UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the three months ended
or
For the transition period from _________ to _________
Commission file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including the area code: (
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s)), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold on September 30, 2024, or the average bid and ask price of such common equity, as of the last business day of the registrant’s most recently completed third fiscal quarter is $2,645,130.
The number of outstanding shares of the registrant’s common stock on March 31, 2025, was
Documents Incorporated by Reference: None.
FORM 10-Q QUARTERLY REPORT
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025
TABLE OF CONTENTS
i
FORWARD-LOOKING STATEMENTS
The statements contained in this report with respect to our financial condition, results of operations and business that are not historical facts are “forward-looking statements”. Forward-looking statements can be identified by the use of forward-looking terminology, such as “anticipate”, “believe”, “expect”, “plan”, “intend”, “seek”, “estimate”, “project”, “could”, “may” or the negative thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties. Management wishes to caution the reader of the forward-looking statements that any such statements that are contained in this report reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors, including, but not limited to, economic, competitive, regulatory, technological, key employees, and general business factors affecting our operations, markets, growth, services, products, licenses and other factors, some of which are described in this report including in “Risk Factors” in Item 1A and some of which are discussed in our other filings with the SEC. These forward-looking statements are only estimates or predictions. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of risks facing our company, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events.
These risk factors should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. All written and oral forward-looking statements made in connection with this report that are attributable to our company or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given these uncertainties, we caution investors not to unduly rely on our forward-looking statements. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by applicable law or regulation.
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PART I – Financial Information
Item 1. Financial Statements (unaudited)
AmeriGuard Security Services, Inc.
CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts Receivable, net | ||||||||
| Current Portion Note Receivable (note 3) | ||||||||
| Prepaid Expenses | ||||||||
| Deposits | ||||||||
| Related Party Receivable (note 4) | ||||||||
| Total Current Assets | ||||||||
| Other Non-Current Assets | ||||||||
| Fixed Assets, net depreciation (note 5) | ||||||||
| Note Receivable (note 3) | ||||||||
| Operating Lease (note 6) | ||||||||
| Goodwill (note 7) | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | $ | ||||||
| Accrued Payroll | ||||||||
| Deferred Revenue (note 8) | ||||||||
| Payroll Liability - Pension (note 9) | ||||||||
| Deferred Liability Subsidiary (note 7) | ||||||||
| Current Portion Operating Lease (note 6) | ||||||||
| Current portion of notes payable (note 10) | ||||||||
| Total Current Liabilities | ||||||||
| Long Term Liabilities | ||||||||
| Long Term Portion of Notes Payable (note 10) | ||||||||
| Long Term Portion Operating Lease (note 6) | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ equity | ||||||||
| Common Stock, $ par value, shares issued and outstanding at December 31, 2023 and 2022 (Note 11) | ||||||||
| Retained Earnings/(Deficit) | ( |
) | ( |
) | ||||
| Total Stockholders’ Equity | ( |
) | ( |
) | ||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
See accompanying notes to financial statements
1
AmeriGuard Security Services, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ending
| March 31, | March 31, | |||||||
| 2025 | 2024 | |||||||
| Revenue | ||||||||
| Services | $ | $ | ||||||
| Discounts and allowances | ( |
) | ( |
) | ||||
| Other operational income | ||||||||
| Total Revenue | ||||||||
| Cost of Services | ||||||||
| Salaries and related taxes | ||||||||
| Employee benefits | ||||||||
| Sub-Contractor payments | ||||||||
| Training and direct expenses | ||||||||
| Vehicles and equipment expenses | ||||||||
| Total Cost of Services | ||||||||
| Gross Margin | ||||||||
| Operating Expenses | ||||||||
| Salaries, payroll taxes and benefits | ||||||||
| Vehicle expense | ||||||||
| Professional services | ||||||||
| Communication services | ||||||||
| General liability insurance | ||||||||
| Advertising and marketing | ||||||||
| Staff training | ||||||||
| Livescan services fees | ||||||||
| Licenses and permits | ||||||||
