1304901--4/13/2006--TRI-S_SECURITY

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Risks Relating to Our Indebtedness If we are in default under the Credit Agreement with our lenders on January 1, 2007, then all amounts due under the Credit Agreement will become immediately due and payable, which will have a material adverse effect on our business and financial condition. If our lenders stop advancing funds to us under the Factoring Facility, then we may not be able to satisfy our current operating payables, which would have a material adverse impact on our business and financial condition. We may not be able to generate sufficient cash to service all of our indebtedness, and we may be forced to take other actions to satisfy our payment obligations, which actions may not be successful. The Credit Agreement imposes significant restrictions on us, which may prevent us from capitalizing on business opportunities and taking certain corporate actions. If we are unable to sell the assets of International Monitoring, Inc. as we intend, then we will not be able to reduce our indebtedness as we anticipate. We may not prevail in our lawsuit against the former shareholders of Paragon Systems which may materially and adversely affect our business and financial condition. If we are unable to satisfy or otherwise settle our indebtedness, then we may lose control of Paragon Systems, which generates a substantial portion of our revenue. Risks Relating to Our Industry and Business We depend on the Factoring Facility to meet our cash flow needs, which reduces our profit margin. Our service contracts often provide for fixed hourly bill rates or permit limited fee adjustments, and our business, financial condition and results of operations will be materially and adversely affected if increases in our costs cannot be charged to our customers. If we lose our executive officers or operation employees, our operations could be materially and adversely affected. If we are unable to attract, retain and manage security guards and administrative staff, then our business, financial condition and results of operation will be materially affected. Organized labor action or occupational health and safety laws and regulations could have a material adverse effect on our business, financial condition and results of operations. If we cannot successfully compete with new or existing security service providers, then our business, results of operations and financial condition will be adversely affected. Changes in available security technology may have an adverse effect on our business, results of operations and financial condition. The security services we provide may subject us to liability for substantial damages not covered by insurance which could have a material adverse affect on our business, financial condition and results of operations. Terrorist activity at locations where we provide security services could have a material adverse effect on our business by subjecting us to liability. Whether or not terrorist activity occurs at a client location, our insurance costs could increase, and we could be required to comply with more burdensome regulations. We may be unable to obtain liability insurance at a reasonable cost, which would increase our exposure to catastrophic claims. We are subject to government regulation, and our failure or inability to comply with these regulations could materially restrict our operations and subject us to substantial penalties. We may not be successful in identifying suitable acquisition opportunities, and, if we do identify such opportunities, then we may not be able to obtain acceptable financing for the acquisition, reach agreeable terms with acquisition targets or successfully integrate acquired businesses. We may not have, or be able to obtain, sufficient capital to pursue our acquisition strategy. We may not be able to obtain additional financing that may be necessary to fund our operations. Compliance with the corporate governance requirements to which we are subject as a public corporation will cause us to incur significant costs, and the failure to comply with such requirements will expose us to investigations and sanctions by regulatory authorities. If our professional reputation is harmed, then we will have difficulty obtaining new customers and retaining existing customers, either of which would adversely affect our revenues. Economic downturns or recessions may dampen the demand for our services, which will reduce our revenues. Risks Related to Government Contracting We derive a significant portion of our revenue from Federal government contracts which the government may terminate at any time or determine not to extend after their scheduled expiration. If we are unable to replace any contract which is not extended or is terminated, then our revenues will decline. Because we have a highly concentrated customer base, the loss of any of our Federal government customers could have a significant effect on our revenues. The Federal government has rights and remedies under its contracts not typically found in commercial contracts that may reduce or eliminate our revenue under these contracts, as well as our ability to enter into other government contracts. Our failure to comply with complex procurement laws and regulations could result in the termination of our Federal government contracts or our failure to be awarded any new contracts, and changes in laws and regulations could impose added costs on our business. Our status as a General Services Administration ( GSA ) Federal Supply Schedule Contractor may be withdrawn, which would make us ineligible to obtain certain Federal government contracts and would result in a significant decrease in our revenues. All of our contracts with the Federal government are subject to audits and cost adjustments by the Federal government that could result in decreased revenues and the imposition on us of civil or criminal penalties or administrative remedies. Our participation in the competitive bidding process, pursuant to which we obtain most of our Federal government contracts, presents a number of risks. The Miami/Dade County contracts at Cornwall represent a significant portion of our revenue and are subject to renewal in the 4 Our cash flow may be reduced due to significant expenses we may incur in connection with attempting to obtain Federal government contracts. The long sales cycles of Federal government contracts make it difficult for us to predict our financial results and cause us to expend a significant amount of effort and funds in bidding on contracts that are not awarded to us. We may not receive the full amount authorized under contracts into which we have entered; consequently, our backlog may not accurately estimate our revenue. If we are unable to obtain and maintain security clearances for our employees, then we will not be able to satisfy existing contracts or obtain new contracts. Risks Relating to Our Securities Management beneficially owns a significant percentage of the common stock and has the ability to influence all matters requiring the approval of our board of directors and our shareholders. Provisions of our articles of incorporation and Georgia law may have anti-takeover effects that could prevent a change in control which the shareholders consider favorable and could negatively affect your investment. We may experience significant volatility in the price of the common stock even if our business is doing well, which could cause you to lose all or part of your investment. We do not intend to pay dividends on the common stock, and you may not experience a return on investment without selling your securities.

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1304901--4/13/2006--TRI-S_SECURITY_CORP