UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMERIGUARD SECURITY SERVICES, INC.
(Exact Namename of Small Business Issuerregistrant as specified in its Charter)
| Nevada | 99-0363866 | |||
(State or other incorporation or organization) | (Primary Standard Industrial Code Number)Classification | ( Identification |
5470 W. Sunrise Boulevard, Spruce Avenue, Suite 304
Fresno, CA
(559)271-5984
(Address, including zip code, and Telephone Numbertelephone number, including area code, of Registrant’s Principal
NEVADA AGENCY AND TRANSFER COMPANY
Registered Agent
50 West Liberty Street Suite 880, Reno, NV, 8950
(775)322-0626
(Name, address, including zip code, and Principal Placetelephone number, including area code, of Business)
With copies to:
Matthew McMurdo
McMurdo Law Group, LLC
1185 Avenue of communications to:
New York, NY 10036
(917) 318-2865
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(d)462(c) under the Securities Act, of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“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 | ☐ |
| Title of Each Class Of Securities to be Registered | Amount to be Registered (1) | Proposed Maximum Aggregate Offering Price per share (2) | Proposed Maximum Aggregate Offering Price | Amount of Registration fee | ||||||||||||
| Common Stock, $0.001 par value per share | 5,125,000 | $ | 0.25 | $ | 1,281,250 | $ | 165.03 | |||||||||
If an emerging growth company, indicate by check mark if the resale by our selling shareholders of upregistrant has elected not to 5,125,000 shares of common stock previously issueduse the extended transition period for complying with any new or revised financial accounting standards provided pursuant to such shareholders.
The registrant hereby amends this registration feestatement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Rule 457(o)Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the basis of the closing bid price of the common stock of the registrant as reported on the OTCBB on January 31, 2014.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomesis effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
Selling Shareholder Preliminary Prospectus
Subject to completion April 10, 2023
AMERIGUARD SECURITY SERVICES, INC.
3,585,946 Shares of Common Stock
This prospectus relates to the resale of up to 3,585,946 shares of common stock, $.001 par value, of Ameriguard Security Services, Inc., a Nevada corporation (the “Company” or “AGSS”), by certain shareholders, as described herein (the “Selling Shareholders”), originally issued when Ameriguard Security Services, Inc. (“we”, “AGSS” or the “Company”), entered into a Definitive Share Exchange Agreement (the “Merger Agreement”) with Ameriguard Security Services, Inc., a California corporation, (“Ameriguard”) and Lawrence Garcia (“Garcia”) the majority shareholder of Ameriguard (the “Majority Shareholder”) and the minority shareholders of Ameriguard (“Minority Shareholders”). Under the Merger Agreement, One Hundred Percent (100%) of the ownership interest of Ameriguard was exchanged for an aggregate of 90,000,000 shares of common stock of AGSS issued to the Majority Shareholders and the Minority Shareholders, in accordance with the Merger Agreement (the “Merger”). The former stockholders of Ameriguard acquired a majority of the issued and outstanding common stock as a result of the share exchange transaction.
The total amount of shares of common stock, which may be sold pursuant to this prospectus, would constitute approximately 6.22% of our issued and outstanding common stock as of March 27, 2023.
The Selling Shareholders are selling all the shares of common stock offered by this prospectus. It is anticipated that the Selling Shareholders will sell these shares of common stock from time to time in one or more transactions, in negotiated transactions or otherwise, at prevailing market prices or at prices otherwise negotiated. We will not receive any proceeds from the sale of shares by the Selling Shareholders.
Our common stock is quoted on the OTC Markets Pink under the symbol “AGSS.” On March 27, 2023, the closing price of our common stock was $2.00 per share on the OTC Pink. These prices will fluctuate based on the demand for our common stock.
We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision. The Company is not a blank check company because it has a specific business purpose and has no plans or intention to merge with an operating company. To our knowledge, none of the Company’s shareholders have plans to enter a change of control or change of management. None of our current management has previously been involved with a development stage company that did not implement its business plan, that generated no or minimal revenues or was engaged in a change of control.
The shares being offered. See “Risk Factors” beginning on page 5.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is February __, 2014subject to completion April 10, 2023.
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| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 36 | |
| DESCRIPTION OF SECURITIES | 37 | |
| MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS | 38 | |
| CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 40 | |
| DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES | 40 | |
| EXPERTS | 40 | |
| WHERE YOU CAN FIND MORE INFORMATION | 41 | |
| FINANCIAL STATEMENTS | F-1 |
You may only rely on the information necessary to make an informed investment decision.
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This summary highlights selected information contained elsewhere in this prospectus.Prospectus. This summary does not contain all the information that you should consider before investing in the common stock.stock of Ameriguard Security Services, Inc. (referred to herein as “we,” “our,” “us,” “AGSS” or the “Company”). You should carefully read the entire prospectus,Prospectus, including “Risk Factors”,Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the accompanying financial statements and the related notes to the Financial Statements before making an investment decision. In this Prospectus, the terms “HRAH,” “Company,” “we,” “us” and “our” refer to Health Revenue Assurance Holdings, Inc.
The information presented is a sourcebrief overview of timely, accuratethe key aspects of the offering. The prospectus summary contains a summary of information contained elsewhere in this prospectus. You should carefully read all information in the prospectus, including the financial statements and critical resources, technology and information that supports the performancenotes to the financial statements under the Financial Statements section beginning on page F-1 prior to making an investment decision.
Corporate History
The Company was incorporated in Nevada on December 13, 2010.
The Company intended to become a provider of revenue integrity in assuring the existencecycle services to a broad range of healthcare organizations. The companyproviders. We offer our customers integrated solutions designed around their specific business needs, including revenue cycle data analysis, contract and its subsidiaries’ products and services include business intelligence technology solutions, contractoutsourced coding, billing, coding and compliance audits, coding education, revenue cyclecoding consulting, physician coding services and ICD-10 education and transition services. The
On February 10, 2012, the Company provides customized solutions to its clientsentered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with the highest regard for ethical standards and responsibility.
The Company then went dormant in August 2014.
On July 14, 2020, as a result of a custodianship in Clark County, Nevada, Case Number: A816259, Custodian Ventures LLC (“Custodian”) was appointed Custodian of the Company.
On July 15, 2020 Custodian appointed David Lazar as the Company’s Chief Executive Officer, President, Secretary, Chief Financial Officer, Chief Executive Officer and Chairman of the Board of Directors.
On September 8, 2021, under the terms of a private stock purchase agreement, 10,000,000 shares of Series A-1 Preferred Stock, $0.001 par value per share (the “Shares”) of the Company, were transferred from Custodian Ventures, LLC to Ameriguard Security Services, Inc. California corporation (Ameriguard). As a result, Ameriguard became holder of approximately 91% of the voting rights of the issued and outstanding share capital of the Company on a fully-diluted basis of the Company, and became the controlling shareholder. The consideration paid for the Shares was $450,000. In connection with the transaction, David Lazar forgave the Company from all debts owed to him and/or Custodian Ventures, LLC.
On September 8, 2021, the Company accepted the resignations from David Lazar as the Company’s Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and as a Member of the Board of Directors. Effective on the same date to fill the vacancies created by Mr. Lazar’s resignations, the Company appointed Lawrence Garcia as the Company’s President, CEO, CFO, Treasurer, Secretary, and Chairman of the Board of Directors. These resignations are in connection with the consummation of the private stock purchase agreement and was not the result of any disagreement with Company on any matter relating to Company’s operations, policies or practices.
On March 11, 2022, the Company, amended its articles of incorporation to change its name to Ameriguard Security Services, Inc. from Health Revenue Assurance Associates,Holdings, Inc. (“HRAA”).The name was deemed effective by FINRA on March 17, 2022.
Pursuant to the Merger Agreement, we acquired the business of Ameriguard and will continue the existing business of Ameriguard as our wholly owned subsidiary.
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Ameriguard was formed on November 14, 2002. The corporation was incorporated with the issuance of 1,000 common shares formerly held by Lawrence Garcia, President and CEO with 550 shares and Lillian Flores, former VP of Operations with 450 shares. On July 12, 2022 under the terms of a Settlement Agreement, Flores exchanged her 450 shares for consideration of $3,384,950 and a promissory note in that amount secured by a stock pledge. Ameriguard provides armed guard services as a federal contractor with licenses in 7 states and provides commercial guard services in California.
Ameriguard principally provides guard services to governmental, quasi-governmental and commercial property management. Guard services generated $22 million in revenues for the fiscal year ended December 31, 2021. Guard services include, providing armed and unarmed uniformed security personnel for access control, mobile patrols, traffic control, security console/system operators, fire safety directors, communication, reception, concierge and front desk/doorman operations.
Corporation Information
Our principal executive offices are currently located at 8551 West Sunrise Blvd.,5470 W Spruce Ave Suite 304, Plantation, FL 33322. 102 Fresno CA 93722.
Our telephone number is (954) 472-2340website; www.ameriguardsecurity.com.
Employees
As of December 31, 2022, we had 313 full-time employees, 237 of these employees are represented by collective bargaining agreements and our fax number is (954) 370-0157. the Company considers it relations with its employees to be very good.
Our website is www.healthrevenue.com.