| General and administrative expenses | ||||||||
| Loan interest | ||||||||
| Depreciation expense | ||||||||
| Total Operating Expenses | ||||||||
| Net Income/(Loss) from Operations | ( |
) | ( |
) | ||||
| Other Income (Expenses) | ||||||||
| Other Income | ||||||||
| Loss on Deferred Liability Subsidiary | ( |
) | ||||||
| Total Other Income/(Expense) | ( |
) | ||||||
| Net Income/(loss) before Income Taxes | ( |
) | ( |
) | ||||
| Income tax expense | ||||||||
| Net Income/(loss) | $ | ( |
) | $ | ( |
) | ||
| Net Income/(loss) per Common Share - Basic and Diluted | $ | ) | $ | ) | ||||
| Weighted Average Number of Common Shares Outstanding - Basic and Diluted | ||||||||
See accompanying notes to financial statements
2
AmeriGuard Security Services, Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED March 31, 2025
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Stockholders’ | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Equity | Equity | ||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| Net Income for the three months ending March 31, 2025 | ( |
) | ( |
) | ||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
See accompanying notes to financial statements
3
AmeriGuard Security Services, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ending
| March 31, | March 31, | |||||||
| 2025 | 2024 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Income/(Loss) | $ | ( |
) | $ | ( |
) | ||
| Adjustment to reconcile net loss from operations: | ||||||||
| Changes in Operating Assets and Liabilities | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid insurance | ( |
) | ||||||
| Accounts payable | ( |
) | ||||||
| Deferred revenue | ||||||||
| Accrued interest | ||||||||
| Accrued payroll | ( |
) | ||||||
| Payroll liability - pension | ( |
) | ( |
) | ||||
| Deferred liability subsidiary | ||||||||
| Depreciation | ||||||||
| Net Cash (Used)/provided in Operating Activities | ( |
) | ( |
) | ||||
| Cash Flows (Used)/Provided from Investing Activities | ||||||||
| Purchase of fixed assets, net retirements | ( |
) | ( |
) | ||||
| Building improvements | ||||||||
| Net Cash Used by Investing Activities | ( |
) | ( |
) | ||||
| Cash (Used)/Provided from Financing Activities | ||||||||
| Note receivable | ||||||||
| Financed Capital | ||||||||
| Loan principle payments | ( |
) | ( |
) | ||||
| Payment for shareholder buyout | ( |
) | ( |
) | ||||
| Net Cash Provided by Financing Activities | ||||||||
| Net Increase (Decrease) in Cash | ( |
) | ( |
) | ||||
| Cash at Beginning of Period | ||||||||
| Cash at End of Period | $ | $ | ||||||
| Supplemental Cash Flow Information: | ||||||||
| Income taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Shareholder loan | $ | $ | ||||||
| Operating leases - right of use asset | $ | $ | ||||||
| Operating leases - lease liability | $ | $ | ||||||
See accompanying notes to financial statements
4
AmeriGuard Security Services, Inc.
Notes to Condensed Consolidated Financial Statements
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
AmeriGuard Security Services, Inc. (“AGS”), was incorporated on November 14, 2002, with an S-Corp tax election. The corporation was incorporated with the issuance of shares of no-par value stock held by Lawrence Garcia, President and CEO with shares, and Lillian Flores, VP of Operations with shares. AGS provides armed guard services as a federal contractor with licenses in five states and provides commercial guard services in California.
On July 7, 2021, AGS, entered into an agreement to gain 100% control of Health Revenue Assurance Holdings, Inc (“HRAA”) a public corporation, incorporated in Nevada, by the purchase of shares of Preferred A-1 Stock from the seller, Custodian Ventures LLC. The purchase of HRAA allowed the Company to begin plans to consummate a reverse merger with HRAA, becoming a wholly owned subsidiary of a public company. In March of 2022, a Certificate of Amendment was filed with the Nevada Secretary of State, changing the name of HRAA to Ameriguard Security Services, Inc. (“AGSS”). Shortly thereafter, a stock name and ticker change report was filed with the SEC, and the stock ticker of HRAA was changed to AGSS.
On December 9, 2022, AGS executed the reverse merger agreement and became the subsidiary of AGSS (the “Company”). From that point forward, the financial statement filings will be the consolidation of Ameriguard Security Services, Inc, a Nevada company, with Ameriguard Security Services, Inc., a California company.
On October 20, 2023, the Company executed a share purchase agreement to acquire TransportUS Inc. TransportUS, Inc. was incorporated on October 24, 2018, with an S-Corp tax election. The corporation was incorporated with the issuance of 1,000 shares with no-par par value stock held by Lawrence Garcia, President and CEO. TransportUS Inc. provides human transportation services as a federal contractor, currently providing services in the state of California.
