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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the three months ended March 31, 2024

 

or

 

 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _________ to _________

 

Commission file number: 333-173039

 

AMERIGUARD SECURITY SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   99-0363866
(State or other jurisdiction of
incorporation or organization)
  (IRS Employer
Identification No.)

 

5470 W. Spruce Avenue, Suite 102

Fresno, CA 93722

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including the area code: (559) 271-5984

 

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. Yes ☒   No ☐

 

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). Yes ☒   No ☐

 

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
  Non-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 ☐   No ☒

 

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 March 31, 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 second fiscal quarter is $3,655,695.

 

The number of outstanding shares of the registrant’s common stock on March 31, 2024, was 94,917,302.

 

Documents Incorporated by Reference: None.

 

 

 

 

 

 

FORM 10-Q QUARTERLY REPORT

 

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

 

TABLE OF CONTENTS

 

    PAGE
Note about Forward-Looking Statements   ii
         
Part I   Financial Information   1
Item 1.   Financial Statements (unaudited)   1
    Condensed Consolidated Balance Sheets-March 31, 2024 and December 31, 2023   1
    Condensed Consolidated Statements of Income – for the Three Months ended March 31, 2024 and 2023   2
    Condensed Consolidated Statements of Stockholders Equity for the three months ended March 31, 2024   3
    Condensed Consolidated Statements of Cash Flows- for the three months ended March 31, 2024 and 2023   4
    Notes to Condensed Consolidated Financial Statements   5
Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.   11
Item 3.   Quantitative and Qualitative Disclosures about Market Risk.   13
Item 4.   Controls and Procedures.   14
         
PART II   Other Information   15
Item 1.   Legal Proceedings   15
Item1A.   Risk Factors   15
Item 6.   Exhibits   17

 

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.

 

ii

 

 

PART I FINANCIAL INFORMATION

 

Item 1. Financial Statements (unaudited)

 

AmeriGuard Security Services, Inc.

CONSOLIDATED BALANCE SHEETS

 

           
   March 31,   December 31, 
   2024   2023 
Assets          
Current Assets          
Cash  $1,451,475   $2,166,118 
Accounts receivable, net (note 2)   1,331,385    1,583,379 
Current Portion Note Receivable (note 3)   9,300    9,300 
Prepaid Expenses   316,798    327,147 
Deposits   60,575    61,575 
Related Party Receivable (note 4)   -    - 
Total Current Assets   3,169,533    4,147,519 
           
Other Non-Current Assets          
Fixed assets, net depreciation (note 5)   789,339    574,114 
Note Receivable (note 3)   338,450    340,700 
Operating Lease   1,005,633    1,005,633 
Total Non-Current Assets   2,133,421    1,920,447 
           
Total Assets  $5,302,954   $6,067,966 
           
Liabilities          
Current Liabilities          
Accounts payable  $499,036   $449,921 
Accrued Interest Due (note 9)   21,300    - 
Deferred Revenue (note 7)   722,327    722,327 
Accrued Payroll   625,833    626,694 
Payroll liability - Pension (note 8)   364,158    507,793 
Current portion of notes payable (note 9)   2,338,060    2,160,347 
Total Current Liabilities   4,570,714    4,467,082 
           
Long Term Liabilities          
Long term portion of notes payable (note 9)   2,015,122    2,034,493 
Operating Lease   1,060,015    1,060,015 
Total Liabilities   7,645,851    7,561,590 
           
Stockholders’ equity          
Common stock, $.001 par value, 94,917,302 shares issued and outstanding at December 31, 2023 and 2022 (Note 7)   159,846    159,846 
Retained earnings/(deficit)   (2,502,742)   (1,653,470)
Total Stockholders’ Equity   (2,342,896)   (1,493,624)
Total Liabilities and Stockholders’ Equity  $5,302,954   $6,067,966 

 

See accompanying notes to financial statements

 

1

 

 

AmeriGuard Security Services, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ending

 

           
   March 31,   March 31, 
   2024   2023 
Revenue          
Services  $5,855,111   $7,116,202 
Discounts and allowances   (4,169)   (48,145)
Other operational income   33,607    31,435 
Total Revenue   5,884,549    7,099,492 
           
Cost of Services          
Salaries and related taxes   3,935,031    4,374,604 
Employee benefits   736,010    876,415 
Sub-Contractor payments   -    946,926 
Training and direct expenses   33,020    27,718 
Vehicles and equipment expenses   413,609    357,392 
Total Cost of Services   5,117,671    6,583,055 
           
Gross Margin   766,878    516,437 
           
Operating Expenses          
Salaries, payroll taxes and benefits   344,537    385,866 
Vehicle expense   94,585    104,398 
Professional services   256,008    166,042 
Communication services   38,609    36,138 
General liability insurance   38,197    49,850 
Advertising and marketing   56,893    37,632 
Staff training   58,227    121,046 
Livescan services fees   25,584    44,081 
Licenses and permits   33,615    25,802 
General and administrative expenses   218,684    166,162 
Loan interest   410,875    40,922 
Depreciation expense   48,309    26,550 
Total Operating Expenses   1,624,122    1,204,488 
           
Net Income/(Loss) from Operations   (857,244)   (688,051)
           
Other Income (Expenses)          
Other Income   7,972    5,294 
Other (Expense)   -    (68,500)
Total Other Income/(Expense)   7,972    (63,206)
           
Net Income/(loss) before Income Taxes   (849,272)   (751,257)
           
Income tax expense          
           
Net Income/(loss)  $(849,272)  $(751,257)
           
Net Income/(loss) per Common Share - Basic and Diluted  $(0.0089)  $(0.0079)
           
Weighted Average Number of Common Shares Outstanding - Basic and Diluted   94,917,302    94,917,302 

 

See accompanying notes to financial statements

 

2

 

 

AmeriGuard Security Services, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Three Months Ending March 31, 2024

 

                          
           Additional       Total 
   Common Stock   Paid-In   Stockholders’   Stockholders’ 
   Shares   Amount   Capital   Equity   Equity 
Balance, December 31, 2023   9,417,302   $159,846   $6,011,595   $(7,665,065)  $(1,493,624)
                          
Net Income for the three months ending March 31, 2024        -    -    (849,272)   (849,272)
                          
Balance, December 31, 2023   9,417,302   $159,846   $6,011,595   $(8,514,337)  $(2,342,896)

 