Security guard and related services in the JOBS Act. An emerging growth company may take advantageUS is a $43 billion industry comprising over 11,000 companies and 900,000 officers. Over 55%, ($24 billion) of specified reduced reportingthis market is serviced by 40 companies, with the top 4 firms, with Allied Universal, Securitas, G4S and other burdens that are otherwise applicable generallyProsegur Security controlling 74% ($31.8 billion), an average revenue of $7.9 billion; the next 21 firms control 8.4% ($3.6billion), an average of 172 million and the next 10 firms control 1% ($550 million) with a range of $20 to public companies. These provisions include:
We believe that the top 40 companies have the resources to harness technology, to expand their business into related services other than guard services. Companies with over $50 million in revenue have, over the last 10 years, experienced steady growth while those guard companies under $20 million, the remaining 9,900 firms, have experienced declining revenues. We believe that the principal reason for this is the steady diversification of security services away from the traditional guard services to areas of utilization of technology requiring capital. Along with this, we believe that the profitability challenges below $20 million annual sales are much more difficult that above $50 million is sales, largely due to the significant economies of scale achieve at the higher revenue levels.
The proliferation of technology while increasing efficacy in performance and inevitably lower costs in the future, the impact on the contract security industry will likely have mixed results – positive for companies who harness technology into their service delivery strategies – and negative for those companies who fail to invest in or adopt these service-enhancing capabilities. Despite the advances in the U.S. contract guarding business over recent years, there remains a question as amended (the “Exchange Act”).
The recent merger and acquisition trend, primarily by the major national and international security organizations and fueled by investment and funding from private equity firms, is continuing. The underlying reason for this shift is less obvious and suggests an increasing number of sellers who concluded that an emerging growth company can taketheir better option was to exit and sell rather than remain in the marketplace and try to compete and organically grow their market share.
Despite its low barriers of entry and nominal capital requirements, the security guard business has become more challenging for the smaller owner/operator. The traditionally historic advantage of the extended transition period provided in Section 7(a)(2)(B)smaller operator’s ability to offer relationship-driven customized services is no longer totally sufficient for sustainable growth – especially with the increasing regulatory challenges of the SecuritiesAffordable Care Act, federal and state minimum wage laws, Family Medical Leave Act and state laws (i.e. meal and rest break reporting and now, predictive scheduling).
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Even stronger local and smaller regional companies are finding it more difficult to protect their client base and grow revenues under increasing regulatory as well as competitive pressures. Larger regional and national organizations are dealing with the regulatory climate while growing market share by leveraging infrastructure, technology, economies of 1933, as amended (the “Securities Act”) for complyingscale with new or revised accounting standards. We have electedmore aggressive pricing and better service reliability. This approach appears to useoffer a more compelling value proposition from the extended transition period provided above and therefore our financial statementsclient’s perspective, which seems evident by the higher client retention rates reported by the major security companies.
However, this consolidating trend may not be comparableinevitable for the future as newer, more tech-savvy owner/operators enter the business and recognize how to adopt best practices with a variety of sophisticated third-party software platforms and applications to help level the playing field. These include talent management and on-boarding applications to attract, hire and maintain a more skilled and reliable workforce; integrated labor management platforms to control scheduling, compliance, operations, payroll, billing and financial reporting; and state-of-the-art social media marketing applications.
The contract security industry should now be able to more effectively capitalize on and penetrate opportunities in a $20 billion in-house market – especially for those companies that complywho have invested and integrated technology into a more highly reliable ecosystem of protective services.
For the foreseeable future, the U.S. manned guarding business seems likely for continued sustainable growth. While the technology/manpower ratio may shift the revenue mix going forward, based on today’s currently expanding U.S. economy, the prospects for an aggregate growth rate of four percent or more seem realistic and perhaps even conservative, especially for ownership who have prudently invested in technology enhancements to their core guarding operations.
Providing these strategies can yield an attractive ROI, increase operating profits (EBITDA ranges of four to six percent and higher) and enterprise valuations, this industry seems not only viable but also opportune for further investment consideration.
(The above industry data taken from https://www.nasco.org/wp-content/uploads/2021/08/2021-Bob-Perry-Contract-Security-Industry-White-Paper-1.pdf)
Regulatory Matters/Compliance
Each State has specific licensing requirements companies must meet to perform guard services, especially armed guard services. To date, the Company holds firearm licenses in over twelve States and does not foresee any license or governmental requirements preventing us from continuing to operate in any State a contract is awarded to us. As a company with public company effective dates.
Contracting officers have indicated that they believe the government has no concern relating to the merger as long as the responsible person(s) remains.
Properties
The Company’s corporate headquarters is located at 5470 W. Spruce Avenue, Suite 102, Fresno CA. The lease is currently month to month. Landlord has not indicated a desire for a new lease. Our lease payments are a total of $55,767 for the entire term (or, $4,230 per month).
Legal Proceedings
While we have not been involved in whichany litigation related to the performance of our annual gross revenues exceed $1 billion, (ii)guard services, armed or otherwise, to date, as an armed guard Company with contracts with Governmental entities is a possibility of legal proceedings that could be more serious than the dateaverage business. From time to time, the Company is involved in matters relating to claims arising from the ordinary course of business, but those claims have been labor and union related and have been settled on an administrative level not in court.
While the results of such claims and legal actions cannot be predicted with certainty, the Company’s management does not believe that we become a “large accelerated filer” as defined in Rule 12b-2 underthere are claims or actions, pending or threatened against the Exchange Act,Company, the ultimate disposition of which would occur if the market valuehave a material adverse effect on our business, results of our common stock that is held by non-affiliates exceeds $700 million asoperations, financial condition or cash flows.
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The Terms of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
| Securities | ||||
| Until all shares are sold by the | ||||
The | ||||
| Common Stock Issued and Outstanding Before Offering: | 93,418,291 shares of our common stock are issued and outstanding as of the date of this Prospectus. | |||
| Common Stock Issued and Outstanding After Offering: | 93,418,291 shares of common stock. | |||
| Use of Proceeds: | We will not receive any proceeds from the sale of the common stock by the Selling Shareholders. See “Use of Proceeds.” |
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RISK FACTORS
An investment in this prospectus, includingour securities is highly speculative and subject to numerous and substantial risks. These risks are set forth below. You should not invest in the documents incorporated by reference into this prospectus, includes some statements that are not purely historical and that are “forward-looking statements.” Such forward-looking statements include, but are not limited to, statements regarding our Company and management’s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations, and the expected impact of the offering on the parties’ individual and combined financial performance. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
Risks Related to Our Corporate Business
Concentration of Revenue
The Company’s future success is dependent uponcompany receives over 90% of its ability to achieve profitable operations and generate cashtotal revenue from operating activities, and upon additional financing, Management believesfour Federal contracts. These contracts have specific terms, typically five years with the opportunity for extension, but there are no assurances they can raisewill be extended. Although we have had several extended in the appropriate funds needed to support their business plan and develop an operating company which is cash flow positive. The Company has not been able to generate sufficient cash from operating activities to fund its ongoing operations. Therepast, 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. To mitigate this risk the company actively pursues additional contracts on an ongoing basis.
Long process in acquiring contracts
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 wining the contract is not guaranteed, the company maintains a department of individuals who monitor and write proposals for all government contracts that fit our operating criteria 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
Transitioning from carve out contracts to open market contracts
Currently the company benefits from several ownership criteria and business size that increases the probability of contract awards. The company meets the contracting qualifications of disabled veteran and minority owned business. Another aspect of contract opportunities is set aside for small businesses. This as defined as those who have operating revenue on average over the past five (5) years under $25.5 million. Currently the company is below this threshold, yet our strategic plan is to move past the average revenue limits within the next 24 months. This should not be seen as a negative in that we will only exceed this limit once we reach annual revenue of $40 million or more during the next 24 months, putting us in an excellent financial position to compete with the much larger companies who operate in the $50-$100 million revenue level. Another aspect of our strategy is to acquire similar guard companies who already have small business contracts with the government which add significantly to our bottom line putting us in even a better position to win additional large government contracts.
Staffing Shortages
Like all industries today, the guard industry is not exempt from staffing shortages. This is an ongoing challenge and in its worst case can impact our ability to meet the requirements of the contracts awarded. The company nor our competitors have discovered a silver bullet to address this challenge. However, we have developed a strategy that we anticipate will help meet the challenge. This strategy does need to remain confidential so as to not tip our hand to our competitors. We will indicate that we have successfully implemented this strategy in the past and it was very successful.
Impact of COVID
Initially the impact of the COVID pandemic was positive for the guard industry. Our industry is considered essential and with less activity at the sites we protect, we were able to meet and exceed the contract requirements with fewer staff and little to no overtime. As a result, each contract became more profitable than normal full operations. The challenges have actually come after the critical year of 2020. As the government began to require vaccinations for all employees and contractors, along with quarantine requirements, staffing became a big problem. Starting in 2021 and continuing to today, these policies implemented by the federal government has made it very difficult for us to meet the staffing needs and thus as increased overtime expenses to levels never before seen. As we discussed regarding staffing shortages this is where COVID has had the greatest impact on us, and it continues. However, during August the CDC released new guideline relating to vaccines, transmission, and quarantines that if implemented by the federal government will help us recover from the staffing shortages. If the federal government adjusts to the new guidelines, we will see individuals returning to their guard positions.
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Accelerating Inflation
All industries struggle when operating in times of inflation like we are experiencing in 2022. The results are increased pressure on salaries, operational costs increase due to higher fuel prices and the increased cost of all supplies. The one silver lining for the company is that federal contacts require that the Company willsalary increases that we negotiate with the labor union must be able to generate enough revenue and/or raise capital to support its operations. These factors raise substantial doubt aboutcovered by increasing the Company’s ability to continue as a going concern.
Key employees are essential to expanding our business.
Lawrence Garcia and Robert Rubinowitzother key employees are essential to our ability to continue to grow and expand our business. Mr. Garcia, as owner, allows the company to bid on the restricted contracts that we discussed earlier regarding transitioning out of the special carveout contracts. Other long-term employees have significant impact on the success of operations and understanding of the industry. They have established relationships within the industry in which we operate. If theyMr. Garcia or any of the long-term employees were to leave us,the company, our growth strategy might be hindered, which could materially affect our business and limit our ability to increase revenue.