The Company’s accounting year end is December 31.
Basis of Presentation
These consolidating financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles. The financial statements and notes include TransportUS Inc.’s financial results for the fiscal year ending December 31, 2023.
Risks and Uncertainties
The risks and uncertainties described below may not be the only ones we are or may face in the future. If any of the following do occur, our business, financial condition or results of operations could be materially adversely affected.
The company receives over
The process required to acquire a government contract takes several months to complete prior to delivery of the proposal to the contracting agency. Due to the time span required to prepare a proposal and winning the contract is not guaranteed, the Company maintains a department of individuals who monitor and write proposals for all government contracts that become open for bid on a continuing basis. It is important to the Company that new contracts are acquired consistently to maintain and grow annual revenue.
Other risks to operations consist of State and Federal regulations, staffing shortages, accelerating inflation, and overall business environment issues we cannot foresee.
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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
In preparing financial statements in conformity with United States generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include estimated useful lives and potential impairment of property and equipment, along with the collectability of some receivables from customers.
Cash and Cash Equivalents
The Company considers all highly liquid
temporary cash investments with an original maturity of three months or less to be cash equivalents. On March 31, 2025, and
December 31, 2024, the Company had cash and cash equivalents totaling $
Accounts Receivable
We record accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and is charged to other bad debt expense. We calculate this allowance based on our history of write-offs, the level of past-due accounts based on the contractual terms of the receivables, and our relationships with, and the economic status of, our customers. With over eighty-seven percent of year end accounts receivable balance from Federal contracts that require payment, and the uncollectable amount historically has been less than 1%. As of March 31, 2025, and December 31, 2024, an allowance for estimated uncollectible accounts was determined to be unnecessary.
Property and Equipment
Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful life for Machinery and Equipment, and Vehicles is
Operating Leases
In February 2016, FASB ASU No. 2016-02 established ASC Topic 842, Leases, which sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both lessees and lessors. Effective December 31, 2022, we have implemented ASU No. 2016-02 and booked the operating lease asset and the related liability.
The Company is a lessee with Enterprise Lease Management for vehicles used in operations, under an all-inclusive master lease. The Company determines if an arrangement is a lease, or contains a lease, at inception of a contract and when the terms of an existing contract are changed. The Company recognizes a lease liability and a right-of-use (ROU) asset at the commencement date. The lease liability is initially and subsequently recognized based on the present value of its future lease payments. Variable payments are included in the future lease payments when those variable payments depend on an index or a rate. The discount rate is the interest rate that equates the present value of future lease payments to the Right-of-Use (ROU) asset or lease liability. The leasehold amortization was calculated using an incremental borrowing rate based on the 7-year risk-free Treasury rate as of January 3, 2024, set at 3.95%. This rate was applied to determine the present value of the lease payments and record the right-of-use asset and lease liability as recorded on the balance sheet as detailed in Note 6.
The Company has elected, for all underlying classes of assets, not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement. As of March 31, 2025, the Company does not have any leases that qualify for this election.
6
Revenue Recognition
The Company recognizes revenue under ASC 606, Revenue from contracts with customers. The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of services to customers in an amount that reflects the consideration to which the company expects to be entitled for those services. There are five steps or qualifiers that determine the timing and amount of Revenue Recognition. Those five steps are:
| 1. | Identifying the contract with a customer. |
| 2. | Identifying the performance obligation in the contract. |
| 3. | Determine the transaction price. |
| 4. | Allocate the transaction price to performance obligations. |
| 5. | Recognize the revenue when the entity satisfies the performance obligation. |
The Company generates and recognizes revenue in three sales categories. Those being, Formal Contracts, Sales Agreements and Retail activities. For the retail activities, the revenue is recognized on a cash basis at the time of sale. For the other two categories, the customers are billed at the end of the month the services have been performed.
The formal contract and sales agreements stipulate the exact services to be performed and the rate the services are to be billed, as per steps 1, 2 and 3. The Company provides details of services provided with each billing invoice for customer review and approval. Any differences are resolved prior to payment, Step 4. The Company recognizes revenue in the month the services stipulated in the agreement have been provided, Step 5.