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, 
   2024   2023 
Cash Flows from Operating Activities          
Net Income/(Loss)  $(849,272)  $(751,257)
Adjustment to reconcile net loss from operations:          
Changes in Operating Assets and Liabilities          
Accounts receivable, net   251,994    (509,415)
Prepaid insurance   11,599    6,403 
Accounts payable   49,115    162,213 
Deferred revenue   -    (45,000)
Accrued Interest   21,300    21,300 
Accrued Payroll   (861)   (3,970)
Payroll liability - Pension   (143,634)   47,190 
Depreciation   48,309    26,560 
Net Cash (Used)/provided in Operating Activities   (611,450)   (1,045,976)
           
Cash Flows (Used)/Provided from Investing Activities          
Purchase of fixed assets, net retirements   (263,534)   (60,609)
Building improvements   -    (20,606)
Net Cash Used by Investing Activities   (263,534)   (81,215)
           
Cash (Used)/Provided from Financing Activities          
Note Receivable   2,250    (1,269)
Financed Capital   937,500    - 
Loan principal payments   (734,414)   (18,399)
Payment for Shareholder buyout   (44,745)   - 
Net Cash Provided by Financing Activities   160,591    (19,668)
           
Net Increase (Decrease) in Cash   (714,393)   (1,146,858)
Cash at Beginning of Period   2,165,868    1,751,489 
Cash at End of Period  $1,451,475   $604,631 
           
Supplemental Cash Flow Information:          
Income Taxes Paid  $-      
Interest Paid  $410,875      
           
Supplemental disclosure of non-cash financing activities:          
Shareholder Loan  $2,697,960      
Operating leases - right of use asset  $1,005,633      
Operating leases - lease liability  $1,060,015      

 

See accompanying notes to financial statements

 

4

 

 

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 1,000 shares of no-par value stock held by Lawrence Garcia, President and CEO with 550 shares and Lillian Flores, VP of Operations with 450 shares. AGS provides armed guard services as a federal contractor with licenses in 5 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 10,000,000 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 2022 and 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 87% of its total revenue from five Federal contracts as described in Note 12 below. These contracts have specific terms, typically five years with the opportunity for extension, but there are no assurances they will be extended. Although we have had several extended in the past, there is no guarantee this will again happened in the future. However, there are significant direct expenses for each contract that also are removed from operations at the end of a contract. As a result, the revenue lost from a completed contract does not affect the bottom-line profits in an amount equal to the revenue lost. The actual net income impact depends on the contract.

 

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.

 

5

 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

In preparing financial statements in conformity with 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, 2024, and December 31, 2023, the Company had cash and cash equivalents totaling $1,451,475 and $2,166,118 respectively.

 

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 December 31, 2023, and 2022, 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 5 years, Leased vehicle capital expenditures are depreciated based on lease term generally 4 years, with Leasehold improvements useful life of 15 Years.

 

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.

 

We have leased vehicles that are classified as operating leases per the guidelines. The capital lease value as calculated following FASB guidelines is presented as a non-current asset on the balance sheet. As of December 31, 2023, the value is calculated to be $1,005,633. For the Operating Lease liability, the amount of $1,060,015 was calculated as of December 31, 2023. Both the lease asset and liability are adjusted annually.

 

6

 

 

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.

 

Revenue Recognition

 

We recognize revenue when the Invoice for contracted services is issued as stipulated by the contract. Other services provided are recognized at the time the service is provided. 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, since it does not believe such returns will be material.

 

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.

 

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 March 31, 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 $350,000. The relationship with AmeriGuard relates to the contract the Company holds with the Veteran’s Administration in Long Beach, California. The contract required this relationship with AmeriGuard, at the time of award. Funds from the contract were shared with AmeriGuard, during the first 3.5 years of operations which ended April 2022. As of December 31, 2022, the receivable was adjusted to $350,000 and a note payable from AmeriGuard was executed. The $350,000 note is amortized over 20 years, with a balloon payment December 31, 2032. The interest rate is 6%, with the monthly payment of $2,500. For March 31, 2024, the note receivable is presented with the current portion of $9,300, and long-term portion of $338,450, and a long-term portion of $340,700 for December 31, 2023.

 

7

 

 

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 $500,000. 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.

 

The receivable balance on March 31, 2024, and December 31, 2023, was $57,971.

 

NOTE 5 – FIXED ASSETS

 

Fixed assets consist of the following on March 31, 2024, and December 31, 2023:

 

          
   2024   2023 
Leasehold Improvements   274,133    274,133 
Machinery and Equipment   297,771    290,892 
Vehicles   891,827    635,172 
Total Fixed Assets   1,463,731    1,200,197 
Accumulated Depreciation   (674,392)   (626,083)
Fixed Assets, Net  $789,339   $574,114 

 

NOTE 6 – 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 $1,087,327. The agreement moving forward required TransportUS to provide services in the amount of $15,000 per month or return funds to Secure in that same amount. During 2023, TransportUS has returned funds in the amount of $365,000, leaving a balance of $722,327 as of March 31, 2024, and December 31, 2023.

 

NOTE 7 – 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, 2024, and December 31, 2023, were $364,158 and $507,793 respectively.

 

NOTE 8 – NOTES PAYABLE

 

In June 2020, AmeriGuard Security Services, Inc. received an SBA Loan through Fresno First Bank in the amount of $1,080,000 that was used to close out a Citibank loan in the amount of $312,339 with the remaining balance after expenses held in reserve. The SBA loan is a 10-year loan with monthly principal and interest payments. Interest rate is variable at prime rate plus 2.75%, adjusted every calendar quarter. Interest rate on March 31, 2024, and December 31, 2023, 11.2%. The balance remaining on the SBA loan was $710,842 and $730,213 as of March 31, 2024, and December 31, 2023, respectively.

 

8

 

 

On July 7, 2022, the Company entered into a buyout agreement with shareholder Lillian Flores. The total buyout amount was $3,384,950 representing 45% of the calculated business value as of December 31, 2020. Following the initial payment of $686,990, the company agreed to make 4 equal installments of principal and interest of $739,508 each December 31, starting 2023. Interest is calculated at a fixed rate of 3.110% compounded semi-annually. The company has accrued interest on December 31, 2022, of $49,035. Balance remaining in the amount of $2,697,960. All interest due was paid December 28, 2023, resulting in a balance of $0 on December 31, 2023. The Company requested a deferral of the payment of principal due December 31, 2023, and received a deferral from Mrs. Flores. On January 22, 2024, the Company entered into an agreement with Lillian Flores regarding the deferral of the required shareholder buyout payment of $611,253 due December 31, 2023. The deferral of the principal payment we requested by the Company for the purpose of capital retention. The agreement allows for a $16,500 monthly principal and interest payment starting in January 2024 through June 2024. Monthly interest is calculated at $1,585, leaving $14,915 applied to principal. The agreement requires the remaining deferred principal of $521,763 to be paid by the Company on or before June 30, 2024. As of March 31, 2024, the current portion of the shareholder buyout agreement was $1,240,095 and $1,285,680 as of December 31, 2023. The long-term portion of the buyout agreement was $1,412,280, for both March 31, 2024, and December 31, 2023.

