AGSS 10-Q
Ameriguard Security Services, Inc. (AGSS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the six 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 June 30, 2025, or the average bid and ask price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter is $1,185,758.
The number of outstanding shares of the registrant’s common stock on June 30, 2025, was
Documents Incorporated by Reference: None.
FORM 10-Q QUARTERLY REPORT
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2025
TABLE OF CONTENTS
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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
| June 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts Receivable, net | ||||||||
| Current Portion Note Receivable (note 3) | ||||||||
| Prepaid Expenses | ||||||||
| Deposits | ||||||||
| Related Party Transaction (note 4) | ||||||||
| Total Current Assets | ||||||||
| Other Non-Current Assets | ||||||||
| Fixed Assets, net depreciation (note 5) | ||||||||
| Related Party 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, $. | ||||||||
| Retained Earnings/(Defecit) | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
See accompanying notes to financial statements
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AmeriGuard Security Services, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ending
| June 30, | June 30, | |||||||
| 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 | ||||||||
| Communiction 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
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AmeriGuard Security Services, Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2025
| Common Stock | Additional Paid-In | Stockholders’ | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Equity | Equity | ||||||||||||||||
| Balance, December 31, 2024 | ( | ) | $ | ( | ) | |||||||||||||||
| Shares retired by Lawrence Garcia | ( | ) | ( | ) | ||||||||||||||||
| Net Income for the three months ending March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||
| Balance, June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||
See accompanying notes to financial statements
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AmeriGuard Security Services, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ending
| June 30, | June 30, | |||||||
| 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 | ||||||||
| Deposits | ||||||||
| 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
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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
On July 7, 2021, AGS, entered into an agreement to gain
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
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.
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 June 30, 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
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 are 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. The rate chosen was the
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 June 30, 2025, the Company does not have any leases that qualify for this election.
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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 June 30, 2025, nor December 31, 2024, since it does not believe such returns will be material.
Net Income/(Loss) per Share
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.
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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 – RELATED PARTY 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 TRANSACTION
On July 7, 2021, AGS entered into an agreement
to purchase
NOTE 5 – FIXED ASSETS
Fixed assets consist of the following on June 30, 2025, and December 31, 2024:
| 2025 | 2024 | |||||||
| Leasehold Improvements | ||||||||
| Machinery and Equipment | ||||||||
| Vehicles | ||||||||
| Total Fixed Assets | ||||||||
| Accumulated Depreciation | ( | ) | ( | ) | ||||
| Fixed Assets, Net | $ | $ | ||||||
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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. The rate chosen was the 7-year risk-free Treasury rate as of January 3, 2024, set at
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 June 30, 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
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 $
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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 Company paid off all of its merchant advance debt and revenue purchase agreements that were taken out in December 2023 and January of 2024 totaling $
The following schedule details the loans active as of June 30, 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
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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
Late March 2025, Lawrence Garcia, the majority shareholder, agreed to retire
The only change to Stockholders Deficit through 2nd 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 June 30, 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 ** | - | Annual Revenue of approx. $ | ||
| ● | Social Security Administration, SSC ** | - | Annual Revenue of approx. $ | ||
| ● | Social Security Administration, WBDOC ** | - | Annual Revenue of approx. $ | ||
| ● | Veterans Administration – Central Los Angeles CA | - | Annual Revenue of approx. $ | ||
| ● | Veterans Administration – Long Beach CA | - | Annual Revenue of approx. $ | ||
| ● | Veterans Administration – Loma Linda CA | - | Annual Revenue of approx. $ |
| ** | - See Moving Forward comments, ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS regarding this contract. |
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, and management did participate in a mediation process March 20, 2025. The Company believes this lawsuit has no merit, yet to avoid significant cost of a trial, the company agreed to a settlement amount of $
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 has been focused on organizational development consulting across multiple industries.
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Results of Operations for the six months ending June 30, 2025
Revenues and Cost of Goods Sold
Through the second quarter of 2025 the Company experienced a 21.6% increase in services revenue compared to the same time period of 2024 of approximately $2,630,000. The increase was the result of two new Veterans Administration contracts awarded to TransportUS, Inc (TUS) that started in October 2024.
Along with the increase in revenue, AGSS experienced an increase in the gross profit margin of approximately $212,000, due to an increase in direct expenses, that was less than the related revenue increase. AGSS experienced increases in direct expenses such as labor, vehicles expenses and sub-contractor services that were related to the additional contract services revenue experienced. Management is working on reducing direct expenses wherever possible without affecting the services provided.
