10-K: Ameriguard Security Services Faces Financial Strain Amid Contract Losses

Ameriguard Security Services, Inc. reports significant revenue decrease and net loss for fiscal year 2025 due to loss of federal contracts, while facing ongoing legal and financial challenges.

Summary

• Ameriguard Security Services, Inc. (AGSS) reported a net loss of $487,792 for the fiscal year ended December 31, 2025, a decrease from a net loss of $2,336,297 in 2024.
• Total revenue for 2025 was $23,531,638, an 11% decrease from $26,435,611 in 2024, primarily due to the loss of three federal guard contracts with the Social Security Administration, which accounted for a $6,593,700 revenue reduction.
• This revenue loss was partially offset by an increase in revenue from TransportUS Inc. (TUS) by $3,690,000.
• The company experienced a net loss from operations of $3,134,181 in 2025, compared to $3,403,601 in 2024.
• Significant other income in 2025 included a gain on sale of assets ($177,176), an employee retention tax credit (ERTC) ($1,943,743), and debt forgiveness for TUS ($657,327).
• The company faces substantial doubt regarding its ability to continue as a going concern due to recurring operating losses, negative stockholders' equity, significant debt, financing defaults, legal matters, and the loss of key contracts.
• A major blow occurred after year-end with the non-renewal of the Veterans Administration Long Beach, CA transportation contract, representing an estimated 58% reduction in projected 2026 revenue.
• The company is actively seeking capital through investors and convertible debt financing to support its growth strategies and NASDAQ listing aspirations.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as significantly negative due to substantial revenue declines, a large net loss, severe going concern issues, major contract losses, and ongoing litigation and financing defaults.

Positives

• TransportUS Inc. (TUS) revenue increased by $3,690,000 in 2025.
• The company received a significant Employee Retention Tax Credit (ERTC) of $1,943,743 in 2025.
• TUS experienced debt forgiveness amounting to $657,327 in 2025.
• The company has a strategic plan focused on growing the transportation business, adapting to high-tech security services, and acquiring industry-related companies.
• AGS is shifting its approach to protecting business assets from traditional standing guards to technology and patrol services, which is being positively received by the market.
• The company has a CEO with 22 years of industry experience and a CFO with over 40 years of experience.

Negatives

• A 11% overall decrease in operational revenue for 2025, totaling $23,531,638.
• Loss of three federal guard contracts with the Social Security Administration resulted in a revenue reduction of approximately $6,593,700.
• Net loss from operations of $3,134,181 for the year ending December 31, 2025.
• Significant debt obligations, with total notes payable of approximately $6.5 million as of December 31, 2025, of which $4.1 million is current.
• Default under the government receivables-backed line of credit with Legalist, Inc., leading to an event of default and increased interest rates.
• Inability to satisfy payroll obligations on July 10, 2025, due to the interruption of financing.
• Forfeiture of three Social Security Administration contracts due to inability to fund payroll.
• The company faces substantial doubt about its ability to continue as a going concern.
• Post-year-end loss of the Veterans Administration Long Beach, CA transportation contract, representing an estimated 58% reduction in projected 2026 revenue.
• The Department of Labor (DOL) investigation resulted in a notification of a wage payment shortage of $356,741.
• Two PAGA/class action lawsuits related to wage and hour violations, with settlements totaling $300,000, pending court approval.
• A lawsuit filed by Legalist Government Receivables Fund, LP, and Legalist SPV III, LP, seeking judgment of $4,123,549.73 against the Company, TransportUS, Inc., and Lawrence D. Garcia.

Risks

• The company is highly leveraged and has limited access to additional sources of liquidity.
• Recurring operating losses, negative stockholders' equity, and significant current debt obligations raise substantial doubt about the company's ability to continue as a going concern.
• Defaults under financing arrangements, specifically with Legalist, Inc., have led to increased interest rates and potential further actions.
• Adverse legal and regulatory matters, including ongoing litigation and DOL investigations, pose financial and operational risks.
• The loss of key government contracts, particularly the recent non-renewal of the VA Long Beach contract, significantly impacts projected revenue.
• The company's reliance on federal contracts, which have specific terms and renewal options, creates inherent revenue instability.
• The management dispute and interruption of the financing agreement led to the loss of operational funding and significant attorney fees.
• The company is subject to wage and hour litigation and potential liabilities related to prevailing wage, fringe benefits, and overtime requirements.
• The outcome of ongoing litigation, including the Legalist lawsuit and PAGA/class action suits, could have a material adverse effect on the company's financial condition.

Future Outlook

The company's strategic plan for 2026 involves growing the transportation company through new federal contracts and private services, adapting to and driving high-tech security services, and acquiring industry-related companies. All these strategies require capital. Management is exploring opportunities for a partner investor to help achieve the goal of becoming a company actively traded on the NASDAQ market. TUS has four outstanding bids and two more being prepared for VA contracts, anticipating 6-10 RFPs in the next twelve months. TUS is also exploring private pay transportation services, initially in Fresno and then expanding to Southern California, which requires new capital for vehicles and personnel. AGC is launching a new marketing campaign, opening a sales office in Las Vegas, and hiring two sales team members to support operational cash needs while developing advanced business asset protection services.

Management Comments

• "At this time, our operating structure and current level of expense can handle twice the revenue with minor increases to our operating overhead expenses. This allows the entire gross profit of any new contract or company acquisition to go straight to the bottom line, providing a consistent return on investment."
• "The market continues to respond positively to this new approach to protecting company assets."
• "All three of these strategies require capital to accelerate success. Which is why a large portion of the executive management team and the boards focus is exploring every opportunity to find a willing partner investor to join AGSS and help AGSS achieve the goal of becoming a company actively trade on the NASDAQ market."
• "Management believes there is no merit in this case as in previous employee suits filed against the Company over the past three years."

