Tri-S: Out of business?

When Tri-S Security de-registered last summer, it wasn't necessarily a strange move, as a number of small public companies have taken that route in order to avoid any number of expenses associated with being public.

However, its sale last month of Paragon, its guarding arm, may actually signal the end of the company's operations entirely.

A few calls to the company's CEO have not been returned, but there may not be much to talk about, considering the wording of the press release:

ATLANTA–(BUSINESS WIRE)–Tri-S Security Corp. (OTCBB: TRIS), formerly a provider of security services for government entities, today announced that it has sold its sole operating subsidiary, Paragon Systems, Inc., to Pinkerton Government Services, Inc., a wholly owned subsidiary of Securitas AB. Paragon provides contract guard services to various Federal government agencies throughout the United States and maintains its principal office in Washington, D.C.

When you sell your only operating subsidiary (it sold off its integration arm last year), it's likely you don't have much left in terms of operations. However, there's definitely still a woman employed by someone who answers the phone at corporate headquarters and refers me to the voicemail of Ron Farrell, the CEO, whom I've talked to in the past for a couple of stories. When I asked her if the company was still in business, she told me I had to talk to Ron about that, and that he definitely does still come into the office.

However, there's more in the press release that sounds like “out of business”: “All of the closing proceeds from the sale of Paragon were used to repay a significant portion of Tri-S's secured debt.” So, they've got no operating subsidiaries, and they've still got debt? How does Tri-S go forward?

There's also this line: “Based in Atlanta, GA, Tri-S Security Corp. (TRIS.PK) was a provider of security services for government entities. Security services included uniformed guards, personnel protection, access control, crowd control and the prevention of sabotage, terrorist and criminal activities.”

Um, “was”? That sounds pretty definitive, but there's nothing that says Tri-S can't get back in the game. If so, they'll have to find a way to do it more profitably than their historical performance. Though the company brought in significant revenue, it also lost a bundle.

According to its most recent financial reports, Tri-S brought in nearly $140 million over the course of 12 months, but was turning very low gross profits (not unusual for a guarding company) and lost roughly $18 million over that time period.

I'm hoping to speak with Ron soon, as the company was focused on government work, which has been put forward by a few firms as a viable business model. What went wrong?