Operating Expenses and Other Expense
Operation expenses increased in 2025 over 2024 by approximately $763,000. Most of the increase was the results of increases in general and administrative expenses, administrative salaries and professional services. The largest increase came in general and administrative expenses of approximately $517,600. Of this increase, $300,000 was the result of the costs associated with the $7,000,000 credit line awarded in February. The remaining expense categories experienced both increases and decreases. The net results were a decrease of approximately $44,000.
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 through June 30, 2025, is approximately $1,898,400, an increase over the loss during the same period of 2024 by approximately $551,000. This increase is the result of an increase in operating expenses that exceeded the increase in gross profit. 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 six months ending June 30, 2025, operations generated a net decrease in cash of approximately $3,131,000 while cash used by investing activities was approximately $81,200. Financing activities added approximately $3,091,000. The net decrease in cash for the period was approximately $122,100.
On June 30, 2025, the Company had cash on hand of $302,483 with total current assets of $3,794,921.
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Moving Forward
During June and July, several key events occurred that have impacted the Companies ability to continue operating. We have filed the required Form 8-K’s and a summary of the events follows:
On June 10, 2025, the executive level management and Board of directors experience a significant disruptive event. At a board Meeting held on that day, board members Douglas Anderson and Russel Honore’ acting on the recommendation of the Audit Committee, on which they were appointed, made a motion to remove Mr. Lawrence Garcia from the position of CEO. At the same time, they appointed board member Anderson as the temporary CEO. On June 12th, Douglas Anderson filed a Form 8-K stating that Board of Directors (the “Board”) of AmeriGuard Security Services, Inc. (the “Company”) removed Lawrence Garcia from the position of Chief Executive Officer of the Company, effective immediately, and that the Board appointed as interim Chief Executive Officer Mr. Anderson, an independent director of the Board and member of the Audit Committee and Compensation Committee.
On June 16, 2025, as previously reported on the Company’s Current Report on Form 8-K filed on June 20, 2025, Mr. Garcia, pursuant to the Company’s bylaws, removed Mr. Anderson and Russell Honore, an independent director of the Board and member of the Audit Committee and Compensation Committee, as board members and appointed Wilhelm Cashen and Terry Slatic as board members to replace Messrs Anderson and Honore. On June 16, 2025, the Board also removed Mr. Anderson from the position of Interim Chief Executive Officer, effective immediately, and appointed Mr. Garcia as Chairman of the Board and Chief Executive Officer of the Company to assume such executive responsibilities effective immediately. The Board also appointed Mr. Slatic and Mr. Cashen to be the members of the Audit Committee.
On June 17, 2025, the Company and Mr. Garcia filed a Complaint in the District Court, Clark County, Case No. A-25-921392-B (Dept. 31) (the “Complaint”), against Mr. Anderson and Mr. Honore. The Complaint seeks declaratory relief to declare that Mr. Garcia’s purported removal from the Company’s Board of Directors on June 12, 2025, was in violation of the Company’s Bylaws and invalid; that Mr. Anderson and Mr. Honore are no longer members of the Board, nor of any board committees; that the Board of Directors is comprised of three directors – Mr. Garcia, Mr. Slatic, and Mr. Cashen; that Mr. Garcia is the Company’s Chief Executive Officer; and other relief. The Complaint also seeks damages and injunctive relief against Mr. Anderson and Mr. Honore for conduct alleged to have been in violation of the Company’s Bylaws.
On June 23, 2025, Mr. Anderson and Mr. Honore, on their own behalf and purportedly on behalf of the Company, filed an Answer and Counterclaim against Mr. Garcia, Mr. Cashen, Mr. Slatic, and the Company’s Controller, Michael Goossen (“Mr. Goossen”). The Counterclaim alleges, among other things, that Mr. Garcia failed to disclose his arrest at an airport TSA checkpoint for carrying a firearm in his backpack; failed to disclose the suspension of a security guard and patrol business license in North Carolina, and that Mr. Garcia paid over $30,000 to a third-party without first obtaining the consent of Mr. Anderson and Mr. Honore as Compensation Committee members. The Counterclaim seeks damages against Mr. Garcia for breaches of fiduciary duty, and against Mr. Garcia, Mr. Cashen, Mr. Slatic, and Mr. Goossen for conversion, and against Mr. Garcia, Mr. Cashen, and Mr. Slatic for fraud. The Counterclaim also seeks declaratory and injunctive relief to declare that Mr. Garcia’s actions following his termination as Chief Executive Office were unlawful, that transfers of funds to the third-party were improper, that Mr. Cashen’s and Mr. Slatic’s appointment to the Board was unlawful, that the purported removal of Mr. Anderson and Mr. Honore from the Board was unlawful, and the removal of Mr. Anderson as President and Chief Executive Officer and restoration of Mr. Garcia as President and Chief Executive Officer was unlawful.
