginning of period 66 463
Cash and cash equivalents at end of period $465 $66

Supplemental disclosures of cash flow information:
Interest paid $1,850 $1,873
Income taxes paid $15 $149
Satisfaction of officer note through issuance
of treasury stock $- $105

Tri-S Security Corporation and Subsidiaries
EBITDA, as adjusted

Three Months Three Months Twelve Months Twelve Months
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
2007 2006 2007 2006

Net Loss $(2,187) $(1,311) $(4,303) $(3,833)

Adjustments:
Income tax expense
(benefit) (691) (662) (2,638) (1,694)
Interest expense,
net 570 441 2,454 3,134
Interest on
preferred stock
subject to
mandatory redemption - 75 211 300
Gain on sale
of assets - - (1,888) (2,381)
Other income/
(expense) (98) 102 (661) (274)
Income from
Investment in
Army Fleet
Support, LLC - - - (384)
Amortization of
intangible assets 252 232 928 942
Amortization of
customer contracts 404 405 1,617 1,624
Depreciation 108 84 375 341
Non-cash stock
based compensation 74 78 236 377

EBITDA, as adjusted $(1,568) $(556) $(3,669) $(1,848)

First Call Analyst:
FCMN Contact:

Source: Tri-S Security Corp.

CONTACT: Ronald Farrell, Chief Executive Officer, Tri-S Security
Corporation, ronfarrell@trissecurity.com, +1-678-808-1540; or Investor
Relations Counsel, Booke and Company, Inc., +1-212-490-9095

Web site: http://www.trissecurity.com/

2008-03-31 18:55:49 0324113 PRNEWSWIRE