10-K: AmeriGuard Security Services Reports Increased Revenue but Suffers Net Loss in 2024

AmeriGuard Security Services, Inc. experienced a revenue increase driven by the TransportUS acquisition but reported a net loss due to increased operating expenses and loan interest.

Summary

• AmeriGuard Security Services, Inc. (AGSS) reported its financial results for the fiscal year ended December 31, 2024.
• The company experienced a 26% increase in operational revenue, totaling approximately $26.4 million, primarily due to the inclusion of a full year of revenue from TransportUS Inc. (TUS).
• Guard services revenue from AmeriGuard Security Services Inc. (AGS) decreased by approximately $2.7 million due to the loss of a contract with the Environmental Protection Authority (EPA).
• Total direct cost of services increased by approximately $4.3 million, or 22%, to $23.4 million, mainly due to increased labor and vehicle expenses from TUS.
• Operating expenses increased by approximately $2.2 million, largely due to increased loan interest of approximately $1.2 million and professional services of approximately $529,000.
• The company reported a net loss from operations of $3.4 million, compared to a loss of $2.4 million in the previous year.
• Other income for 2024 was $1.1 million, including a gain on deferred liability subsidiary of $1.0 million, while 2023 had other income of $2.5 million from the Employee Retention Tax Credit.
• The company had cash on hand of $424,588 as of December 31, 2024, with total current assets of $3.3 million.
• AGSS acquired TransportUS Inc. on October 20, 2023, issuing 3,000,000 common shares to Lawrence Garcia in exchange for the 1,000 shares held from TransportUS, Inc.
• The company is pursuing organic growth through bidding on contracts and exploring mergers and acquisitions within the security industry.
• AGSS negotiated a full refinance agreement of its debt in March 2025 to better control debt payments and cash flow.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While revenue increased, the company experienced a net loss and faces significant financial challenges, including high debt and ongoing litigation. The future outlook is cautiously optimistic, but the risks are considerable.

Positives

• The company experienced a 26% increase in operational revenue, reaching approximately $26.4 million for the fiscal year ended December 31, 2024.
• Gross margin increased approximately $1.2 million, a 66% increase.
• The gross margin percentage increased to 11.3% in 2024 from 8.6% in 2023.
• The company negotiated a full refinance agreement of its debt in March 2025, allowing for better control of debt payments and cash flow.
• AGSS secured a $7 million line of credit in February 2025 to refinance debt and improve liquidity.

Negatives

• The company reported a net loss from operations of $3.4 million for the year ending December 31, 2024, compared to a loss of $2.4 million for the year ending December 31, 2023.
• Operating expenses increased in 2024 over 2023 by approximately $2.2 million.
• The largest category of increase was in loan interest, of approximately $1.2 million, resulting from utilizing several high-interest loans necessary to cover the operational capital needs.
• Professional services experienced an increase of approximately $529,000, with approximately $250,000 of this increase resulting from a class action lawsuit filed alleging labor law violations.
• The company defaulted on several short-term loan agreements in April 2024, requiring negotiations for lower payments and total interest due.

Risks

• The company relies heavily on six Federal contracts, which account for approximately 89% of total services revenue, and the loss of any of these contracts could significantly impact revenue.
• The company faces risks related to State and Federal regulations, staffing shortages, accelerating inflation, and overall business environment issues.
• The company is involved in three employment-related legal issues, which could result in financial liabilities.
• The company's high debt levels and reliance on short-term loans pose a risk to its financial stability.
• The company's internal control over financial reporting is not subject to an attestation report of the company's independent registered public accounting firm, which could indicate potential weaknesses in internal controls.

Future Outlook

Management anticipates that access to capital markets will allow AGSS to encompass advanced AI-driven digital security and robotics, delivering it to the security industry, as well as non-emergency medical transportation logistics. The company is pursuing organic growth through bidding on contracts and exploring mergers and acquisitions within the security industry. Management is positive regarding profitable operations for the next twelve months.

Management Comments

• Management anticipates that our access to capital markets, allows AGSS to encompass advanced AI-driven digital security and robotics, delivering it to the security industry, as well as our non-emergency medical transportation logistics.
• Management is very positive regarding profitable operations for the next twelve months based on the following: Both industries that AGSS currently operates in, are growing industries, the security industry is somewhat recession proof, the non-emergency transportation market is growing at an annual rate of over 7.5%, there are over 10,000 security companies operating in our market, with 50% available for acquisition, our management team, Board of Directors and supporting equity professionals can get the job done, we negotiated a full refinance agreement of our debt in March 2025, allowing for better control of debt payments and cash flow, we have been and will continue to be a company that is very conservative with our resources and will use every available dollar providing strength, and good return to our investors, we are in it for the long haul.

Industry Context

The security guard industry is consolidating, with larger firms leveraging technology and economies of scale. The non-emergency medical transportation (NEMT) industry is experiencing rapid growth, presenting opportunities for TransportUS Inc.

Comparison to Industry Standards

• AGS revenue at approximately $17 million in annual revenue places it in a strong competitive position.
• Companies with over $50 million in revenue have, over the last 10 years, experienced steady growth while those guard companies between $15 million and $20 million, the remaining 9,900 firms, have experienced greater challenges to increase revenues.
• The non-emergency medical transportation (NEMT) industry is a fast-growing industry with the North American market was approximately $6.4 billion in 2022 with a compound annual growth rate of between 7.5% and 9%.
• This provides TUS with a market of approximately $7.6 billion in 2024.

Legal Proceedings

• As of December 31, 2024, 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 in the Fresno County Superior Court, 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.

Related Party Transactions

• As of December 31, 2024, the subsidiary TransportUS Inc., has a note receivable from AmeriGuard Security Systems, Inc. (SYS).
• SYS is a California Corporation, owned 100% by Lawrence Garcia, the majority shareholder of AGSS.

Stakeholder Impact

• Shareholders may be concerned about the net loss and the impact on the company's stock price.
• Employees may be affected by potential cost-cutting measures or changes in operations.
• Customers may experience changes in service quality or pricing.
• Suppliers and creditors may be affected by the company's financial performance and ability to meet its obligations.

Next Steps

• The company will continue to seek organic growth through bidding on contracts.
• The company will explore mergers and acquisitions within the security industry.
• The company plans to adopt an Equity Incentive Plan during 2025.
• The company plans to adopt an insider trading policy by the end of the fiscal year 2025.

Key Dates

Keywords

security services, medical transportation, government contracts, revenue, net loss, AmeriGuard, TransportUS, financial results, acquisition, debt, loans