Ninety eight percent of revenues are billed monthly and recognized in the month the services were provided. Refunds and returns, which are minimal, are recorded as a reduction of revenue. The Company has not recorded a reserve for returns on March 31, 2025, nor December 31, 2024, since it does not believe such returns will be material.
Net income/(loss) per common share is computed by dividing net income or loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share”. Basic earnings/(loss) per common share (“EPS”) calculations are determined by dividing net income/(loss) by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.
Fair Value of Financial Instruments
The Company applies the accounting guidance under Financial Accounting Standards Board (“FASB”) ASC 820-10, “Fair Value Measurements”, as well as certain related FASB staff positions. This guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
7
The guidance also establishes a fair value hierarchy for measurements of fair value as follows:
| ● | Level 1 - quoted market prices in active markets for identical assets or liabilities. | |
| ● | Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
| ● |
Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
The carrying amount of the Company’s financial instruments approximates their fair value as of December 31, 2023, and June 30, 2024, due to the short-term nature of these instruments.
NOTE 3 – NOTE RECEIVABLE
On December 31, 2022, TransportUS held a
receivable from a related company, AmeriGuard Security Systems, Inc (AmeriGuard) in the amount of $
NOTE 4 – RELATED PARTY RECEIVABLE
On July 7, 2021, AGS entered into an agreement to purchase 100% of the Preferred A-1 Stock of Health Revenue Assurance Holdings, Inc. a SEC registered company for $. In March 2022, Health Revenue Assurance Holdings, Inc. name was changed to Ameriguard Security Services Inc. (AGSS). On December 9, 2022, we signed the definitive merger agreement initiating a reverse merger with AGSS, resulting in AGS becoming a 100% owned subsidiary of AGSS. Prior to the merger, AGS funded the operational expenses of AGSS and treated these expenses as related party expenses. These expenses were eliminated when the two companies were consolidated for the financial statement presentation.
NOTE 5 – FIXED ASSETS
Fixed assets consist of the following on March 31, 2025, and December 31, 2024:
| 2025 | 2024 | |||||||
| Leasehold Improvements | ||||||||
| Machinery and Equipment | ||||||||
| Vehicles | ||||||||
| Total Fixed Assets | ||||||||
| Accumulated Depreciation | ( |
) | ( |
) | ||||
| Fixed Assets, Net | $ | $ | ||||||
8
NOTE 6 – OPERATING LEASES
We have leased vehicles with terms greater than one year that are classified as operating leases per the guidelines. The lease terms vary between 48 and 60 months. At the end of the term the vehicle becomes the property of the Company.
The capital lease value is calculated following
FASB guidelines annually and is presented as a non-current asset on the balance sheet. As of December 31, 2024, the value is calculated
to be $
The discount rate is the interest rate that equates the present value of future lease payments to the Right-of-Use (ROU) asset or lease liability. The leasehold amortization was calculated using an incremental borrowing rate based on the 7-year risk-free Treasury rate as of January 3, 2024, set at 3.95%. This rate was applied to determine the present value of the lease payments and record the right-of-use asset and lease liability as recorded on the balance sheet.
NOTE 7 – GOODWILL
As of March 31, 2025, the Company’s goodwill totaled $
As indicated the agreement generated a Goodwill
asset of $
As of December 31, 2024, the Deferred Liability
in Subsidiary decreased by $
As March 31, 2025, the Deferred Liability in Subsidiary
was increase by $
The Company reviewed events and circumstances during the quarter and concluded there were no indicators of impairment as defined in ASC 350-20-35. Therefore, no interim impairment testing was performed.
Goodwill is reviewed annually for impairment as of October 1, or more frequently if triggering events occur.