 

On December 20, 2023, the company entered into a short-term loan agreement collateralized by accounts receivable from TVT Capital LLC. The agreement encumbered $1,199,200 of receivables resulting in a note payable of $800,000; the repayment term requires $49,967 per week for 24 weeks. As of March 31, 2024, the balance was $366,671 and as of December 31, 2023, the balance of $766,667, and is included as current portion of notes payable.

 

On January 2, 2024, the Company entered into a short-term loan agreement collateralized by accounts receivable with Cedar Advance Capital. The agreement encumbered $719,250 of receivables, resulting in a note payable of $525,000; the repayment term requires $22,477 per week for 32 weeks. As of March 31, 2024, the balance was $351,751, presented as current.

 

On January 2, 2024, the Company entered into a short-term loan agreement collateralized by accounts receivable with Velocity Capital Group. The agreement encumbered $565,150 of receivables resulting in a note payable of $412,500; the repayment term requires $17,660 per week for 32 weeks. As of March 31, 2024, the balance was $270,703, presented as current.

 

The following schedule details the loans active as of March 31, 2024, and December 31, 2023:

 

          
   2024   2023 
Current Portion:          
Notes and loans payable  $2,338,060   $2,160,347 
Long term Portion:          
Notes and loans payable   2,015,122    2,034,493 
Total Notes Payable  $4,353,182   $4,194,840 

 

NOTE 9 – 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 90,000,000 AGSS shares to the shareholders of Ameriguard Security Services, Inc., in exchange for 1000 shares of AGS, adding a net increase in common shares outstanding of 89,999,000. Next was the cancelation and conversion of series 675,000 A-1 preferred shares held by AGSS on December 31, 2020. The result in the total number of shares outstanding is 93,417,302.

 

9

 

 

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 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. Although the purchase agreement is dated October 2023, for financial statement presentation purposes, we have presented the purchase as if it occurred in 2022. The result is the purchase transaction impact on the equity section of the Company is shown in detail in the 2022 section of the report.

 

NOTE 10 – COMMITMENTS AND CONTINGENCIES

 

The company has a multiple vehicle lease agreement with Enterprise Leasing. As of March 31, 2024, the company had 35 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 11 – CONCENTRATION OF SALES

 

The company generated approximately $5,800,000 in service revenue as of March 31, 2024, and approximately $7,000,000 in contract service revenue as of March 31, 2023. Of the total service revenue, approximately 87% was earned from four federal contracts in the first quarter 2024 and five contracts in the first quarter 2023. The contracts and their respective terms are as follows:

 

  Social Security Administration, NSC   -

September 2022 through September 2027

Annual Revenue of approx. $3M

           
  Social security Administration, SSC   -

June 2022 through June 2027

Annual Revenue of approx. $5M

           
  Social Security Administration, WBDOC   -

June 2021 through July 2026

Annual Revenue of approx. $5.8M

           
  National Institute of Health- EPA   -

May 2020 through May 2023

Annual Revenue of approx. $2.8M

           
  Veterans Administration – Long Beach CA   -

Feb 2019 through June 2024

Annual Revenue of approx. $4.9M

 

NOTE 12 – 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 the unfair business practices act. A lawsuit has been filed, but it is early in the process and the attorneys 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, 2024, there have been no additional litigation issues, nor changes in those in process.

 

Per Attorney letters issued there are no other pending cases or legal matters.

 

NOTE 13 – INCOME TAXES

 

Due to the losses incurred during the tax year ending 2022, and the expected zero tax due for 2023, there is no estimated tax liability as of March 31, 2024. Therefore, no provision for income taxes has been included in the accompanying financial statements.

 

10

 

 

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 new 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.

 

11

 

 

Results of Operations for the three months ending March 31, 2024

 

Revenues and Cost of Goods Sold

 

The first quarter of 2024 experienced a 17.1% decrease of approximately $1,215,000 in overall revenue over the first quarter of 2023. The decrease was the net result of a federal guard contract that ended in May 2023 that provided approximately $1,800,000 in revenue each quarter, with an increase in revenue of approximately $550,000 from a federal transportation contract.

 

Despite the decline in revenue, AGSS experienced and increase in the gross profit margin due to the reduction of expenses, associated with the aforementioned contract that ended, along with increase transportation revenue without a significant increase in direct expenses. The results of the decline in revenue along with the reduction in direct expenses benefited AGSS by increasing the gross profit margin percentage from 7% to 13%.

 

Operating Expenses and Other Expense

 

Operation expenses increased in 2024 over 2023 by approximately $419,000. The majority of the increase, 88%, was the increase of approximately $370,000 in loan interest expense. Due to the tightening of capital markets during the previous 6 months, our efforts to acquire additional companies have been delayed. As a result, we have had to accept some less than desirable loan terms in order to support our operations at present. At the same time, we have been working diligently on finding more traditional financing to refinance our debt obligations. We anticipate receiving loan refinancing and an influx of capital before the end of the second quarter 2024.

 

The remaining increase of $50,000 in operating expenses is from a combination of increases and decreases in various expense categories. There was an increase in professional fees of approximately $90,000, an increase in advertising and marketing of approximately $19,000, an increase in depreciation expense of approximately $22,000, and an increase in the general and administrative expense group of approximately $52,000. The $183,000 of expense increases were offset by decreases of expenses in administrative salaries of $41,000, Staff training expenses of $63,000, and reduction of license fees for the live scan service of $18,500.

 

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 in the first quarter of 2024 was approximately $857,000, which is an increase over the loss in [the first quarter of] 2023 of approximately $688,000. As previously mentioned, our operational structure that drives these costs has excess capacity in anticipation of significant growth via new contracts, or more specifically, company acquisitions. This allows additional revenue to flow directly to our earnings.

 

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, 2024, operations generated a net decrease in cash of approximately $611,000 while cash used by investing activities was approximately $263,000. Financing activities added approximately 160,600. The net decrease in cash for the period was approximately $714,000.

 

On March 31, 2024, the Company had cash on hand of $1,451,475 with total current assets of $3,169,533.

