"I will get back with you on the rest of your questions, however, I do indeed want to clear one of your first items listed below:
posted comment in your email:
"Keep in mind, this is not a new contract, it is the extension of an already existing agreement. "
end posted comment -
I am assuming this comment is referencing our most recent press release concerning our contract with the utility company on November 6, 2009. Please refer to our press release at it was clearly stated in the title of the release. I do not know who is posting this comment, however, it's content is incorrect. The contract the poster is referencing here is indeed a "new" contract with the utility company. Our firm re-competed for this contract in 2008. We did provide services previously for the utility giant for four years prior to January 1, 2009, but in no way is the current contract an extension of the previous contract. It is a new contract just as the press release stated.
I trust this will clear up any mis-information listed on your forum regarding this issue. I will address your other items as soon as I get a chance to research their accuracy and will respond accordingly.
Thank you again for your interest in our Company."
Michael
R. Michael Lagow
CEO
Safeguard Security Holdings, Inc.
(SSHS)
In a message dated 11/9/2009 4:04:14 PM Central Standard Time,
bblack1@ymail.com writes:
Mr. Lagow,
I appreciate you taking the time to answer my e-mail. You have cleared up a few things but I still have a few questions to be answered. As I was on a popular forum I came across this post about SSHS:
"Keep in mind, this is not a new contract, it is the extension of an already existing agreement.
Contracts and Significant Customers
A common theme and focus by SYSTEMSgroup and our security staffing services is recurring contractual revenue. As of June 15, 2006, our outsourcing business unit had one agreement for contract security staffing services which was with TXU, our largest customer. With the settlement relating to Superior, we diminished the amount of work done for the Federal government, which for our fiscal year ended June 30, 2005, amounted to approximately 86% of our revenues on a pro forma basis.
The TXU security outsourcing contract, executed in November 2004, was for a term of three years plus three one-year renewable options. SYSTEMSgroup began providing services under the contract in January 2005. Services provided consist of a converged suite of security solutions involving systems technology and personnel, enabling the client to reduce and simplify security expenditures by bundling all services under a single source provider. Bundled services include threat analysis, staffing analysis, systems procurement, technology management, investigation services, command center operations and full security operations management.
Then there is the issue of the $3.5M convertible note, which at the time had a conversion price of $2.00, but adjusted and the A/S increased 10 fold to allow for the satisfaction of the agreement.
(2) The selling stockholders or affiliates of each other because they are under common control. AJW Partners, LLC is a private investment fund that is owned by its investors and managed by SMS Group, LLC. SMS Group, LLC, of which Corey S. Ribotsky is the fund manager, has voting and investment control over the securities owned by AJW Partners, LLC. AJW Offshore, Ltd. is a private investment fund that is owned by its investors and managed by First Street Manager II, LLC. First Street Manager II, LLC, of which Corey S. Ribotsky is the fund manager, has voting and investment control over the securities owned by AJW Offshore, Ltd. AJW Qualified Partners, LLC is a private investment fund that is owned by its investors and managed by AJW Manager, LLC, of which Corey S. Ribotsky and Lloyd A. Groveman are the fund managers, have voting and investment control over the securities owned by AJW Qualified Partners, LLC. New Millennium Capital Partners II, LLC is a private investment fund that is owned by its investors and managed by First Street Manager II, LLC. First Street Manager II, LLC, of which Corey S. Ribotsky is the fund manager, has voting and investment control over the securities owned by New Millennium Capital Partners II, LLC. We have been notified by the selling stockholders that they are not broker-dealers or affiliates of broker-dealers.
(3) Assumes issuance of the entire $3,500,000 in aggregate amount of the callable secured convertible notes and issuance of warrants to purchase 950,000 shares of common stock, and that all securities underlying the notes, at a conversion price of $2.00 per share and the warrants have been issued. The total, 3,450,000, is added to 6,638,218 to determine the aggregate number of shares and each selling shareholders total as set forth in the table is divided by that total to determine the percentage.
(4) Assumes that all securities registered will be sold and that all securities of common stock underlying the callable secured convertible notes and warrants will be issued.
Now keep in mind this conversion occurred because SSHS could not pay back $3.5M in four years, plus 15% interest per year upon conversion, 8% if paid on time. One must take into account the company's margins since many are viewing this as a huge windfall. Since this is a continuation, I'm betting SSHS was paid a similar amount for the last five years, which was not enough to avoid the conversion of the Ribotsky note. "
I was just wondering if you could take the time to clear this up? Again, I thank you for taking the time to clear up my questions. Please get back to me as soon as possible.
Best Regards
Re: Sshs.pk-safeguard Security 
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