If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our Common Stock.
Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. We currently do not maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, 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.
As a public company, we will have significant requirements for enhanced financial reporting and internal controls. We will be required to implement, document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of our internal controls over financial reporting. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.
Although our management team, may hinder our abilityCEO and CFO, have not specifically managed a publicly traded company, we do have experience with the issues and requirements of Sarbanes-Oxley Act. The company CFO is a California CPA with over 30 years of experience in business operations and has been through multiple financial statement audits that required compliance with the Sarbanes-Oxley Act. Management has already identified individuals and consultants who can support management’s efforts to comply with Sarbanes-Oxley Act.
Technology innovations in the markets that we serve may create alternatives to our products and result in reduced sales.
Technology innovations to which our current and potential customers might have access to, could reduce or eliminate their need for our services. ALike all industries as new or other disruptive technology that reduces or eliminates the use of one or more of our services could negatively impact the need for our services. OurHowever, our management team and board of directors are aware of this challenge and are very innovative and forward thinking. Yet, our failure to develop, introduce or enhance our services able to compete with new technologies in a timely manner could have an adverse effect on our business, results of operation and financial condition. The management team is continually focused on improvements and new technology to insure we are not left behind.
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We may engage in a business combination that causes tax consequences to us and our shareholders.
Federal and state tax consequences can be a significant factor in considering any business combination that we may undertake. As a result, such transactions may be subject to significant taxation to the buyer and its shareholders under applicable federal and state tax laws. While we intend to structure any business combination so as to minimize the federal and state tax consequences to the extent practicable in accordance with our business objectives, there can be no assurance that any business combination we undertake will meet the statutory or regulatory requirements of a tax-free reorganization or similar favorable treatment or that the parties to such a transaction will obtain the tax treatment intended or expected upon a transfer of equity interests or assets. A non-qualifying reorganization, combination or similar transaction could result in the imposition of significant taxation, both at the federal and state levels, which may have an adverse effect on both parties to the transaction, including our shareholders.
It is unlikely that our shareholders will have any opportunity to evaluate or approve a business combination.
Our growth objectives are largely dependentshareholders will not have the opportunity to evaluate and approve the business combination. In most cases, business combinations do not require shareholder approval under applicable law, and our Articles of Incorporation and Bylaws do not afford our shareholders with the right to approve such a transaction. Further, Mr. Garcia, our Chief Executive Officer and sole director, is the holder of over 86% of the voting rights of the Company on a fully diluted basis. Accordingly, our shareholders will be relying almost exclusively on the timing and market acceptancejudgement of our new product offerings, includingboard of directors (“Board”) and Chief Executive Officer and any persons on whom they may rely with respect to a potential business combination. To develop and implement our abilitybusiness plan, may in the future hire lawyers, accountants, technical experts, appraisers, or other consultants to continually renewassist with determining the Company’s direction’ and consummating any transactions contemplated thereby. We may rely on such persons in making difficult decisions in connection with the Company’s future business and prospects. The selection of any such persons will be made by our pipelineBoard, and any expenses incurred, or decisions made based on any of new products and to bring those products to market.
Risks Related to Our SecuritiesStockholders and Purchasing Shares of Common Stock
We have not voluntarily implemented various corporate governance measures.
Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors’ independence, audit committee oversight and the adoption of a Code of Ethics. Our Board of Directors expects to adopt a Code of Ethics at its next Board meeting. The Company has not adopted exchange-mandated corporate governance measures and, since our securities are not listed on a national securities exchange, we are not required to do so. It is possible that if we were to adopt some or all these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least most independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by most directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.
We may be exposed to potential risks relating to our internal control over financial reporting.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX 404”), the SEC has adopted rules requiring public companies to include a report of management on the Company’s internal control over financial reporting in its annual reports. While we expect to expend significant resources in developing the necessary documentation and testing procedures required by SOX 404, there is a risk that we will not comply with all the requirements imposed thereby. At present, there is no precedent available with which to measure compliance adequately. In the event we identify significant deficiencies or material weaknesses in our internal control over financial reporting that we cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements and our ability to obtain equity or debt financing could suffer.
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We have many authorized but unissued shares of our common stock.
We have many authorized but unissued shares of common stock, which our management may issue without further stockholder approval, thereby causing dilution of your holdings of our common stock. Our management will continue to have broad discretion to issue shares of our common stock in a range of transactions, including capital-raising transactions, mergers, acquisitions and other transactions, without obtaining stockholder approval, unless stockholder approval is required. If our management determines to issue shares of our common stock from the large pool of authorized but unissued shares for any purpose in the future, your ownership position would be diluted without your further ability to vote on that transaction.
Shares of our common stock may become illiquidity because our shares may begin to be thinly traded and may never become eligible for trading on a national securities exchange.
While we may at some point be able to meet the requirements necessary for our common stock to be listed on a national securities exchange, we cannot assure you that we will ever achieve a listing of our common stock on a national securities exchange. Our shares are currently only eligible for quotation on the OTC Pink, which is not an exchange. Initial listing on a national securities exchange is subject to a variety of requirements, including minimum trading price and minimum public “float” requirements, and could also be affected by the general skepticism of such markets concerning companies that are the result of mergers with inactive publicly-held companies. There are also continuing eligibility requirements for companies listed on public trading markets. If we are unable to satisfy the initial or continuing eligibility requirements of any such market, then our stock may not be listed or could be delisted. This could result in a lower trading price for our common stock and may limit your ability to sell your shares, any of which could result in you losing some or all your investments.
The market valuation of our business may fluctuate due to factors beyond our control and the value of your investment may fluctuate correspondingly.
The market valuation of emerging growth companies, such as us, frequently fluctuate due to factors unrelated to the past or present operating performance of such companies. Our market valuation may fluctuate significantly in response to several factors, many of which are beyond our control, including:
| i. | changes in securities analysts’ estimates of our financial performance, although there are currently no analysts covering our stock; |
| ii. | fluctuations in stock market prices and volumes, particularly among securities of emerging growth companies; |
| iii. | changes in market valuations of similar companies; |
| iv. | announcements by us or our competitors of significant contracts, new technologies, acquisitions, commercial relationships, joint ventures or capital commitments; |
| v. | variations in our quarterly operating results; |
| vi. | fluctuations in related commodities prices; and |
| vii. | additions or departures of key personnel. |
As a result, the value of your investment in us may fluctuate.
We have never paid dividends on our common stock.
We have never paid cash dividends on our common stock and do not presently intend to pay any dividends in the foreseeable future. Investors should not look to dividends as a source of income.
In the interest of reinvesting initial profits back into our business, we do not intend to pay cash dividends in the foreseeable future. Consequently, any economic return will initially be derived, if at all, from appreciation in the fair market value of our stock, and not because of dividend payments.
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Future sales or perceived sales of our common stock could depress our stock price.
This resale prospectus covers 3,585,946 shares of common stock underlying the Warrants. If the holders of these shares were to attempt to sell a substantial amount of their holdings at once, the market price of our common stock could decline. Moreover, the perceived risk of this potential dilution could cause shareholders to attempt to sell their shares and investors to short the common stock, a practice in which an investor sells shares that he or she does not own at prevailing market prices, hoping to purchase shares later at a lower price to cover the sale. As each of these events would cause the number of shares of our common stock being offered for sale to increase, our common stock market price would likely further decline. All these events could combine to make it very difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.
Due to factors beyond our control, our stock price may be volatile.
Any of the following factors could affect the market price of our common stock:
| ● | The continued COVID-19 pandemic and its adverse impact upon the capital markets; |
| ● | The loss of one or more members of our management team; |
| ● | Our failure to generate material revenues; |
| ● | Regulatory changes including new laws and rules which adversely affect companies in our line of business; |
| ● | Our public disclosure of the terms of any financing which we consummate in the future; |
| ● | An announcement that we have effected a reverse split of our common stock; |
| ● | Our failure to become profitable; |
| ● | Our failure to raise working capital; |
| ● | Any acquisitions we may consummate; |
| ● | Announcements by us or our competitors of significant contracts, new services, acquisitions, commercial relationships, joint ventures or capital commitments; |
| ● | Cancellation of key contracts; |
| ● | Our failure to meet financial forecasts we publicly disclose; |
| ● | Short selling activities; or |
| ● | Changes in market valuations of similar companies. |
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise be used to benefit our business.
Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
The existence of shares of common stock issuable upon conversion of outstanding shares of Preferred Stock, creates a circumstance commonly referred to as an “overhang” which can act as a depressant to our common stock price. The existence of an overhang, whether sales have occurred or are occurring, also could make our ability to raise additional financing through the sale of equity or equity-linked securities more difficult in the future at a time and price that we deem reasonable or appropriate. If our existing shareholders and investors seek to sell a substantial number of shares of our common stock, such selling efforts may cause significant declines in the market price of our common stock.
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Because we may issue preferred stock without the approval of our shareholders and have other anti-takeover defenses, it may be more difficult for a third party to acquire us and could depress our stock price.
In general, our Board may issue, without a vote of our shareholders, one or more additional series of preferred stock that have more than one vote per share. Additionally, issuance of preferred stock could block an acquisition resulting in both a drop in our stock price and a decline in interest of our common stock. This could make it more difficult for shareholders to sell their common stock. This could also cause the market price of our common stock shares to drop significantly, even if our business is performing well.
Because certain of our stockholders control a significant number of shares of our voting capital stock, they have effective control over actions requiring stockholder approval.