 

12

 

 

Moving Forward

 

Following the reverse merger in December 2022, we have been hard at work getting AGSS in the position it is in today. It has been difficult and expensive to get to this point of being a public company with the corporate structure, systems and team that can expand our business with increasing profitability. These costs have had a negative impact on our bottom line, yet we are now in position to execute our plans. Our current overhead expense structure has the capacity to manage multiple times the revenues from one of our two strategic sources. We remain confident and expect that our future will be profitable.

 

Our first source is to continue down our historical path of seeking out contracts that meet our sweet spot and bidding with the expectation of successful results. In early February 2024, TransportUS Inc was awarded a new contract from the Department of Veterans Affairs providing transportation for veterans in central LA. TransportUS Inc currently has proposals with two other cities for similar services. Ameriguard Security Services Inc has proposals out for guard services as well.

 

Our second source of growth is mergers and acquisitions. Now that we have access to capital markets and we operate in both the guard industry and the non-emergency medical transportation industry, we believe that we are well-positioned for long-term growth. The total available market for the security industry continues to grow, and at the same time, there is significant consolidation occurring. As a top-tier company in the industry, we can be a desired company for acquisition exits and quickly triple our revenues with one or two key acquisitions. After such acquisitions, we could see the additional gross profits from acquired companies flow directly to our earnings. Such returns may be quick and significant. The non-emergency medical transportation industry continues to expand and the opportunity for gaining contracts is increasing. At the same time, our intention is to find additional transportation companies to acquire.

 

There are also acquisition opportunities in several other industries that fit our business model. Those include cyber security, private security, ammunition manufacturing, and surveillance to mention a few.

 

The Company continues the process of our first equity raise to recover our expended working capital and acquire additional companies. We anticipate the equity raise to be completed in the next quarter.

 

Management is very positive regarding profitable operations for the next twelve months based on the following:

 

  AGSS operates in growing industries.

 

  The security industry continues to expand, and we are now a part of the expanding transportation industry as well

 

  There are over 8,000 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 have been and will continue to be a company that is very conservative with our resources and will use every possible dollar to provide strength and good return to our investors.

 

  We are in it for the long haul.

 

  We make profits the old fashion way, hard work.

 

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.

 

13

 

 

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, 2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2023, 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, 2024, 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, 2024, 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, 2024, 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.

 

14

 

 

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 December 31, 2023, there are three employment-related matters 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 in Fresno County Superior Court, 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, 2024, 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.

 

15

 

 

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 22, 2024 By: /s/ Lawrence Garcia
    Name: Lawrence Garcia
    Title: Chief Executive Officer
      (principal executive officer)
   
Date: May 22, 2024 By: /s/ Jason Bovell
    Name: Jason Bovell
    Title: Chief Financial Officer
      (principal financial officer and principal accounting officer)

 

16

 

 

AMERIGUARD SECURITY SERVICES, INC.

Exhibit Index to Quarterly Report on Form 10-Q

For the Three Months Ended March 31, 2024

 

Exhibit No.   Description
3.1   Certificate of Incorporation of AMERIGUARD SECURITY SERVICES, INC., as amended (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on December 14, 2022).
     
3.2   Amended and Restated By-Laws of AMERIGUARD SECURITY SERVICES, INC. (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on December 14, 2022).
     
21.1*   Subsidiaries of the Company- Ameriguard Security Services, Inc. (California)
     
31.1*   Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a) of the Exchange Act.
     
31.2*   Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a) of the Exchange Act.
     
32.1*   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2*   Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101*   Interactive data files pursuant to Rule 405 of Regulation S-T
     
101.INS   Inline XBRL Instance Document.*
101.SCH   Inline XBRL Taxonomy Extension Schema Document.*
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document.*
104   Cover Page Interactive Data File (Embedded as Inline XBRL document and contained in Exhibit 101).*

 

 

*Exhibits filed herewith.

 

17

 

Exhibit 21.1

 

Subsidiaries of the Registrant

 

Name of Subsidiaries   Jurisdiction
Ameriguard Security Services, Inc.   California
TransportUS, Inc   California

 

 

 

Exhibit 31.1

 

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

 

I, Lawrence Garcia, certify that:

 

1. I have reviewed this report on Form 10-Q of Ameriguard Security Services, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 22, 2024

 

/s/ Lawrence Garcia  
Name: Lawrence Garcia  
Title: Chief Executive Officer  
  (principal executive officer)  

 

 

 

Exhibit 31.2

 

CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

 

I, Jason Bovell, certify that:

 

1. I have reviewed this report on Form 10-Q of Ameriguard Security Services, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

 

  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 22, 2024

 

/s/ Jason Bovell  
Name: Jason Bovell  
Title: Chief Financial Officer  
  (principal financial officer
and principal accounting officer)
 

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

The undersigned hereby certifies, in his capacity as Chief Executive Officer of Ameriguard Security Services, Inc. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

 

(1) The Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: May 22, 2024

 

/s/ Lawrence Garcia  
Name: Lawrence Garcia  
Title: Chief Executive Officer  
  (principal executive officer)  

 

This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

The undersigned hereby certifies, in his capacity as Chief Financial Officer of Ameriguard Security Services, Inc. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

 

(1) The Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: May 22, 2024

 

/s/ Jason Bovell  
Name: Jason Bovell  
Title: Chief Financial Officer  
  (principal financial officer
and principal accounting officer)
 

 