On June 26, 2025, Mr. Anderson and Mr. Honore, on their own behalf and purportedly on behalf of the Company, filed an Application for Temporary Restraining Order and Motion for Preliminary Injunction against Mr. Garcia, Mr. Cashen, Mr. Slatic, and Mr. Goossen prohibiting the appointment of Mr. Cashen and Mr. Slatic to the Board of Directors, prohibiting the removal of Mr. Anderson and Mr. Honore from the Board, prohibiting the reinstitution of Mr. Garcia as Chief Executive Officer, prohibiting Mr. Garcia, Mr. Cashen, and Mr. Slatic from making or publishing any further false statements regarding their purported positions at and on the Board; prohibiting Mr. Garcia, Mr. Cashen, and Mr. Slatic from taking any further action on behalf of the Company.
On July 1, 2025, Garcia filed an Opposition to Counterclaimants’ Application for Temporary Restraining Order and Motion for Preliminary Injunction.
On July 2, 2025, the Court denied Mr. Anderson’s and Mr. Honore’s Application for Temporary Restraining Order and Motion for Preliminary Injunction against Mr. Garcia, Mr. Cashen, Mr. Slatic, and Mr. Goossen. At this hearing, counsel for Mr. Anderson and Mr. Honore’ indicated that they had evidence that Mr. Garcia was in fact not the majority shareholder and his actions since June 10, 2025, were unlawful. The Judge agreed to hear the evidence at a future hearing scheduled for July 29, 2025.
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On July 29, 2025 the hearing began at 1:30 and the evidence and witness testimony occurred but did not get completed. A second hearing occurred on July 31, 2025, allowing for the completion of the testimony brought by the counsel of Mr. Anderson’ and Mr. Honore’. Following the conclusion of the testimony, Mr. Garcia’s counsel petitioned the judge that there was no evidence provided that countered the position that Mr. Garcia was in fact an 80% shareholder ad that the court should rule in his favor. The judge agreed.
The results of the actions taken by Mr. Anderson and Mr. Honore’ have impacted the Company negatively in two ways. First, On July 1, 2025, the Company received notice that our Government Purchase Order/Receivables Financing Agreement (the “Financing Agreement”), dated as of February 5, 2025, between the Company and List Government Receivables Fund, LLC (the “Lender”), was in default and that no further funding would be available. A Form 8-K was filed July 10, 2025, detailing the event. The second event was this action taken by the Lender caused the Company to forfeit the three Social Security Administration contracts listed in Note 13 above effective June 30, 2025. The impact of the forfeiture was immediate, reducing monthly revenues by $1.2 million. This situation has put the operations of the Company in jeopardy.
Management has since begun a complete reorganization of operations which is ongoing. We have taken steps necessary to keep our Transportation company operating and have begun eliminating all non-vital expenses in all categories. Although we are optimistic that we will be able to continue, the future is not certain. We can operate profitably moving forward resulting in some free cash flow. Month to month expenses will be met. However, the amount of debt held by the Company and the amounts due to vendors is significant and may be more than the future operations can manage. The Company’s continued operations greatly depend upon the arrangements that can be made with the Lender and the patience of our vendors.
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 June 30, 2025. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 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 June 30, 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 June 30, 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 June 30, 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 no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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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 June 30, 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, and management did participate in a mediation process March 20, 2025. The Company believes this lawsuit has no merit, yet to avoid significant cost of a trial, the company agreed to a settlement amount of $150,000. The settlement process is expected to require 12 months to get through the process. The agreement required a $15,000 good faith deposit. As of June 30, 2025, there have been no additional litigation matters of relevance.
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: September 24, 2025 | By: | /s/ Lawrence Garcia | |
| Name: | Lawrence Garcia | ||
| Title: | Chief Executive Officer | ||
| (principal executive officer) | |||
| Date: September 24, 2025 | By: | /s/ Michael Goossen | |
| Name: | Michael Goossen | ||
| Title: | Interim 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 Six Months Ended June 30, 2025
| * | Exhibits filed herewith. |
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