As of March 27, 2023, Lawrence Garcia, our Chief Executive Officer, effectively held 86.26% of the Company’s issued and outstanding common stock. As a result, Mr. Garcia can control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all our assets. In addition, Mr. Garcia can control the management and affairs of our company. Accordingly, any investors who purchase shares will be minority shareholders and as such will have little to no say in the direction of us and the election of directors. Additionally, this concentration of ownership might harm the market price of our common stock by:
| ● | delaying, deferring or preventing a change in corporate control; |
| ● | impeding a merger, consolidation, takeover or other business combination involving us; or |
| ● | discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us |
Our common stock is considered a “penny stock.”
The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock may be volatile.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our common stock.
Other sections of this prospectus may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a highly regulated, very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
We undertake no obligation to update publicly or revise any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events or performance. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be materiallyachieved or will occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We have an ongoing obligation to continually disclose material future changes in the Company and adversely affected.its operations.
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common stock by the Selling Shareholders.
12
DETERMINATION OF OFFERING PRICE
The Selling Shareholders may sell their shares in the over-the-counter market or otherwise, at market prices prevailing at the time of sale, at prices related to the prevailing market price, or at negotiated prices. We will not receive any proceeds from the sale of shares by the Selling Shareholders.
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THE SELLING SHAREHOLDERS
A portion of the Selling Shareholders for approximately ten (10) years, with them currently restricted under the Securities Act of 1933, as amended. A certain Selling Shareholder was issued his shares in 2014 with a Rule 144 legend on it. Certain shareholders were issued an aggregate of 675,000 shares upon the conversion of preferred shares. The remaining Selling Shareholders were issued their shares of common stock byon or about December 9, 2022, pursuant to the selling security holders. AllMerger Agreement, whereby Ameriguard became a wholly owned subsidiary of AGSS, and AGSS its only shareholder. The Selling Shareholders relinquished all of their Ameriguard common shares, in exchange for the net proceeds from the resaleshares of our common stock will go to the selling security holders as described belowbeing registered in the sections entitled “Selling Security Holders” and “Plan of Distribution.” We have agreed to bear thethis registration statement on Form S-1.
All expenses relatingincurred with respect to the registration of the common stock for the selling security holders.
None of the selling security holders and buyersSelling Shareholders nor any of our common stocktheir associates or affiliates has held any position, office, or other material relationship with us in private transactions or as otherwise described in “Plan of Distribution.”
The following table sets forth the namesname of the selling stockholders,Selling Shareholders, the number of shares of common stock beneficially owned by eachthe Selling Shareholders as of the selling stockholders as of January 31, 2014date hereof and the number of shares of common stock being offered by the selling stockholders.Selling Shareholders. The offer and sale of the shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholdersherein. The Selling Shareholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus.shares. All information with respect to share ownership has been furnished by the selling stockholders.Selling Shareholders, respectively. The “Amount Beneficially Owned After the Offering” column assumes the sale of all shares offered herein.
| Name | Shares of Common Stock Beneficially Owned prior to Offering | Maximum Number of Shares of Common Stock to be Offered | Number of Shares of Common Stock Beneficially Owned after Offering | Percent Ownership after Offering | ||||||||||||
| STEPHANIE POPE(1) | 140,625 | 140,625 | 0 | 0 | % | |||||||||||
| STACEY VARGAS(1) | 140,625 | 140,625 | 0 | 0 | % | |||||||||||
| MICHAEL ROMERO(1) | 140,625 | 140,625 | 0 | 0 | % | |||||||||||
| MARTHA GARCIA(1) | 140,625 | 140,625 | 0 | 0 | % | |||||||||||
| LEO REIJNDERS(1) | 140,625 | 140,625 | 0 | 0 | % | |||||||||||
| LAWRENCE GARCIA JR.(1) | 140,625 | 140,625 | 0 | 0 | % | |||||||||||
| LAURA GARCIA(1) | 140,625 | 140,625 | 0 | 0 | % | |||||||||||
| HARLAN HARTMAN(1) | 140,625 | 140,625 | 0 | 0 | % | |||||||||||
| GCT EQUITY HOLDINGS, LLC(1) | 1,125,000 | 1,125,000 | 0 | 0 | % | |||||||||||
| ALI MUSLEH(1) | 140,625 | 140,625 | 0 | 0 | % | |||||||||||
| ALMORLI ADVISORS, INC.(2) | 5,000 | 5,000 | 0 | 0 | % | |||||||||||
| WALD BLOISE(2) | 2,500 | 2,500 | 0 | 0 | % | |||||||||||
| INTERED, INC(2) | 2,500 | 2,500 | 0 | 0 | % | |||||||||||
| JOSEPH BROPHY(2) | 16,983 | 16,983 | 0 | 0 | % | |||||||||||
| CARL ABBONIZIO(2) | 2,500 | 2,500 | 0 | 0 | % | |||||||||||
| DANNY FEDER(2) | 6,250 | 6,250 | 0 | 0 | % | |||||||||||
| ROBERT FREEDMAN(2) | 7,500 | 7,500 | 0 | 0 | % | |||||||||||
| SERGE MILMAN(2) | 1,250 | 1,250 | 0 | 0 | % | |||||||||||
| ROY LANTZ(2) | 517 | 517 | 0 | 0 | % | |||||||||||
| ALAN DRUCKER(2) | 1,429 | 1,429 | 0 | 0 | % | |||||||||||
| JIA LI(2) | 179 | 179 | 0 | 0 | % | |||||||||||
| SUSAN HUDDLESTON(2) | 715 | 715 | 0 | 0 | % | |||||||||||
| RONNIE EBANKS(2) | 1,250 | 1,250 | 0 | 0 | % | |||||||||||
| VALERIE A. RINKLE(2) | 1,000 | 1,000 | 0 | 0 | % | |||||||||||
| GREGORY S. DAHL(2) | 90 | 90 | 0 | 0 | % | |||||||||||
| JAMES MCCORMACK(2) | 36,667 | 36,667 | 0 | 0 | % | |||||||||||
| JOSEPH E. TOENISKOETER(2) | 100 | 100 | 0 | 0 | % | |||||||||||
| KEITH LUNEBURG(2) | 36,667 | 36,667 | 0 | 0 | % | |||||||||||
| ROBERTA A. ANDERSON(2) | 1,000 | 1,000 | 0 | 0 | % | |||||||||||
| DEAN BOYER(2) | 32,250 | 32,250 | 0 | 0 | % | |||||||||||
| BRUCE A OSBORN(2) | 554 | 554 | 0 | 0 | % | |||||||||||
| DANIEL J HAPNER(2) | 893 | 893 | 0 | 0 | % | |||||||||||
| DENISE WILLIAMS(2) | 1,647 | 1,647 | 0 | 0 | % | |||||||||||
| GARRY BACHER(2) | 200 | 200 | 0 | 0 | % | |||||||||||
| MARILYN HAPNER(2) | 179 | 179 | 0 | 0 | % | |||||||||||
| PEGGY M HAPNER(2) | 358 | 358 | 0 | 0 | % | |||||||||||
| SECURE INVESTIGATION CONSULTING(2) | 900 | 900 | 0 | 0 | % | |||||||||||
| MARIO SCINICARIELLO(2) | 10,078 | 10,078 | 0 | 0 | % | |||||||||||
| FINEST MANAGEMENT LLC(2) | 2,500 | 2,500 | 0 | 0 | % | |||||||||||
| LOUIS J. ALIMENA(2) | 5,000 | 5,000 | 0 | 0 | % | |||||||||||
| ANTHONY MANGANARO(2) | 2,692 | 2,692 | 0 | 0 | % | |||||||||||
| DONNA RUDOLPH(2) | 274 | 274 | 0 | 0 | % | |||||||||||
| ELEANOR EDELSTEIN(2) | 138 | 138 | 0 | 0 | % | |||||||||||
| EMILY EDELSTEIN(2) | 410 | 410 | 0 | 0 | % | |||||||||||
| GARRY CONNELL(2) | 2,692 | 2,692 | 0 | 0 | % | |||||||||||
| JUGNA SHAH(2) | 4,543 | 4,543 | 0 | 0 | % | |||||||||||
| KAREL GINSBERG(2) | 1,363 | 1,363 | 0 | 0 | % | |||||||||||
| LINDA PRESTO(2) | 410 | 410 | 0 | 0 | % | |||||||||||
| LINDA RUBINOWITZ(2) | 1,363 | 1,363 | 0 | 0 | % | |||||||||||
| PEGGY HAPNER(2) | 1,363 | 1,363 | 0 | 0 | % | |||||||||||
| S&S FISCHER HOLDINGS, LP(2) | 6,814 | 6,814 | 0 | 0 | % | |||||||||||
| SAM CZYSZ(2) | 274 | 274 | 0 | 0 | % | |||||||||||
| SAM WAKSMAN(2) | 2,726 | 2,726 | 0 | 0 | % | |||||||||||
| CHRISTIE RAMPONE(2) | 1,250 | 1,250 | 0 | 0 | % | |||||||||||
| FIDELIS HOLDINGS LLC(2) | 4,499 | 4,499 | 0 | 0 | % | |||||||||||
| BRADLEY JAMES COHEN(2) | 10,384 | 10,384 | 0 | 0 | % | |||||||||||
| EDWARD ROSENTHAL(2) | 3,750 | 3,750 | 0 | 0 | % | |||||||||||
| MARTIN J. HASEY(2) | 15,117 | 15,117 | 0 | 0 | % | |||||||||||
| RICHARD COHEN & WILLA COHEN TEN ENT(2) | 10,385 | 10,385 | 0 | 0 | % | |||||||||||
| VINCENT BURKE AND TONI BURKE TEN ENT(2) | 2,017 | 2,017 | 0 | 0 | % | |||||||||||
| DIRING HOLDING LLC(2) | 341 | 341 | 0 | 0 | % | |||||||||||
| DON LUNEBURG(2) | 70,697 | 70,697 | 0 | 0 | % | |||||||||||
| GLENN COTTON(2) | 101,639 | 101,639 | 0 | 0 | % | |||||||||||
| WILLIAM E. SCHIFFER(2) | 59,024 | 59,024 | 0 | 0 | % | |||||||||||
| HERBERT C POHLMANN, JR. TR(3) | 37,500 | 37,500 | 0 | 0 | % | |||||||||||
| BIOMEDICAL INSTITUTIONAL VALUE FUND, L.P.(4) | 75,262 | 75,262 | 0 | 0 | % | |||||||||||
| BIOMEDICAL OFFSHORE VALUE FUND, LTS.(4) | 166,137 | 166,137 | 0 | 0 | % | |||||||||||
| BIOMEDICAL VALUE FUND, L.P.(4) | 293,132 | 293,132 | 0 | 0 | % | |||||||||||
| CLASS D SERIES GEF-PS, L.P.(4) | 122,788 | 122,788 | 0 | 0 | % | |||||||||||
| WS INVESTMENTS II, LLC(4) | 17,682 | 17,682 | 0 | 0 | % |
| Name of Selling Stockholder | Shares Beneficially Owned Prior to Offering | Shares to be Offered | Amount Beneficially Owned After Offering | Percent Beneficially Owned After Offering (1) | |||||||||
| Brett Borgersen | 320,000 | 320,000 | 0 | 0 | % | ||||||||
| John Paul O'Connor ** | 1,830,100 | 1,830,000 | 100 | 0 | % | ||||||||
| Maurizio Corrao ** | 445,000 | 225,000 | 220,000 | 0.40 | % | ||||||||
| Michael Ciprianni ** | 2,800,000 | 2,550,000 | 250,000 | 0.46 | % | ||||||||
| Robert Freedman ** | 1,231,533 | 150,000 | 1,081,533 | 1.97 | % | ||||||||