This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

v3.24.1.1.u2
Cover
3 Months Ended
Mar. 31, 2024
shares
Cover [Abstract]  
Document Type 10-Q
Amendment Flag false
Document Quarterly Report true
Document Transition Report false
Document Period End Date Mar. 31, 2024
Document Fiscal Period Focus Q1
Document Fiscal Year Focus 2024
Current Fiscal Year End Date --12-31
Entity File Number 333-173039
Entity Registrant Name AMERIGUARD SECURITY SERVICES, INC.
Entity Central Index Key 0001514443
Entity Tax Identification Number 99-0363866
Entity Incorporation, State or Country Code NV
Entity Address, Address Line One 5470 W. Spruce Avenue
Entity Address, Address Line Two Suite 102
Entity Address, City or Town Fresno
Entity Address, State or Province CA
Entity Address, Postal Zip Code 93722
City Area Code (559)
Local Phone Number 271-5984
Entity Current Reporting Status Yes
Entity Interactive Data Current Yes
Entity Filer Category Non-accelerated Filer
Entity Small Business true
Entity Emerging Growth Company false
Entity Shell Company false
Entity Common Stock, Shares Outstanding 94,917,302
v3.24.1.1.u2
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Current Assets    
Cash $ 1,451,475 $ 2,166,118
Accounts receivable, net (note 2) 1,331,385 1,583,379
Current Portion Note Receivable (note 3) 9,300 9,300
Prepaid Expenses 316,798 327,147
Deposits 60,575 61,575
Related Party Receivable (note 4)
Total Current Assets 3,169,533 4,147,519
Other Non-Current Assets    
Fixed assets, net depreciation (note 5) 789,339 574,114
Note Receivable (note 3) 338,450 340,700
Operating Lease 1,005,633 1,005,633
Total Non-Current Assets 2,133,421 1,920,447
Total Assets 5,302,954 6,067,966
Current Liabilities    
Accounts payable 499,036 449,921
Accrued Interest Due (note 9) 21,300
Deferred Revenue (note 7) 722,327 722,327
Accrued Payroll 625,833 626,694
Payroll liability - Pension (note 8) 364,158 507,793
Current portion of notes payable (note 9) 2,338,060 2,160,347
Total Current Liabilities 4,570,714 4,467,082
Long Term Liabilities    
Long term portion of notes payable (note 9) 2,015,122 2,034,493
Operating Lease 1,060,015 1,060,015
Total Liabilities 7,645,851 7,561,590
Stockholders’ equity    
Common stock, $.001 par value, 94,917,302 shares issued and outstanding at December 31, 2023 and 2022 (Note 7) 159,846 159,846
Retained earnings/(deficit) (2,502,742) (1,653,470)
Total Stockholders’ Equity (2,342,896) (1,493,624)
Total Liabilities and Stockholders’ Equity $ 5,302,954 $ 6,067,966
v3.24.1.1.u2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares
Mar. 31, 2024
Dec. 31, 2023
Statement of Financial Position [Abstract]    
Common stock, shares par value $ 0.001 $ 0.001
Common stock, shares issued 94,917,302 94,917,302
Common stock, shares outstanding 94,917,302 94,917,302
v3.24.1.1.u2
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Revenue    
Total Revenue $ 5,884,549 $ 7,099,492
Cost of Services    
Total Cost of Services 5,117,671 6,583,055
Gross Margin 766,878 516,437
Operating Expenses    
Salaries, payroll taxes and benefits 344,537 385,866
Vehicle expense 94,585 104,398
Professional services 256,008 166,042
Communication services 38,609 36,138
General liability insurance 38,197 49,850
Advertising and marketing 56,893 37,632
Staff training 58,227 121,046
Livescan services fees 25,584 44,081
Licenses and permits 33,615 25,802
General and administrative expenses 218,684 166,162
Loan interest 410,875 40,922
Depreciation expense 48,309 26,550
Total Operating Expenses 1,624,122 1,204,488
Net Income/(Loss) from Operations (857,244) (688,051)
Other Income (Expenses)    
Other Income 7,972 5,294
Other (Expense) (68,500)
Total Other Income/(Expense) 7,972 (63,206)
Net Income/(loss) before Income Taxes (849,272) (751,257)
Net Income/(loss) $ (849,272) $ (751,257)
Net Income/(loss) per Common Share - Basic $ (0.0089) $ (0.0079)
Net Income/(loss) per Common Share - Diluted $ (0.0089) $ (0.0079)
Weighted Average Number of Common Shares Outstanding - Basic 94,917,302 94,917,302
Weighted Average Number of Common Shares Outstanding - Diluted 94,917,302 94,917,302
Services [Member]    
Revenue    
Total Revenue $ 5,855,111 $ 7,116,202
Discounts Aand Allowances [Member]    
Revenue    
Total Revenue (4,169) (48,145)
Other Operational Income [Member]    
Revenue    
Total Revenue 33,607 31,435
Salaries And Related Taxes [Member]    
Cost of Services    
Total Cost of Services 3,935,031 4,374,604
Employee Benefits [Member]    
Cost of Services    
Total Cost of Services 736,010 876,415
Sub Contractor Payments [Member]    
Cost of Services    
Total Cost of Services 946,926
Training And Direct Expenses [Member]    
Cost of Services    
Total Cost of Services 33,020 27,718
Vehicles And Equipment Expenses [Member]    
Cost of Services    
Total Cost of Services $ 413,609 $ 357,392
v3.24.1.1.u2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (Unaudited) - 3 months ended Mar. 31, 2024 - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Stockholders Equity [Member]
Total
Beginning balance, value at Dec. 31, 2023 $ 159,846 $ 6,011,595 $ (7,665,065) $ (1,493,624)
Beginning balance, Shares at Dec. 31, 2023 9,417,302      
Net Income (849,272) (849,272)
Ending balance, value at Mar. 31, 2024 $ 159,846 $ 6,011,595 $ (8,514,337) $ (2,342,896)
Ending balance, Shares at Mar. 31, 2024 9,417,302      
v3.24.1.1.u2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash Flows from Operating Activities    
Net Income/(Loss) $ (849,272) $ (751,257)
Changes in Operating Assets and Liabilities    
Accounts receivable, net 251,994 (509,415)
Prepaid insurance 11,599 6,403
Accounts payable 49,115 162,213
Deferred revenue (45,000)
Accrued Interest 21,300 21,300
Accrued Payroll (861) (3,970)
Payroll liability - Pension (143,634) 47,190
Depreciation 48,309 26,560
Net Cash (Used)/provided in Operating Activities (611,450) (1,045,976)
Cash Flows (Used)/Provided from Investing Activities    
Purchase of fixed assets, net retirements (263,534) (60,609)
Building improvements (20,606)
Net Cash Used by Investing Activities (263,534) (81,215)
Cash (Used)/Provided from Financing Activities    
Note Receivable 2,250 (1,269)
Financed Capital 937,500
Loan principal payments (734,414) (18,399)
Payment for Shareholder buyout (44,745)
Net Cash Provided by Financing Activities 160,591 (19,668)
Net Increase (Decrease) in Cash (714,393) (1,146,858)
Cash at Beginning of Period 2,165,868 1,751,489
Cash at End of Period 1,451,475 $ 604,631
Supplemental Cash Flow Information:    
Income Taxes Paid  
Interest Paid 410,875  
Supplemental disclosure of non-cash financing activities:    
Shareholder Loan 2,697,960  
Operating leases - right of use asset 1,005,633  
Operating leases - lease liability $ 1,060,015  
v3.24.1.1.u2
ORGANIZATION AND DESCRIPTION OF BUSINESS
3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
ORGANIZATION AND DESCRIPTION OF BUSINESS

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 1,000 shares of no-par value stock held by Lawrence Garcia, President and CEO with 550 shares and Lillian Flores, VP of Operations with 450 shares. AGS provides armed guard services as a federal contractor with licenses in 5 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 10,000,000 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 2022 and 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 87% of its total revenue from five Federal contracts as described in Note 12 below. These contracts have specific terms, typically five years with the opportunity for extension, but there are no assurances they will be extended. Although we have had several extended in the past, there is no guarantee this will again happened in the future. However, there are significant direct expenses for each contract that also are removed from operations at the end of a contract. As a result, the revenue lost from a completed contract does not affect the bottom-line profits in an amount equal to the revenue lost. The actual net income impact depends on the contract.