NOTE 8 – DEFERRED REVENUE
During the first three years of operations of TransportUS
Inc, Secure Transportation, Inc. (Secure), a subcontractor, advanced funds to TransportUS Inc. with the expectation of future services
provided for Secure. This arrangement ended, December 31, 2021, after Secure had advanced $
9
NOTE 9 – PAYROLL LIABILITY – PENSION
The company offers various pension plans to employee groups based on location of employment. Corporate office employees and guards have an option to participate in a 401K sponsored by the company with a matching program up to 5% of employee salary. Federal contracts have union agreements that define the pension calculation and due dates. It is the responsibility of the company to calculate the pension benefit amount each month and contribute the amount due to the plan designated. The pension balances due on March 31, 2025, and December 31, 2024, were $
NOTE 10 – NOTES PAYABLE
In June 2020, AmeriGuard Security Services,
Inc. received an SBA Loan through Fresno First Bank in the amount of $
On July 7, 2022, the Company entered into a
buyout agreement with shareholder Lillian Flores. The total buyout amount was $
On December 20, 2023, the company entered
into a short-term loan agreement collateralized by accounts receivable from TVT Capital LLC. The agreement encumbered $
On January 2, 2024, the Company entered into
a short-term loan agreement collateralized by accounts receivable with Cedar Advance Capital. The agreement encumbered $
10
On
January 2, 2024, the Company entered into a short-term loan agreement collateralized by accounts receivable with Velocity Capital
Group. The agreement encumbered $
On
April 16, 2024, The Company entered into a short-term loan agreement with 1800 Diagonal Lending LLC. The amount funded was $
On
April 16, 2024, The Company entered into a short-term loan agreement with 1800 Diagonal Lending LLC. The amount funded was $
On
June 17, 2024, The Company entered into a short-term loan agreement with 1800 Diagonal Lending LLC. The amount funded was $
On
August 19, 2024, The Company entered into a short-term loan agreement with 1800 Diagonal Lending LLC. The amount funded was $
On
November 6, 2024, The Company entered into a short-term loan agreement with 1800 Diagonal Lending LLC. The amount funded was $
On
November 08, 2024, The Company entered into a short-term loan agreement with First Class Industries. The amount funded was $
On
November 20, 2024, The Company entered into a short-term loan agreement with First Class Industries. The amount funded was $
11
On
November 21, 2024, The Company entered into a short-term loan agreement with W.L.L Associates. The amount funded was $
On
December 08, 2024, The Company entered into a short-term loan agreement with W.L.L Associates. The amount funded was $
On
February 05, 2025, the Company entered into a government purchase orders/receivables backed line of credit of $
The following schedule details the loans active as of March 31, 2025, and December 31, 2024:
| 2025 | 2024 | |||||||
| Current Portion: | ||||||||
| Notes and loans payable | $ | $ | ||||||
| Long term Portion: | ||||||||
| Notes and loans payable | ||||||||
| Total Notes Payable | $ | $ | ||||||
NOTE 11 – STOCKHOLDERS’ EQUITY
On December 9, 2022, AGS executed a reverse merger agreement with AGSS resulting in significant adjustments to the equity section of both companies. The result of the merger was AGSS became the sole owner of AGS. Although the merger is dated December 9, 2022, for financial statement presentation purposes, we have presented the Equity Section as if the merger occurred in 2021.
The first significant impact on stockholders’ equity was the issuance of AGSS shares to the shareholders of Ameriguard Security Services, Inc., in exchange for shares of AGS, adding a net increase in common shares outstanding of . Next was the cancelation and conversion of series A-1 preferred shares held by AGSS on December 31, 2020. The result in the total number of shares outstanding is .
12
On October 20, 2023, the Company executed a share purchase agreement to acquire a related company owned by Lawrence Garcia, CEO. TransportUS Inc. was acquired with 3,000,000 shares with the initial 1,500,000 shares to purchase from the company and a bonus of 1,500,000 shares when TransportUS renews its main services contract with the Veterans Affairs Department of Long Beach, CA. As of March 31, 2025, the Department of Veterans affairs in Long Beach, CA has not awarded a contract but has issued an extension of the contract to the Company through September 2025.
The only change to Stockholders Deficit for 1st
Quarter 2025 is the inclusion of the consolidated net loss of $
NOTE 12 – COMMITMENTS AND CONTINGENCIES
The company has a multiple vehicle lease agreement with Enterprise Leasing. As of March 31, 2025, the company had 82 vehicles under lease. The lease agreement includes maintenance services and tracking. The terms of the lease agreement vary based on the date the vehicle was leased and the respective terms for each vehicle. The master lease is updated annually and requires annual internal financial reports and company tax return.