| Wald Bloise | 70,000 | 50,000 | 20,000 | 0.04 | % | ||||||||
| Total | 6,696,633 | 5,125,000 | 1,571,633 | 2.87 | % | ||||||||
| These Selling Shareholders were issued their 2,390,625 shares of common stock on or about December 9, 2022, pursuant to the Merger Agreement, whereby Ameriguard became a | ||
| (2) | These Selling Shareholders were issued an aggregate of 482,821 restricted shares between February 15, 2012 and October 9, 2013, by the prior management of the Company. |
| (3) | This Selling Shareholder was issued the 37,500 shares on April 23, 2014 by the prior management of the Company. |
| (4) | These Selling Shareholders were issued the aggregate of 675,000 shares in March of 2023, upon the conversion of their preferred stock. |
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This prospectus relates to the resale of up to 5,125,0003,585,946 shares of common stock issued as compensation to employees and consultants.
The Selling Shareholders, and any of their pledgees, donees, assignees and other successors-in-interest may, from time to time sell any or all of their shares of common stock covered hereby on the principal trading market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. A selling stockholderThe Selling Shareholders may use any one or more of the following methods when selling shares:
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits |
| ● | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as | |
| ● | facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| broker-dealers |
| ● | through the writing |
| ● | a combination of any such methods of sale; |
| ● | any other method permitted pursuant to applicable law. |
The selling stockholdersSelling Shareholders, as applicable, shall have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if it deems the purchase price to be unsatisfactory at any time.
The Selling Shareholders may also sell the shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
The Selling Shareholders, alternatively, may sell all or any written or oral agreement or understanding, directly or indirectly, with any person to distribute the common stock. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
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The Selling Shareholders may pledge its shares to its brokers under the proposed salemargin provisions of customer agreements. If any of the resale shares bySelling Shareholders default on a margin loan, the selling stockholders.
The Selling Shareholders will be offering such shares for its own account. We do not know for certain how or when the Selling Shareholders will choose to sell its shares of common stock. However, it can sell such shares at any time or through any manner set forth in this plan of distribution.
To permit the Selling Shareholders to resell the shares of common stock issued to it, we agreed to file a registration statement, of which this prospectus is a part, and all necessary amendments and supplements with the SEC for the purpose of registering and maintaining the registration of the shares. We will bear all costs relating to the registration of the common stock offered by this prospectus, other than the selling stockholders or any other person.costs of our independent legal review. We will make copieskeep the registration statement effective until the earlier of this prospectus available to(i) the selling stockholders and have informed themdate after which all of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
17
BUSINESS
Changes to the Business.
We intend to continue Ameriguard’s line of business. Ameriguard principally provides guard services to governmental, quasi-governmental and commercial property management. Guard services generated $22 million in revenues for the fiscal year ended December 31, 2021. Guard services include, providing armed and unarmed uniformed security personnel for access control, mobile patrols, traffic control, security console/system operators, fire safety directors, communication, reception, concierge and front desk/doorman operations.
Corporation Information
Our principal executive offices are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
Our website; www.ameriguardsecurity.com.
Employees
As of December 31, 2011 included in this prospectus2022, we had 313 full-time employees, 237 of these employees are represented by collective bargaining agreements and the registration statement have been audited by Friedman LLPCompany considers it relations with its employees to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
Corporate History
The Company iswas incorporated in Nevada on December 13, 2010.
The Company intended to become a trusted source of timely, accurate and critical resources, technology and information that supports the performanceprovider of revenue integrity in assuring the existencecycle services to a broad range of healthcare organizations. The companyproviders. We offer our customers integrated solutions designed around their specific business needs, including revenue cycle data analysis, contract and its subsidiaries’ products and services include business intelligence technology solutions, contractoutsourced coding, billing, coding and compliance audits, coding education, revenue cyclecoding consulting, physician coding services and ICD-10 education and transition services. The Company provides customized solutions to its clients with the highest regard for ethical standards and responsibility.
On February 10, 2012, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Health Revenue Acquisition Corp.Assurance Holdings, Inc. (formerly known as Anvex International, Inc., “HRAH”), a Nevada corporationcompany, and its wholly-owned subsidiary Health Revenue Acquisition Corporation (“Acquisition Sub”), andwhich was treated for accounting purposes as a reverse recapitalization with HRAA, pursuant to which Acquisition Sub was merged with and into HRAA, and HRAA, asconsidered the surviving corporation, became a wholly-owned subsidiary of the Company (the “Merger”).accounting acquirer. Each share of HRAA'sHRAA’s common stock was exchanged for the right to receive approximately 1,271 shares of the Company’sHRAH’s common stock. Before their entry into the Merger Agreement, no material relationship existed between HRAH and Acquisition Sub or HRAA. On April 27, 2012, the Company or Acquisition Sub andcompleted a 12.98 to 1 forward stock split. On May 2, 2012, the Company changed its ticker symbol from ANVX to HRAA.
The Company then went dormant in August 2014.
On July 14, 2020, as a result of a custodianship in Clark County, Nevada, Case Number: A816259, Custodian Ventures LLC (“Custodian”) was appointed Custodian of the Merger, we transferred all of our operating assetsCompany.
On July 15, 2020 Custodian appointed David Lazar as the Company’s Chief Executive Officer, President, Secretary, Chief Financial Officer, Chief Executive Officer and liabilities to Anvex Split Corp., a Nevada corporation (the “Split-Off Subsidiary”), and contemporaneously with the closingChairman of the Merger, we split-offBoard of Directors.
On September 8, 2021, under the Split-Off Subsidiary through the saleterms of alla private stock purchase agreement, 10,000,000 shares of Series A-1 Preferred Stock, $0.001 par value per share (the “Shares”) of the outstanding capital stockCompany, were transferred from Custodian Ventures, LLC to Ameriguard Security Services, Inc. California corporation (Ameriguard). As a result, Ameriguard became holder of approximately 91% of the Split-Off Subsidiary (the “Split-Off”) to our former sole officervoting rights of the issued and director (the “Split-Off Shareholder”).outstanding share capital of the Company on a fully-diluted basis of the Company, and became the controlling shareholder. The consideration paid for the Shares was $450,000. In connection with the Split-Off, an aggregate of 3,500,000 shares of our common stock held bytransaction, David Lazar forgave the Split-Off Shareholder were surrenderedCompany from all debts owed to him and/or Custodian Ventures, LLC.
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On September 8, 2021, the Company accepted the resignations from David Lazar as the Company’s Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and cancelled without further consideration.
On April 12, 2012, we closed the Offering by selling an additional $349,000 at the purchase price of $0.25 and issuing 1,394,909 shares of Common Stock. The total raised in the Offering was $1,012,908.
Pursuant to the Merger Agreement, we acquired the business of Ameriguard and will continue the existing business of Ameriguard as our wholly owned subsidiaries is availablesubsidiary.
Ameriguard was formed on and/or may be accessed through our website, www.healthrevenue.com. In addition to news and other information about our company, we have provided access through this site to our filingsNovember 14, 2002. The corporation was incorporated with the Securitiesissuance of 1,000 common shares formerly held by Lawrence Garcia, President and Exchange CommissionCEO with 550 shares and Lillian Flores, former VP of Operations with 450 shares. On July 12, 2022 under the terms of a Settlement Agreement, Flores exchanged her 450 shares for consideration of $3,384,950 and a promissory note in that amount secured by a stock pledge. Ameriguard provides armed guard services as soona federal contractor with licenses in 7 states and provides commercial guard services in California.