 

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.

 

v3.24.1.1.u2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

In preparing financial statements in conformity with 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, 2024, and December 31, 2023, the Company had cash and cash equivalents totaling $1,451,475 and $2,166,118 respectively.

 

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 December 31, 2023, and 2022, 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 5 years, Leased vehicle capital expenditures are depreciated based on lease term generally 4 years, with Leasehold improvements useful life of 15 Years.

 

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.

 

We have leased vehicles that are classified as operating leases per the guidelines. The capital lease value as calculated following FASB guidelines is presented as a non-current asset on the balance sheet. As of December 31, 2023, the value is calculated to be $1,005,633. For the Operating Lease liability, the amount of $1,060,015 was calculated as of December 31, 2023. Both the lease asset and liability are adjusted annually.

 

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.

 

Revenue Recognition

 

We recognize revenue when the Invoice for contracted services is issued as stipulated by the contract. Other services provided are recognized at the time the service is provided. 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, since it does not believe such returns will be material.

 

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.

 

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 March 31, 2024, due to the short-term nature of these instruments.

 

v3.24.1.1.u2
NOTE RECEIVABLE
3 Months Ended
Mar. 31, 2024
Disclosure Note Receivable Abstract  
NOTE RECEIVABLE

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 $350,000. The relationship with AmeriGuard relates to the contract the Company holds with the Veteran’s Administration in Long Beach, California. The contract required this relationship with AmeriGuard, at the time of award. Funds from the contract were shared with AmeriGuard, during the first 3.5 years of operations which ended April 2022. As of December 31, 2022, the receivable was adjusted to $350,000 and a note payable from AmeriGuard was executed. The $350,000 note is amortized over 20 years, with a balloon payment December 31, 2032. The interest rate is 6%, with the monthly payment of $2,500. For March 31, 2024, the note receivable is presented with the current portion of $9,300, and long-term portion of $338,450, and a long-term portion of $340,700 for December 31, 2023.

 

v3.24.1.1.u2
RELATED PARTY RECEIVABLE
3 Months Ended
Mar. 31, 2024
Related Party Transactions [Abstract]  
RELATED PARTY RECEIVABLE

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 $500,000. 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.

 

The receivable balance on March 31, 2024, and December 31, 2023, was $57,971.

 

v3.24.1.1.u2
FIXED ASSETS
3 Months Ended
Mar. 31, 2024
Property, Plant and Equipment [Abstract]  
FIXED ASSETS

NOTE 5 – FIXED ASSETS

 

Fixed assets consist of the following on March 31, 2024, and December 31, 2023:

 

          
   2024   2023 
Leasehold Improvements   274,133    274,133 
Machinery and Equipment   297,771    290,892 
Vehicles   891,827    635,172 
Total Fixed Assets   1,463,731    1,200,197 
Accumulated Depreciation   (674,392)   (626,083)
Fixed Assets, Net  $789,339   $574,114 

 

v3.24.1.1.u2
DEFERRED REVENUE
3 Months Ended
Mar. 31, 2024
Revenue Recognition and Deferred Revenue [Abstract]  
DEFERRED REVENUE

NOTE 6 – 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 $1,087,327. The agreement moving forward required TransportUS to provide services in the amount of $15,000 per month or return funds to Secure in that same amount. During 2023, TransportUS has returned funds in the amount of $365,000, leaving a balance of $722,327 as of March 31, 2024, and December 31, 2023.

 

v3.24.1.1.u2
PAYROLL LIABILITY – PENSION
3 Months Ended
Mar. 31, 2024
Payroll Liability Pension  
PAYROLL LIABILITY – PENSION

NOTE 7 – 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, 2024, and December 31, 2023, were $364,158 and $507,793 respectively.

 

v3.24.1.1.u2
NOTES PAYABLE
3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 8 – NOTES PAYABLE

 

In June 2020, AmeriGuard Security Services, Inc. received an SBA Loan through Fresno First Bank in the amount of $1,080,000 that was used to close out a Citibank loan in the amount of $312,339 with the remaining balance after expenses held in reserve. The SBA loan is a 10-year loan with monthly principal and interest payments. Interest rate is variable at prime rate plus 2.75%, adjusted every calendar quarter. Interest rate on March 31, 2024, and December 31, 2023, 11.2%. The balance remaining on the SBA loan was $710,842 and $730,213 as of March 31, 2024, and December 31, 2023, respectively.

 

On July 7, 2022, the Company entered into a buyout agreement with shareholder Lillian Flores. The total buyout amount was $3,384,950 representing 45% of the calculated business value as of December 31, 2020. Following the initial payment of $686,990, the company agreed to make 4 equal installments of principal and interest of $739,508 each December 31, starting 2023. Interest is calculated at a fixed rate of 3.110% compounded semi-annually. The company has accrued interest on December 31, 2022, of $49,035. Balance remaining in the amount of $2,697,960. All interest due was paid December 28, 2023, resulting in a balance of $0 on December 31, 2023. The Company requested a deferral of the payment of principal due December 31, 2023, and received a deferral from Mrs. Flores. On January 22, 2024, the Company entered into an agreement with Lillian Flores regarding the deferral of the required shareholder buyout payment of $611,253 due December 31, 2023. The deferral of the principal payment we requested by the Company for the purpose of capital retention. The agreement allows for a $16,500 monthly principal and interest payment starting in January 2024 through June 2024. Monthly interest is calculated at $1,585, leaving $14,915 applied to principal. The agreement requires the remaining deferred principal of $521,763 to be paid by the Company on or before June 30, 2024. As of March 31, 2024, the current portion of the shareholder buyout agreement was $1,240,095 and $1,285,680 as of December 31, 2023. The long-term portion of the buyout agreement was $1,412,280, for both March 31, 2024, and December 31, 2023.