NOTE 13 – CONCENTRATION OF SALES
The company generated approximately $
| ● | Social Security Administration, NSC | - |
September 2022 through September 2027 Annual Revenue of approx. $6.1M | ||
| ● | Social Security Administration, SSC | - |
June 2022 through June 2027 Annual Revenue of approx. $5.4M | ||
| ● | Social Security Administration, WBDOC | - |
June 2021 through July 2026 Annual Revenue of approx. $3M | ||
| ● | Veterans Administration – Central Los Angeles CA | - |
Oct 2024 through Sep 2029 Annual Revenue of approx. $720K | ||
| ● | Veterans Administration – Long Beach CA | - |
Feb 2019 through September 2025 Annual Revenue of approx. $9M | ||
| ● | Veterans Administration – Loma Linda CA | - |
Oct 2024 through Sep 2029 Annual Revenue of approx. $2.1M |
NOTE 14 – LITIGATION AND CLAIMS
As of December 31, 2023, there are three employment issues pending. The issues revolve around terminated employees alleging the Company has failed to pay minimum wages, sick pay wages, meal period violations, rest period violations wage statement violations and violation of relevant unfair business practices acts. A lawsuit has been filed, but it is early in the process, and we are unable to comment on the merits of such a lawsuit at this time. The Company believes this lawsuit has no merit and intends to resolve it before a trial, if possible. As of March 31, 2025, there have been no additional litigation matters of relevance. The Company intends to resolve this complaint before any trial, if possible.
NOTE 15 – INCOME TAXES
Due to the losses incurred during the tax year ending 2023, and the
expected zero tax due for 2024, there is
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Item 2 contains forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, some of which are beyond our control. Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware or which we currently deem immaterial could also cause our actual results to differ, including those discussed in the sections entitled “Forward-Looking Statements” and “Risk Factors” included elsewhere in this Quarterly Report.
Management’s Discussion and Analysis should be read in conjunction with the financial statements included in this Quarterly Report on Form 10-Q (the “Financial Statements”). The financial statements have been prepared in accordance with generally accepted accounting policies in the United States (“GAAP”). Except as otherwise disclosed, all dollar figures included therein and in the following management discussion and analysis are quoted in United States dollars.
The following discussion of the Company’s financial condition and the results of operations should be read in conjunction with the Financial Statements and footnotes thereto appearing elsewhere in this Report.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that in addition to the description of historical facts contained herein, this report contains certain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company’s other filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those, described in the forward-looking statements. These factors include, among others: (a) the Company’s fluctuations in sales and operating results; (b) regulatory, competitive and contractual risks; (c) development risks; (d) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth, and (e) unknown litigation.
Corporate Structure
As previously mentioned, on December 9, 2022, AGSS executed a reverse merger with AmeriGuard resulting in AGSS becoming the sole owner of AmeriGuard. This merger establishes AGSS as a company operating a viable guard company with annual sales of approximately $24,000,000. On October 20, 2023, the Company executed a share purchase agreement to acquire TransportUS Inc. TransportUS, Inc. was incorporated on October 24, 2018, with an S-Corp tax election. The corporation was incorporated with the issuance of 1,000 shares with no-par par value stock held by Lawrence Garcia, President and CEO. TransportUS Inc. provides human transportation services as a federal contractor, currently providing services in the state of California. These two acquisitions within one year allows AGSS to access the capital market to generate the capital needed to continue its growth strategy of mergers and acquisitions within related industries.
AGSS continues developing the leadership team needed for success. We have in place a CEO with 20 years of experience in our industry who has experienced success in the government contracting market. Our CFO has 20 years of experience in improving business performance as well as organizational growth across various sectors. Our Senior Controller has over 35 years of business finance experience, the last 15 of which he has been focusing on organizational development consulting across multiple industries, and an Operations team on the east coast managing IT and our federal contracts. We have an exclusive contract with Think Equity, a New York Investment Banking Firm, and we have engaged legal and SEC compliance professionals. We have a Board of Directors with Wall Street and government security experience, making us well positioned to aggressively grow the business.
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Results of Operations for the three months ending March 31, 2025
Revenues and Cost of Goods Sold
For the first quarter of 2025 the Company experienced a 21.7% increase in services revenue compared to the same time period of 2024 of approximately $1,271,225. The increase was the result of two new Veterans Administration contracts awarded to TransportUS, Inc (TUS) that started in October 2024. The revenue earned by AmeriGuard Security Services Inc (AGS) during this quarter experienced a minor decrease of approximately $19,000.