Our Industry
Security guard and related services in the US is a $43 billion industry comprising over 11,000 companies and 900,000 officers. Over 55%, ($24 billion) of this market is serviced by 40 companies, with the top 4 firms, with Allied Universal, Securitas, G4S and Prosegur Security controlling 74% ($31.8 billion), an average revenue of $7.9 billion; the next 21 firms control 8.4% ($3.6billion), an average of 172 million and the next 10 firms control 1% ($550 million) with a range of $20 to $100 million with average of $50 million. Ameriguard’s approximately $22 million in annual revenue places is within the top 25 firms in the country. The rest of the market comprises over 7,900 firms with $19 billion or an average of $2.5 million in revenue. This consolidation of market share has not been gradual but rather a rapid shift over the last five years in an industry which once was highly fragmented and widely dispersed, from smaller regional and local companies to the largest companies.
We believe that the top 40 companies have the resources to harness technology, to expand their business into related services other than guard services. Companies with over $50 million in revenue have, over the last 10 years, experienced steady growth while those guard companies under $20 million, the remaining 9,900 firms, have experienced declining revenues. We believe that the principal reason for this is the steady diversification of security services away from the traditional guard services to areas of utilization of technology requiring capital. Along with this, we believe that the profitability challenges below $20 million annual sales are much more difficult that above $50 million is sales, largely due to the significant economies of scale achieve at the higher revenue levels.
The proliferation of technology while increasing efficacy in performance and inevitably lower costs in the future, the impact on the contract security industry will likely have mixed results – positive for companies who harness technology into their service delivery strategies – and negative for those companies who fail to invest in or adopt these service-enhancing capabilities. Despite the advances in the U.S. contract guarding business over recent years, there remains a question as reasonably practicable after we fileto the industry’s viability in view of the increasing trend for integrating manned services with security systems (i.e. security video, access control and monitoring) along with the emergence of other new smart technology options and solutions (i.e. robotics, drones, cybersecurity and crowd sharing alert notification).
The recent merger and acquisition trend, primarily by the major national and international security organizations and fueled by investment and funding from private equity firms, is continuing. The underlying reason for this shift is less obvious and suggests an increasing number of sellers who concluded that their better option was to exit and sell rather than remain in the marketplace and try to compete and organically grow their market share.
Despite its low barriers of entry and nominal capital requirements, the security guard business has become more challenging for the smaller owner/operator. The traditionally historic advantage of the smaller operator’s ability to offer relationship-driven customized services is no longer totally sufficient for sustainable growth – especially with the increasing regulatory challenges of the Affordable Care Act, federal and state minimum wage laws, Family Medical Leave Act and state laws (i.e. meal and rest break reporting and now, predictive scheduling).
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Even stronger local and smaller regional companies are finding it more difficult to protect their client base and grow revenues under increasing regulatory as well as competitive pressures. Larger regional and national organizations are dealing with the regulatory climate while growing market share by leveraging infrastructure, technology, economies of scale with more aggressive pricing and better service reliability. This approach appears to offer a more compelling value proposition from the client’s perspective, which seems evident by the higher client retention rates reported by the major security companies.
However, this consolidating trend may not be inevitable for the future as newer, more tech-savvy owner/operators enter the business and recognize how to adopt best practices with a variety of sophisticated third-party software platforms and applications to help level the playing field. These include talent management and on-boarding applications to attract, hire and maintain a more skilled and reliable workforce; integrated labor management platforms to control scheduling, compliance, operations, payroll, billing and financial reporting; and state-of-the-art social media marketing applications.
The contract security industry should now be able to more effectively capitalize on and penetrate opportunities in a $20 billion in-house market – especially for those companies who have invested and integrated technology into a more highly reliable ecosystem of protective services.
For the foreseeable future, the U.S. manned guarding business seems likely for continued sustainable growth. While the technology/manpower ratio may shift the revenue mix going forward, based on today’s currently expanding U.S. economy, the prospects for an aggregate growth rate of four percent or furnish them electronically. Information on our websitemore seem realistic and perhaps even conservative, especially for ownership who have prudently invested in technology enhancements to their core guarding operations.
Providing these strategies can yield an attractive ROI, increase operating profits (EBITDA ranges of four to six percent and higher) and enterprise valuations, this industry seems not only viable but also opportune for further investment consideration
(The above industry data taken from https://www.nasco.org/wp-content/uploads/2021/08/2021-Bob-Perry-Contract-Security-Industry-White-Paper-1.pdf)
Regulatory Matters/Compliance
Each State has specific licensing requirements companies must meet to perform guard services, especially armed guard services. To date, the Company holds firearm licenses in over twelve States and does not constitute part of andforesee any license or governmental requirements preventing us from continuing to operate in any State a contract is not incorporated by reference into this Annual Report on Form 10-K or any other reportawarded to us. As a company with over 300 employees, we file or furnish with the SEC. You may also read and copy any document that we file at the public reference facilitiesare subject to all of the SEC in Washington, D.C. You may callstandard federal and state labor laws and have consistently met those requirements to date, including ERISA.
Contracting officers have indicated that they believe the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also availablegovernment has no concern relating to the public frommerger as long as the SEC’s website at http://www.sec.gov.
Properties
The Company’s corporate headquarters is located in Plantation, Florida. The Company currently leases space located at 85515470 W. Sunrise Boulevard, Unit 305, Plantation, Florida 33322.Spruce Avenue, Suite 102, Fresno CA. The lease is currently month to month. Landlord has not indicated a desire for a term of one-year beginning on September 1, 2012 and ending August 31, 2013. We have elected to renew our current lease starting September 1, 2013 for an additional one-year term. As of September 1, 2013, our monthlynew lease. Our lease payments are approximately $5,500 for a total of approximately $66,000$55,767 for the totalentire term (or, $4,230 per month).
Legal Proceedings
While we have not been involved in any litigation related to the performance of our guard services, armed or otherwise, to date, as an armed guard Company with contracts with Governmental entities is a possibility of legal proceedings that could be more serious than the lease.
While the results of such claims and legal actions cannot be predicted with certainty, the Company’s management does not believe that there are claims or other matters may arise from time to time that may harm our business. We are currently not awareactions, pending or threatened against the Company, the ultimate disposition of any such legal proceedings or claims that we believe willwhich would have a material adverse effect on our business, results of operations, financial condition or operating results.cash flows.
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| Fiscal 2012-2014 | ||||||||
| High | Low | |||||||
| Third Quarter (July 1 - September 30) 2012 | $ | 0.29 | $ | 0.29 | ||||
| Fourth Quarter (October 1 - December 31) 2012 | $ | 0.35 | $ | 0.10 | ||||
| First Quarter (January 1 - March 31) 2013 | $ | 0.52 | $ | 0.25 | ||||
| Second Quarter (April 1 - June 30) 2013 | $ | 0.62 | $ | 0.25 | ||||
| Third Quarter (July 1 - September 30) 2013 | $ | 0.52 | $ | 0.20 | ||||
| Fourth Quarter (October 1 - December 31) 2013 | $ | 0.30 | $ | 0.11 | ||||
| First Quarter (January 1 – February 10) 2014 | $ | 0.29 | $ | 0.20 | ||||
Management’s Discussion and analysisAnalysis and Results of Operations
This Item 7 contains forward-looking statements. Forward-looking statements in this Registration Statement on Form S-1 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 of operationsto differ, including those discussed in the sections entitled “Forward-Looking Statements” and financial condition of Health Revenue Assurance Holdings, Inc. for the fiscal years ended December 31, 2012“Risk Factors” included elsewhere in this Annual Report.
Management’s Discussion and 2011 and for the three and nine months ended September 30, 2013 and 2012,Analysis should be read in conjunction with the Selected Consolidated Financial Data, Health Revenue Assurance Holdings’ financial statements included in this Registration Statement on Form S-1 (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 notes to those financial statements that are includedresults of operations should be read in conjunction with the Financial Statements and footnotes thereto appearing elsewhere in this filing. Our discussion includesReport.
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 based upon current expectations that involve risks and uncertainties such as our plans, objectives,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 intentions. Actualare subject to a number of factors and uncertainties, which could cause actual results and the timing of events couldto differ materially from those, anticipateddescribed in thesethe forward-looking statementsstatements. 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. It also is in the position to access the capital market to generate the capital needed to begin its growth strategy of mergers and acquisitions within the security industry.
Prior to and after the merger AGSS has been working on developing the leadership team needed. We have in place a CEO with 20 years of experience in our industry and has been very successful in the government contracting market. Our CFO 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 Directors with Wall Street and government security experience making us well positioned to aggressively grow the business.
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Results of Operations for the fiscal year ending December 31, 2022
Revenues and Cost of Goods Sold
2022 experienced a 10% increase of $2.2 million in security services revenue. The majority of which was from federal contracts in the amount of approximately $1.5 million and the remaining $700,000 from commercial guard services. The contract services revenue increase was the result of monthly fee increases within the four existing contract operated for during 2022 and 2021. As the costs of labor increases within the unionized contract so does the revenue. For the Commercial operations we saw a numbersignificant increase in demand for services, specifically our patrol services. Patrol services solve the problem of factors, including those set forth underdelayed police response. Our patrol officers respond to all alarms regardless of cause within 15 minutes of activation. This is a cost effect way for businesses to have protection without the Cautionary Notice Regarding Forward-Looking Statementshigh expense of a posted guard. This is an area of service we are continuing to expand.
We also had a significant increase of over $280,000 in this filing. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “on going,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressionsother related income. This increase was due to identify forward-looking statements.
As with all professional service industries the Merger.
