Will history repeat itself?

January 18, 2006

Back in August 2004, Giuliani Partners, the company started by former NYC Mayor Rudolph Giuliani, signed an agreement with a company called Applied DNA Sciences (APDN.OB), which trades on the OTC Bulletin Board. Judging by Applied’s filings, the agreement was very profitable for both Applied DNA, which saw its stock increase three-fold, but also for Giuliani Partners, which collected $1.25 million between August 2004 and April 2005. It’s not clear why the deal between the two fell apart after only eight months, but my best guess is that it had something to do with this article in USA Today a month before the deal was terminated.

Fast forward to now and Giuliani Security & Safety, which is a division of Giuliani Partners, has signed another agreement with another company that trades on the OTC BB. The agreement with Command Security (CMMD.OB) seems likely to be just as profitable, certainly for Giuliani’s company, which will be paid $175,000 a month in consulting fees according to this 8-K filed on Friday. Command, whose market cap is only $19 million, currently trades at around $2.15 a share. On its website, Command describes itself as “one of the fastest growing companies in the security services business today”.

Because Giuliani Partners is a private company, details of their business arrangements have been difficult to come by. But the hefty fee being paid by Command certainly makes one wonder what some of Giuliani’s larger clients are forking over in monthly fees.

Of course, the real question is whether Command will follow the same arc as Applied DNA. Hard to say. There’s also the question of how Command can afford this kind of high-priced talent in the first place and what, exactly, they’re hoping to gain from the relationship with Giuliani’s firm? The agreement notes that Giuliani’s company will recommend Command’s services “at an appropriate time” and “to appropriate clients” and will “utilize Command’s security personnel as GP’s primary resource”. The filing also notes that two of Giuliani’s top managers when he was mayor — Fire Commissioner Thomas Von Essen and Emergency Management Commissioner Richard Sheirer — will help in expanding Command’s business into emergency and crisis management.

Oh, and about that $175K a month fee. It doesn’t include expenses, just in case you were wondering.

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