 

On December 20, 2023, the company entered into a short-term loan agreement collateralized by accounts receivable from TVT Capital LLC. The agreement encumbered $1,199,200 of receivables resulting in a note payable of $800,000; the repayment term requires $49,967 per week for 24 weeks. As of March 31, 2024, the balance was $366,671 and as of December 31, 2023, the balance of $766,667, and is included as current portion of notes payable.

 

On January 2, 2024, the Company entered into a short-term loan agreement collateralized by accounts receivable with Cedar Advance Capital. The agreement encumbered $719,250 of receivables, resulting in a note payable of $525,000; the repayment term requires $22,477 per week for 32 weeks. As of March 31, 2024, the balance was $351,751, presented as current.

 

On January 2, 2024, the Company entered into a short-term loan agreement collateralized by accounts receivable with Velocity Capital Group. The agreement encumbered $565,150 of receivables resulting in a note payable of $412,500; the repayment term requires $17,660 per week for 32 weeks. As of March 31, 2024, the balance was $270,703, presented as current.

 

The following schedule details the loans active as of March 31, 2024, and December 31, 2023:

 

          
   2024   2023 
Current Portion:          
Notes and loans payable  $2,338,060   $2,160,347 
Long term Portion:          
Notes and loans payable   2,015,122    2,034,493 
Total Notes Payable  $4,353,182   $4,194,840 

 

v3.24.1.1.u2
STOCKHOLDERS’ EQUITY
3 Months Ended
Mar. 31, 2024
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 9 – 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 90,000,000 AGSS shares to the shareholders of Ameriguard Security Services, Inc., in exchange for 1000 shares of AGS, adding a net increase in common shares outstanding of 89,999,000. Next was the cancelation and conversion of series 675,000 A-1 preferred shares held by AGSS on December 31, 2020. The result in the total number of shares outstanding is 93,417,302.

 

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 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. Although the purchase agreement is dated October 2023, for financial statement presentation purposes, we have presented the purchase as if it occurred in 2022. The result is the purchase transaction impact on the equity section of the Company is shown in detail in the 2022 section of the report.

 

v3.24.1.1.u2
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 10 – COMMITMENTS AND CONTINGENCIES

 

The company has a multiple vehicle lease agreement with Enterprise Leasing. As of March 31, 2024, the company had 35 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.

 

v3.24.1.1.u2
CONCENTRATION OF SALES
3 Months Ended
Mar. 31, 2024
Concentration Of Sales  
CONCENTRATION OF SALES

NOTE 11 – CONCENTRATION OF SALES

 

The company generated approximately $5,800,000 in service revenue as of March 31, 2024, and approximately $7,000,000 in contract service revenue as of March 31, 2023. Of the total service revenue, approximately 87% was earned from four federal contracts in the first quarter 2024 and five contracts in the first quarter 2023. The contracts and their respective terms are as follows:

 

  Social Security Administration, NSC   -

September 2022 through September 2027

Annual Revenue of approx. $3M

           
  Social security Administration, SSC   -

June 2022 through June 2027

Annual Revenue of approx. $5M

           
  Social Security Administration, WBDOC   -

June 2021 through July 2026

Annual Revenue of approx. $5.8M

           
  National Institute of Health- EPA   -

May 2020 through May 2023

Annual Revenue of approx. $2.8M

           
  Veterans Administration – Long Beach CA   -

Feb 2019 through June 2024

Annual Revenue of approx. $4.9M

 

v3.24.1.1.u2
LITIGATION AND CLAIMS
3 Months Ended
Mar. 31, 2024
Litigation And Claims  
LITIGATION AND CLAIMS

NOTE 12 – 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 the unfair business practices act. A lawsuit has been filed, but it is early in the process and the attorneys 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, 2024, there have been no additional litigation issues, nor changes in those in process.

 

Per Attorney letters issued there are no other pending cases or legal matters.

 

v3.24.1.1.u2
INCOME TAXES
3 Months Ended
Mar. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 13 – INCOME TAXES

 

Due to the losses incurred during the tax year ending 2022, and the expected zero tax due for 2023, there is no estimated tax liability as of March 31, 2024. Therefore, no provision for income taxes has been included in the accompanying financial statements.

v3.24.1.1.u2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 31, 2024
Accounting Policies [Abstract]  
Use of Estimates

Use of Estimates

 

In preparing financial statements in conformity with 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

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, 2024, and December 31, 2023, the Company had cash and cash equivalents totaling $1,451,475 and $2,166,118 respectively.

 

Accounts Receivable

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 December 31, 2023, and 2022, an allowance for estimated uncollectible accounts was determined to be unnecessary.

 

Property and Equipment

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 5 years, Leased vehicle capital expenditures are depreciated based on lease term generally 4 years, with Leasehold improvements useful life of 15 Years.

 

Operating Leases

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.

 

We have leased vehicles that are classified as operating leases per the guidelines. The capital lease value as calculated following FASB guidelines is presented as a non-current asset on the balance sheet. As of December 31, 2023, the value is calculated to be $1,005,633. For the Operating Lease liability, the amount of $1,060,015 was calculated as of December 31, 2023. Both the lease asset and liability are adjusted annually.

 

Net Income/(Loss) per Share

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.

 

Revenue Recognition

Revenue Recognition

 

We recognize revenue when the Invoice for contracted services is issued as stipulated by the contract. Other services provided are recognized at the time the service is provided. 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, since it does not believe such returns will be material.

 

Fair Value of Financial Instruments

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.

 

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 March 31, 2024, due to the short-term nature of these instruments.

 

v3.24.1.1.u2
FIXED ASSETS (Tables)
3 Months Ended
Mar. 31, 2024
Property, Plant and Equipment [Abstract]  
Schedule of fixed assets
          
   2024   2023 
Leasehold Improvements   274,133    274,133 
Machinery and Equipment   297,771    290,892 
Vehicles   891,827    635,172 
Total Fixed Assets   1,463,731    1,200,197 
Accumulated Depreciation   (674,392)   (626,083)
Fixed Assets, Net  $789,339   $574,114 
v3.24.1.1.u2
NOTES PAYABLE (Tables)
3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
Schedule of the loan active
          