Even with the increase in revenue, AGSS experienced a decrease in the gross profit margin of approximately $166,000, due to increases in direct expenses, associated with the aforementioned new contracts awarded to TUS. AGSS experienced increases in labor, vehicles expenses and sub-contractor services that were not expected from the contracts awarded. Management is working on addressing the expense increases and is anticipating increase in gross profit over the next 6 months.
Operating Expenses and Other Expense
Operation expenses increased in 2025 over 2024 by approximately $296,700. Although there was a decrease in operational expenses in administrative salaries, advertising and marketing, training and loan interest, totaling approximately $276,800, there were increases in other expenses. The largest increase came in general and administrative expenses of approximately $318,000. Of this increase, $300,000 was the result of the costs associated with the $7,000,000 credit line awarded in February. There was an increase in professional fees in the amount of approximately $151,000. Key increases were in legal fees of $36,000 and accounting fees of $92,000. These increases related to the requirement of having to reissue the 2023 audited financial statements, processed in late 2024 and billed in this quarter. Vehicle expenses, licenses, and depreciation expense also increased a total of $110,900.
At this time, we believe that our operating structure and current level of expense can handle significantly more revenue with minor increases in our operating overhead expenses. This would allow the entire gross profit of any new contract or company acquisition to flow directly to our earnings, providing a consistent return on investment for our stockholders. Management is focused on reducing operating expenses wherever possible and actively seeking companies to acquire.
Net (Loss) from Operations
Net loss from operations for the quarter approximately $1,325,000, an increase over the loss during the same time period of 2024 by approximately $463,000. This increase is the result of a gross profit decline of approximately $166,000 and an operating expenses increase of approximately $297,000. Management is focused on reducing the direct expenses of our services, thus increasing the gross profit percentage. At the same time management does not expect increases in the operation expenses, resulting in bottom line improvement in the next quarter and beyond.
Liquidity and Capital Resources
The Company’s principal sources of liquidity include cash from operations and proceeds from debt financing. During the three months ending March 31, 2025, operations generated a net decrease in cash of approximately $1,787,000 while cash used by investing activities was approximately $17,000. Financing activities added approximately $1,650,000. The net decrease in cash for the period was approximately $154,100.
On March 31, 2025, the Company had cash on hand of $270,484 with total current assets of $3,196,616.
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Moving Forward
During the past twenty-seven months we have worked diligently to set up our corporate structure, process, staffing and implement our strategy as a public company to expand our business. Our current overhead expense structure has excess capacity, positioning us to manage two to three times the revenues from one of two strategic growth sources.
Our first source is to continue our historical strategy of seeking organic growth through bidding and winning contracts that meet our criteria for both AGS and TUS. We had two contracts that were won and commenced during the third quarter of 2024, and we will realize the impact of the full annual revenue increase in 2025. As of December 31, 2024, we had four bids submitted totaling over $12M in revenues. We have continued to submit bids each month, resulting in 5-10 bids in review at all times. We are confident with our history of excellent service and strategic bids that we should add new contracts to the company. We continue to seek new ways to meet the growing security needs of commercial businesses. Management anticipates that our access to capital markets allows AGSS to encompass advanced AI-driven digital security and robotics, delivering it to the security industry, as well as our non-emergency medical transportation logistics. These advancements serve as catalysts for immediate performance improvements in short term and long-term growth supporting the federal and private sectors. By leveraging cutting-edge blockchain, AI, and robotics technologies, our company is uniquely positioned to reduce labor and operational costs while delivering a high level of security innovation that differentiates us from conventional human-based security and transportation firms. Our proactive AI technical approach not only enhances our operational efficiency but also enables us to deploy scalable, automated security solutions nationwide, that adapt to rapidly evolving threats in the digital and physical realms. As the market begins to demand greater efficiency from our industry, AI robotic security will continue to expand, our integrated technology platforms position us at the forefront of the industry. This strategic advantage not only allows us to capitalize on emerging market opportunities but also provides significant cost savings, operational efficiencies, and the potential for robust revenue growth. Our leadership in the industries of security and transportation and logistics will bring cost savings, and greater profits for our company.