Industry Context

StockSavvy.ai notes that Ameriguard Security Services operates in two highly competitive sectors: contract security and non-emergency medical transportation (NEMT). The security industry is dominated by large players like Allied Universal, Securitas, G4S, and Prosegur, with smaller companies facing significant challenges due to increasing regulatory burdens and the need for capital investment in technology. The NEMT industry is growing rapidly, presenting opportunities for TUS, but competition is also increasing. The company's strategy to focus on technology-driven security solutions and leverage its NEMT capabilities aligns with industry trends, but execution and capital access remain critical.

Comparison to Industry Standards

• In the security industry, companies with over $50 million in revenue have experienced steady growth, while those between $10 million and $20 million, like AGS with approximately $10.4 million in revenue for 2025, face greater challenges in increasing revenues.
• Profitability challenges for companies below $20 million in annual sales are more difficult than for those above $50 million, largely due to economies of scale.
• The contract security industry's EBITDA ranges are typically between four to six percent and higher; however, the filing does not provide specific EBITDA figures for AGSS.
• The NEMT industry in North America was valued at approximately $6.4 billion in 2022 with a CAGR of 7.5% to 9%, indicating a substantial market for TUS to target.

Corporate Governance

Legal Proceedings

• Two employment issues pending related to terminated employees alleging failure to pay minimum wages, sick pay, meal/rest period violations, wage statement violations, and violation of the unfair business practices act (PAGA/Class Action).
• A PAGA/Class Action suit against Ameriguard Security of California was settled in March 2025 for $150,000, pending court approval.
• A PAGA/Class Action suit against TransportUS Inc. was settled in February 2026 for $150,000, payable eighteen months from settlement date.
• The Wage and Hour Division of the U.S. Department of Labor (DOL) is investigating affiliate contractors' inability to meet payroll obligations under Social Security Administration contracts, alleging $1,326,182.87 in back wages, with $356,741.06 outstanding.
• Legalist Government Receivables Fund, LP, and Legalist SPV III, LP filed a motion for summary judgment in the Supreme Court of New York seeking $4,123,549.73 against the Company, TransportUS, Inc., and Lawrence D. Garcia.
• A lawsuit was filed by the Company and Mr. Garcia against former directors Douglas Anderson and Russell Honore, seeking declaratory relief and damages.
• Mr. Anderson and Mr. Honore filed an Answer and Counterclaim against Mr. Garcia, Mr. Cashen, Mr. Slatic, and Michael Goossen, alleging breaches of fiduciary duty, conversion, and fraud.
• A mediation conference was held regarding the counterclaim filed by former board members Anderson and Honore, resulting in a proposed $500,000 settlement to the Company, pending approval by opposing counsel.

Related Party Transactions

• TransportUS Inc. has a note receivable from AmeriGuard Security Systems, Inc. (SYS), a company owned 100% by Lawrence Garcia.
• Veterans Administration contracts managed by TUS are awarded to SYS, with TUS managing the contracts, receiving revenues, and paying expenses.
• Prior to the merger, AGS funded the operational expenses of AGSS and treated these expenses as related party expenses, which were eliminated upon consolidation.

Stakeholder Impact

• Shareholders: Significant negative impact due to the company's financial distress, going concern issues, and potential for operational cessation. The stock price is likely to be severely affected.
• Employees: Potential risk of payroll disruptions, as evidenced by the July 10, 2025 payroll issue. The loss of contracts could also lead to workforce reductions.
• Creditors: Increased risk of non-payment or delayed payment due to the company's liquidity issues and default on financing agreements. Legalist, Inc. is pursuing significant judgment.
• Government Agencies (Clients): The forfeiture of SSA contracts and potential disruption in VA services due to financial instability could impact government operations and require rapid re-contracting.
• Suppliers: Potential for delayed payments or increased scrutiny on credit terms due to the company's financial precariousness.

Next Steps

• Grow the Transportation company through new federal contracts and local private party services.
• Adapt to and drive the need for high tech security services as the leader in the industry.
• Acquire industry related companies.
• Explore opportunities to find a willing partner investor.
• Submit bids on all VA contracts announced.
• Develop private pay transportation service in Fresno and expand to Southern California.
• Launch a new marketing campaign for AGC.
• Open a sales office in Las Vegas.
• Hire two individuals for the AGC sales team.
• Negotiate a payment plan with the DOL for the $356,741 wage shortage.
• Seek to restructure or refinance existing debt obligations, including the Legalist facility.
• Continue to implement cost-reduction initiatives.
• Seek to obtain new government and commercial contracts to replace lost revenue.
• Finalize settlement of the counterclaim filed by former board members Anderson and Honore, pending approval by opposing counsel.

Key Dates

Recommendation

The company is facing severe financial distress, including significant operating losses, a going concern warning, major contract losses, defaults on financing, and substantial ongoing litigation. The inability to meet payroll and the potential for operational cessation present extreme risks to investors. Without a clear path to new capital and operational stability, the outlook is highly unfavorable.

Keywords

Ameriguard Security Services, AGSS, Form 10-K, Annual Report, Security Guard Services, Non-Emergency Medical Transportation, Federal Contracts, Veterans Administration, Social Security Administration, Financial Results, Net Loss, Going Concern, Legal Proceedings, Financing Default, Lawrence Garcia