   2024   2023 
Current Portion:          
Notes and loans payable  $2,338,060   $2,160,347 
Long term Portion:          
Notes and loans payable   2,015,122    2,034,493 
Total Notes Payable  $4,353,182   $4,194,840 
v3.24.1.1.u2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) - shares
Nov. 14, 2002
Mar. 31, 2024
Jul. 07, 2021
Number of share issued 1,000    
Holder ownership   87.00%  
Custodian Ventures [Member]      
Preferred a-1 stock, shares authorized     10,000,000
Chief Executive Officer [Member]      
Number of share issued 550    
Lillian Flores [Member]      
Number of share issued 450    
v3.24.1.1.u2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Property, Plant and Equipment [Line Items]    
Cash $ 1,451,475 $ 2,166,118
Operating leases 1,005,633  
Operating lease liability $ 1,060,015  
Machinery and Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful life 5 years  
Vehicles [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful life 5 years  
Leased Vehicle Capital Expenditures [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful life 4 years  
Leasehold Improvements [Member]    
Property, Plant and Equipment [Line Items]    
Estimated useful life 15 years  
v3.24.1.1.u2
NOTE RECEIVABLE (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2022
Dec. 31, 2023
Defined Benefit Plan Disclosure [Line Items]      
Note receivable current portion $ 9,300    
Note receivable long-term portion $ 338,450   $ 340,700
Ameri Guard [Member]      
Defined Benefit Plan Disclosure [Line Items]      
Note receivable   $ 350,000  
Term   3 years 6 months  
Note receivable adjustment   $ 350,000  
Amortized over   20 years  
Interest rate 6.00%    
Monthly payment $ 2,500    
v3.24.1.1.u2
RELATED PARTY RECEIVABLE (Details Narrative) - USD ($)
Jul. 07, 2021
Mar. 31, 2024
Dec. 31, 2023
Related Party Transactions [Abstract]      
Consideration paid $ 500,000    
Notes receivable related party   $ 57,971 $ 57,971
v3.24.1.1.u2
FIXED ASSETS (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Property, Plant and Equipment [Line Items]    
Total Fixed Assets $ 1,463,731 $ 1,200,197
Accumulated Depreciation (674,392) (626,083)
Fixed Assets, Net 789,339 574,114
Leasehold Improvements [Member]    
Property, Plant and Equipment [Line Items]    
Total Fixed Assets 274,133 274,133
Machinery and Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Total Fixed Assets 297,771 290,892
Vehicles [Member]    
Property, Plant and Equipment [Line Items]    
Total Fixed Assets $ 891,827 $ 635,172
v3.24.1.1.u2
DEFERRED REVENUE (Details Narrative) - Transport U S Inc [Member] - USD ($)
12 Months Ended
Dec. 31, 2023
Mar. 31, 2024
Dec. 31, 2021
Defined Benefit Plan Disclosure [Line Items]      
Deferred revenue $ 722,327 $ 722,327 $ 1,087,327
Deferred income     $ 15,000
Return funds amount $ 365,000    
v3.24.1.1.u2
PAYROLL LIABILITY – PENSION (Details Narrative) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Payroll Liability Pension    
Pension balances $ 364,158 $ 507,793
v3.24.1.1.u2
NOTES PAYABLE (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Short-Term Debt [Line Items]    
Total Long-term Portion $ 2,015,122 $ 2,034,493
Total Notes Payable 4,353,182 4,194,840
Notes And Loans Payable [Member]    
Short-Term Debt [Line Items]    
Total Current Portion 2,338,060 2,160,347
Total Long-term Portion $ 2,015,122 $ 2,034,493
v3.24.1.1.u2
NOTES PAYABLE (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Jan. 02, 2024
Jul. 07, 2022
Jan. 22, 2024
Dec. 31, 2020
Jun. 30, 2020
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Dec. 20, 2023
Dec. 31, 2022
Short-Term Debt [Line Items]                    
Notes payable           $ 4,353,182   $ 4,194,840    
Accrued interest           21,300     $ 49,035
Lillian Flores [Member]                    
Short-Term Debt [Line Items]                    
Interest rate   3.11%   45.00%            
Notes payable   $ 2,697,960                
Total buyout amount     $ 611,253 $ 3,384,950   1,240,095   1,285,680    
Initial payment   $ 686,990                
Installments payment description   the company agreed to make 4 equal installments of principal and interest of $739,508 each December 31, starting 2023. The agreement allows for a $16,500 monthly principal and interest payment starting in January 2024 through June 2024.              
Monthly interest     $ 1,585              
Leaving principal     14,915              
Deferred principal     $ 521,763              
Long term buyout amount           $ 1,412,280   1,412,280    
Secure Transportation Inc [Member]                    
Short-Term Debt [Line Items]                    
Notes payable               0    
SBA Loan [Member]                    
Short-Term Debt [Line Items]                    
Principal amount         $ 1,080,000          
Expenses held in reserve         $ 312,339          
Term         10 years          
Interest rate is variable         prime rate plus 2.75%          
Interest rate           11.20% 11.20%      
Notes payable           $ 710,842   730,213    
Short Term Loan Agreement [Member]                    
Short-Term Debt [Line Items]                    
Notes payable                 $ 800,000  
Note receivable                 1,199,200  
Weekly payment                 $ 49,967  
Notes payable current portion           366,671   $ 766,667    
Short Term Loan Agreement [Member] | Cedar Advance Capital [Member]                    
Short-Term Debt [Line Items]                    
Notes payable $ 525,000                  
Installments payment description the repayment term requires $22,477 per week for 32 weeks.                  
Accounts receivable $ 719,250         351,751        
Short Term Loan Agreement [Member] | Velocity Capital Group [Member]                    
Short-Term Debt [Line Items]                    
Notes payable $ 412,500                  
Installments payment description the repayment term requires $17,660 per week for 32 weeks.                  
Accounts receivable $ 565,150         $ 270,703        
v3.24.1.1.u2
STOCKHOLDERS’ EQUITY (Details Narrative) - shares
1 Months Ended 12 Months Ended
Nov. 14, 2002
Oct. 20, 2023
Dec. 31, 2020
Mar. 31, 2024
Number of shares issued 1,000      
Lawrence Garcia [Member]        
Share purchase agreement description   TransportUS Inc. was acquired with 3,000,000 shares with the initial 1,500,000 shares to purchase 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.    
Ameriguard Security Services [Member]        
Number of shares issued     90,000,000  
Number of shares exchanged     1,000  
Increase in common shares outstanding     89,999,000  
Conversion of shares     675,000  
Shares Outstanding       93,417,302
v3.24.1.1.u2
CONCENTRATION OF SALES (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Revenues $ 5,884,549 $ 7,099,492
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Guard Service [Member]    
Concentration Risk, Percentage 87.00% 87.00%
Guard Service [Member]    
Revenues $ 5,800,000 $ 7,000,000
v3.24.1.1.u2
INCOME TAXES (Details Narrative)
Mar. 31, 2024
USD ($)
Income Tax Disclosure [Abstract]  
Tax liability $ 0

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