Our second source of growth is through mergers and acquisitions. With the capital market available to us and our industry being positioned for long-term growth, there’s an opportunity for acquisitions. The security industry continues to expand, and at the same time there’s a lot of consolidation occurring. The security industry is no different than many others. Several privately held firms equal to our size and larger are looking for a buyout allowing the owner to retire. Our experience allows AGSS to be the company acquiring others, which can quickly double our revenues with one or two key acquisitions. After which we will see all the gross profits from those companies going directly to our bottom line. There are also potential acquisition opportunities in several other industries that could fit our business model. Those include transportation, cyber security, private security, ammunition manufacturing, and surveillance.
Management is very positive regarding profitable operations for the next twelve months based on the following:
| ● | Both industries that AGSS currently operates in are growing industries. |
| ● | The security industry is somewhat recession proof. | |
| ● | The non-emergency transportation market is growing at an annual rate of over 7.5%. | |
| ● | There are over 10,000 security companies operating in our market, with 50% available for acquisition. |
| ● | Our management team, Board of Directors and supporting equity professionals can get the job done. | |
| ● | We negotiated a full refinance agreement of our debt in February 2025, allowing for better control of debt payments and cash flow. | |
| ● | We have been and will continue to be a company that is very conservative with our resources and will use every available dollar providing strength, and good return to our investors. |
| ● | We are in it for the long haul. |
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company and are not required to provide the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the “Exchange Act”) that are designed to ensure that information that would be required to be disclosed in the Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2025. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2025, our disclosure controls and procedures were not effective to satisfy the objectives for which they are intended due to a weakness in our internal control over financial reporting discussed below.
The framework our management uses to evaluate the effectiveness of our internal control over financial reporting is based on the guidance provided by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in its 1992 report: INTERNAL CONTROL - INTEGRATED FRAMEWORK. Based on our evaluation under the framework described above, our management has concluded that our internal control over financial reporting was ineffective as of March 31, 2025, due to the same weaknesses that rendered our disclosure controls and procedures ineffective. The Company’s internal control over financial reporting is not effective due to a lack of sufficient resources to hire support staff to separate duties between different individuals. The Company plans to address these weaknesses as resources become available by hiring additional professional staff, as funding becomes available, outsourcing certain aspects of the recording and reporting functions, and separating responsibilities. We have identified the following material weakness.
As of March 31, 2025, we did not maintain effective controls over the control environment. The Board of Directors has not established an audit committee as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.
Because of these weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of March 31, 2025, based on the criteria established in “INTERNAL CONTROL-INTEGRATED FRAMEWORK” issued by the COSO. Management believes that the weaknesses set forth above did not have an effect on our financial results because the activity during this period was nominal. However, management believes that the lack of a functioning audit committee results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods. Management will further recruit qualified individuals, establish an audit committee, and ensure that board members have current and pertinent financial experience.
Changes in Internal Controls over Financial Reporting
There were
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PART II – Other Information
ITEM 1. LEGAL PROCEEDINGS
Involvement in Certain Legal Proceedings
To our knowledge, during the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has:
| ● | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses) | |
| ● | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; | |
| ● | been found by a court of competent jurisdiction in a civil action or by the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; | |
| ● | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | |
| ● | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
As of March 31, 2025, there is one class action employment-related matter pending. The issues in such matters involve terminated employees alleging the Company has failed to pay minimum wages, sick pay wages, meal period violations, rest period violations, wage statement violations, and violation of the unfair business practices act. A lawsuit has been filed, but it is early in the process, and we cannot comment on the merits at this time. The Company believes the suit has no merit and intends to resolve it before a trial, if possible. As of March 31, 2025, there have been no additional litigation issues, nor changes in those in process.
ITEM 1A. RISK FACTORS
AS A SMALLER REPORTING COMPANY, WE ARE NOT REQUIRED TO PROVIDE A STATEMENT OF RISK FACTORS.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| AMERIGUARD SECURITY SERVICES, INC. | |||
| Date: May 19, 2025 | By: | /s/ Lawrence Garcia | |
| Name: | Lawrence Garcia | ||
| Title: | Chief Executive Officer | ||
| (principal executive officer) | |||
| Date: May 19, 2025 | By: | /s/ Jason Bovell | |
| Name: | Jason Bovell | ||
| Title: | Chief Financial Officer | ||
| (principal financial officer and principal accounting officer) | |||
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AMERIGUARD SECURITY SERVICES, INC.
Exhibit Index to Quarterly Report on Form 10-Q
For the Nine Months Ended September 30, 2024
| * | Exhibits filed herewith. |
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