Operating Expenses and Other Expense
Operation expenses, overhead expenses, increased in 2022 over 2021 by approximately $1.3 million. Slightly more than half of that increase was in administrative salaries and related payroll expenses, of approximately $796,000. As mentioned earlier in 2021 overhead expenses included administrative salaries were allocated between related companies. In 2022, all the salaries were expensed to service providersAmeriGuard. Also, during 2022 as part of the reverse merger preparations, we added to our administrative team a full-time CFO, an HR Manager and consulting companies, including competitionan Operations Management team along with the necessary support positions in payroll and accounting. This was done in the preparations for the merger and the ability to recruit, train, and put in place a sufficient quantityfollowing expansion.
Other areas of proficient consultants and medical coders familiar with the requirements of IDC-10-CM/PCS, the uncertainty of future regulatory approvals and laws, the need for future capital and the retention of key employees. We cannot provide assurance that we will generate revenues or achieve and sustain profitabilityexpense increase were in the future.
Other expenses in the amount of $344,105 that occurred in 2022, but not in 2021 are non-operational expenses related specifically to the preparations for and after the reverse merger. These expenses are legal, compliance, accounting and merger related expenses that are treated as non-operational expense to prevent distortions of operational net income or loss. It is anticipated that there will be experienced duecontinued non-operational expenses from ongoing capital raise activities moving forward.
At this time, our operating structure and current level of expense can handle twice the revenue stream 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 changeover:
Net Income/(Loss) from insurance providers such as Medicare and Medicaid, as well as private insurance companies. We offer above industry standards ICD-9 and ICD-10 training to coders, equipping them with the knowledge to effectively assign the appropriate codes. We also conduct medical billing audits, identifying risks of lost revenue and ensuring the correct amounts have been paid. In doing so, we shorten the revenue cycle and prevent financial stress on healthcare providers.
| For the three months ended | ||||||||||||||||
September 30, 2013 | September 30, 2012 | Increase/ (Decrease) $ | Increase/ (Decrease) % | |||||||||||||
| Revenue | $ | 1,790,825 | $ | 1,985,516 | $ | (194,691 | ) | (9.81 | )% | |||||||
| Revenue – Related Party | 60,552 | - | 60,552 | 100.00 | % | |||||||||||
| Total Revenue | 1,851,377 | 1,985,516 | (134,139 | ) | (6.76 | )% | ||||||||||
| Costs of Revenues | 1,088,442 | 758,267 | 330,175 | 43.54 | % | |||||||||||
| Gross profit | 762,935 | 1,227,249 | (464,314 | ) | (37.83 | )% | ||||||||||
| Selling and administrative expenses | 1,898,595 | 1,069,870 | 828,725 | 77.46 | % | |||||||||||
| Research and development expenses | - | 926 | (926) | (100.00 | )% | |||||||||||
| Asset impairment | 946,931 | - | 946,931 | 100.00 | % | |||||||||||
| Depreciation and amortization | 19,616 | 14,007 | 5,609 | 40.04 | % | |||||||||||
| Total operating expenses | 2,865,142 | 1,084,803 | 1,780,339 | 164.11 | % | |||||||||||
| Operating income (loss) | (2,102,207 | ) | 142,446 | (2,244,653 | ) | (1,575.79 | )% | |||||||||
| Other expense, net | (459,268 | ) | (372,595 | ) | (86,673 | ) | 23.26 | % | ||||||||
| Net loss | $ | (2,561,475 | ) | $ | (230,149 | ) | $ | (2,331,326 | ) | 1,012.96 | % | |||||
Combining 2022 net loss of approximately $2,561,000 was recognized for the three months ended September 30, 2013 as compared to net loss of approximately $230,000 for the three months ended September 30, 2012, an increase of approximately $2,331,000 or approximately 1013%. The increase in net loss is outlined above.
| For the nine months ended | Increase/ | Increase/ | ||||||||||||||
September 30, 2013 | September 30, 2012 | (Decrease) $ | (Decrease) % | |||||||||||||
| Revenue | $ | 5,787,811 | $ | 3,619,611 | $ | 2,168,200 | 59.90 | % | ||||||||
| Revenue – Related Party | 287,626 | - | 287,626 | 100.00 | % | |||||||||||
| Total Revenue | 6,075,437 | 3,619,611 | 2,455,826 | 67.85 | % | |||||||||||
| Costs of Revenues | 3,049,394 | 1,642,619 | 1,406,775 | 85.64 | % | |||||||||||
| Gross profit | 3,026,043 | 1,976,992 | 1,049,054 | 53.06 | % | |||||||||||
| Selling and administrative expenses | 5,284,354 | 2,726,475 | 2,557,879 | 93.82 | % | |||||||||||
| Research and development expenses | 289 | 54,059 | (53,770 | ) | (99.47 | )% | ||||||||||
| Asset impairment | 946,931 | - | 946,931 | 100.00 | % | |||||||||||
| Depreciation and amortization | 64,214 | 36,758 | 27,456 | 74.69 | % | |||||||||||
| Total operating expenses | 6,295,788 | 2,817,292 | 3,478,496 | 123.47 | % | |||||||||||
| Operating income (loss) | (3,269,745 | ) | (840,300 | ) | (2,429,445 | ) | 289.12 | % | ||||||||
| Other expense, net | (823,619 | ) | (383,437 | ) | (440,182 | ) | 114.80 | % | ||||||||
| Net loss | $ | (4,093,364 | ) | $ | (1,223,737 | ) | $ | (2,869,627 | ) | 234.50 | % | |||||
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| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net loss | $ | (2,561,475 | ) | $ | (230,149 | ) | $ | (4,093,364 | ) | $ | (1,223,737 | ) | ||||
| Interest expense | 357,127 | 377,954 | 721,829 | 392,888 | ||||||||||||
| Asset Impairment | 946,931 | - | 946,931 | - | ||||||||||||
| Loss on early extinguishment of debt | 112,583 | - | 112,583 | - | ||||||||||||
| Depreciation and amortization | 83,753 | 14,007 | 128,351 | 36,758 | ||||||||||||
| Stock based compensation expense | 192,130 | - | 290,162 | - | ||||||||||||
| Adjusted EBITDA (loss) from operations | $ | (868,951 | ) | $ | 161,812 | $ | (1,893,508 | ) | $ | (794,091 | ) | |||||
Liquidity and Capital Resources
The Company’s principal sources of liquidity include cash from operations and proceeds from long term debt and private placement of its shares. Overall, for the nine months ended September 30, 2013, the Company generated $2,503,000 from its financing activities primarily associated with the debt and equity financing. Such proceeds, coupled with its beginning cash balances, were utilized by the Company to fund its negative cash flow from operating activities in the amount of approximately $1,454,000 and investment in capitalized software, property and equipment of approximately $761,000.
| During |
| Year-ended | Year-ended | Increase/ | Increase/ | |||||||||||||
| December 31, | December 31, | (Decrease) | (Decrease) | |||||||||||||
| 2012 | 2011 | ($) | (%) | |||||||||||||
| Revenues | $ | 5,806,848 | $ | 1,432,773 | $ | 4,374,075 | 305.3 | % | ||||||||
| Cost of Revenues | 2,830,008 | 473,719 | 2,356,289 | 497.4 | % | |||||||||||
| Gross profit | 2,976,840 | 959,054 | 2,017,786 | 210.4 | % | |||||||||||
| Selling and administrative expenses | 3,853,820 | 1,976,655 | 1,877,165 | 95.0 | % | |||||||||||
| Research and development expenses | 64,386 | 93,489 | (29,103 | ) | (31.1 | )% | ||||||||||
| Depreciation and amortization | 50,765 | 31,362 | 19,403 | 61.9 | % | |||||||||||
| Other expenses, net | 465,339 | 29,468 | 435,871 | 1,479.1 | % | |||||||||||
| Net income (loss) | $ | (1,457,470 | ) | $ | (1,171,921 | ) | $ | (285,549 | ) | 24.4 | % | |||||
| For the year ended | ||||||||
December 31, 2012 | December 31, 2011 | |||||||
| Net loss | $ | (1,457,470 | ) | $ | (1,171,921 | ) | ||
| Interest expense | 465,349 | 29,468 | ||||||
| Depreciation and amortization | 50,765 | 31,362 | ||||||
| Stock based compensation expense | - | 818,595 | ||||||
| Adjusted EBITDA (loss) from operations | $ | (941,356 | ) | $ | (292,496 | ) | ||
The main use of its shares. Overall, forcash was the year ended December 31, 2012,first payment to shareholder from the Company generated approximately $2,803,000 from its financing activities primarily associated with the debt and equity financing. Such proceeds, coupled with its beginning cash balances, were utilized by the Company to fund its negative cash flow from operating activitiesshareholder buyout agreement signed in July 2022 in the amount of approximately $1,699,000 and investment in property and equipment$686,990, as previously discussed. Other finance activities usage was building improvements of approximately $280,000.
On December 31, 2012,2022, the Company had cash balanceson hand of approximately $894,000 as compared$1,226,600, with total current assets of $3,207,750.
Moving Forward
During the past eighteen months we have been working to approximately $199,000 asget to where we are today. It has been difficult and expensive, to get to this point of December 31, 2011, an increasebeing a public company with the corporate structure, systems and team that can expand our business with increasing profitability. Our current overhead expense structure has the capacity to manage two to three times the revenues from one of approximately $695,000.
Our first source is to continue down our historical path of seeking out contracts that meet our sweet spot and bidding with hope of successful award. However, this path is time consuming and isn’t a guarantee of the growth we desire and is outside of our control.
Our second source of growth is merger and acquisition. Now that we have the capital market available to us and our industry is positioned for long term growth, now is the time. The security industry continues to grow in operating activities was approximately $1,699,000 foropportunity, and at the year ended December 31, 2012. This compared to net cash used by operating activitiessame there’s a lot of approximately $66,000 for the year ended December 31, 2011. The decrease of $1,633,000 was primarily due to higher personnel costs, greater travel and business development costs, and professional fees connected to the Company’s merger with HRAA which occurred in February 2012 along with non-cash charges of $355,573.
There are also acquisition opportunities in net cash flow from financing activities of approximately $2,418,000. This was dueseveral other industries that fits our business model. Those include transportation, cyber security, private security, ammunition manufacturing, and surveillance to the receipt of net proceeds from the Company’s issuance of stock, advances on convertible promissory notes, and net borrowings from new and existing debt obligations offset by various debt repayments.
Management is very positive regarding profitable operations for the next twelve months based on the following:
| ● | AGSS operates in a growing industry. |
| ● | The |
| ● | There are over 10,000 security companies operating in our market, with 50% available for acquisition. |
| ● | Our management team, Board of |
| ● | We have been and will continue to be a company that is very conservative with our resources and will use every possible dollar provide strength and good return to our investors. |
| ● | We are in it for |
| ● | We make profits the old fashion way, hard work. |
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Management Discussion of Strategic Plans
On December 9, 2022, AGSS acquired AmeriGuard via a stock exchange. After which, AmeriGuard became the 100% subsidiary of AGSS resulting in the consolidated annual revenue of AGSS to exceed $22 million. We hope to achieve material growth following a very simple menu:
| ● | Aggressive bidding on new and current Federal Guard Contracts. |
| ● | Meet the growing needs in the Commercial Guard services. |
| ● | Acquisitions of Federal Contracting competitors, specifically those with |
| ● | Acquisition of |
Government Contracts
We intend to continue to take advantage of our federal contracting bidding category of a veteran owned, minority owned, small business (initially) narrowing the field of competition for each contract. The small business category is defined as average sales over 5 years at or below $25.5 million. We project that we will remain below that level for the next two calendar years. Another category that increases contracting opportunities is the much-coveted position of having high level secret clearance. We have held this clearance in the past and are actively seeking to gain such clearance again.
With over 20 years of experience with government contracts providing significant understanding of the bidding process along with a team of 5 individuals processing contract bids, we are confident of being awarded two or three new contracts in the next eighteen months.
As previously mentioned in the industry discussion, the industry is going through a merger and acquisition phase driven by the need to consolidate overhead and a significant percentage of owner retirements. One key reason for the creation of this public company is to gain the significant capital necessary to acquire two or three companies already in the governmental contract market.
Commercial Guard Services
With the increasing crime rates in most major cities across the country the gap between what the business owners expect from law enforcement and what law enforcement can deliver is widening. A specific concern is the amount of time it takes from the moment an alarm is triggered and the arrival of an officer. This can be multiple hours and sometimes not at all for local police departments. The time gap as described could mean the difference between a broken window to a multi thousand-dollar loss.
It is a part of our regular service to dispatch an armed officer to respond quickly to the alarm, secure the scene and await law enforcement or the business owner. We believe that this quick response ensures a higher level of security for our customers. We provide the complete package of alarms, video cameras to armed response. This complete vertical can be duplicated in any town USA. It is true that other guard companies do provide armed response, yet not many also have surveillance systems under their operational control and monitored with local dispatch as we do.
Our strategy is to acquire commercial guard companies in the states where we have federal contracts allowing us to establish a kind of farm system for guards who can start at a no experience entry position, receive experience and training to ultimately be employed at the high value level of unionized federal guard. Like many industries, it is extremely difficult to find and keep the employees needed for our federal contracts. This negatively impacts the bottom-line success of a contract due to extra overtime not anticipated. A program like this will allow individuals to start and build a career, not just a job.
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Other Business Acquisitions
The last item on our menu is the acquisition of a related governmental contractor in the Transportation and/or Cyber Security business. These lines of business achieve high margins and play in the same contract market as our guard services. We can become successful players in this market very quickly.
AGSS will look to identify a few potential Cyber Security/IT companies that could be acquired. We see the acquisition of a quality Cyber Security company and an important aspect of our strategic plan. The Executive Team will identify potential acquisitions with great urgency.
Implementation and Timeline
For the acquisitions we will identify target companies that meets the specific strategic and financial criteria established by the board, and then seek the necessary capital. The acquisition offer will include both cash and AGSS stock.
The criteria that management is currently using to identify acquisition target are:
| 1. | Currently holding governmental contracts in good standing and/or with solid commercial operations. |
| 2. | Companies in related industries provide significant value to our company’s bottom line. |
| 3. | A minimum of a 10% EBTIDA (non-guard companies), and guard companies with the majority of revenues from government contracts with an EBTIDA of 2.5+%. |
| 4. | Consolidation savings will bring EBTIDA to 15% (non-guard companies), and 8-10% for |
| 5. | Monthly revenues exceeding $500,000. |
| 6. | Has a clear path for revenue growth. |
| 7. | If the company does not meet the criteria in 1-6. It needs |
For new government contracts, this approach is a bit more time-consuming and competitive. Preparing proposals for the contracts that become available is not the problem, the time aspect is the dates the contracts are awarded.
The capital required component of these contracts is twofold. First, the contract often requires new equipment and vehicles. Second, the bidding company must have enough working capital to cover the first three months of payroll. With payroll cost being 80% of the contract and various equipment requirements, the required capital on hand can be significant. For a contract that has $15 million per year in revenue the capital on hand requirement would exceed $3,000,000.
The following is a description of the assumptions made for each quarter of operation.
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Second quarter of operation, April – June 30, 2023
During this quarter our focus will be acquiring a guard company of a large enough size to have annual sales over $10 million, with the hopes of providing additional cash from operations at 6% of annual sales.
During this quarter we also look to acquire a transportation company, hopefully with federal contract(s). The capital required for this industry is heavy on the sale of common stockasset side in that was approximately $600,000 short of the expected amountvehicles need to be raised in orderready to execute its growth plan for the near future. Sincego at the time of contract award. However, bottom line earnings can exceed 12%. Like the Merger, the Company has transacted equity capital raises totaling approximately $1,060,000 of additional capital infusion. The Company has continued its buildup of the personnelguard industry, this industry is going through mergers and business development efforts and has incurred operating losses. As a result, the Company possesses a working capital of approximately $157,000 at December 31, 2012 and continues to hold discussions with interested parties regarding additional investment in the Company’s common stock in amounts which approximate its current estimated working capital shortfall. Should efforts to raise additional capital prove to be unsuccessful; the Company will reduce its growth plans accordingly.
Third quarter of operation, July – September 30, 2023
The third quarter of operation anticipates the operations of an acquired transportation company with a net cash percentage of 12% or raise capitalmore. This quarter could see the blending in of the transportation company and the consolidation of overheads.
At this point AGSS should have a complete Executive Team, full Board of Directors, processes and procedures in place and will be aggressively working to support its operations. These factors raise substantial doubt aboutachieve our goal of $100 million in annual sales.
As previously indicated it is anticipated that AGSS will acquire additional Security Companies competing with AGSS in the government contracting market, along with companies that meet the acquisition criteria previously mentioned, from June 2023 through the end of the year. The previous comments and timeline reflect management’s expectations that are achievable and are at the minimum of management’s intentions. Based on market activities and investor readiness, the pace of acquisitions and contract awards could accelerate.
Potential Impact of COVID-19
The Company is concerned that the COVID-19 virus may impact the Company’s ability to raise additional equity capital due to the uncertainty of the virus’ effects on the economy and capital markets, which may make potential investors less likely to invest during the pandemic. This may affect the Company’s ability to raise equity capital to meet its financial obligations, implement its business plan and continue as a going concern.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
Our discussion and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our consolidated financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayalanalysis of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our consolidated financial statements.
We define our “critical accounting policies” as those estimates. SignificantU.S. generally accepted accounting principles that require us to make subjective estimates reflectedabout matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific way we apply those principles. Our estimates are based upon assumptions and judgments about matters that are highly uncertain at the time the accounting estimate is made and applied and require us to continually assess a range of potential outcomes. A detailed discussion of the critical accounting policies that most affect our company is in Footnote 2 of the notes to our financial statements.
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DESCRIPTION OF PROPERTY
The Company’s corporate headquarters is located at 5470 W. Spruce Avenue, Suite 102, Fresno CA. The lease is currently month to month. Landlord has not indicated a desire for a new lease. Our lease payments are a total of $55,767 for the entire term (or, $4,230 per month).
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LEGAL PROCEEDINGS
While we have not been involved in any litigation related to the performance of our guard services, armed or otherwise, to date, as an armed guard Company with contracts with Governmental entities is a possibility of legal proceedings that could be more serious than the average business. From time to time, the Company is involved in matters relating to claims arising from the ordinary course of business, but those claims have been labor and union related and have been settled on an administrative level not in court.
While the results of such claims and legal actions cannot be predicted with certainty, the Company’s consolidated financial statements include valuation of accounts receivable, valuation of property and equipment, valuation and amortization period of software, valuation of beneficial conversion features in convertible debt, valuation of equity based instruments issued for other than cash, revenue recognition, and the valuation allowance on deferred tax assets.
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Directors, and Executive Officers
Set forth below are the names, ages and other biographicalis information ofregarding our directors and executive officers following the closing of the Merger. Pursuant to the terms of the Merger, our sole officer and director, Lawrence Garcia, was appointed as President and Chief Executive Officer, was appointed as our Chief Operating Officer, Secretary and Treasurer, Michael Goossen as our Chief Financial Officer. In addition, in connection with the Merger, Douglas Anderson was appointed to serve as a director on December 9, 2022
The following persons became our executive officers and directors upon effectiveness of January 31, 2014:
| Name | Age | Position | ||
| Lawrence Garcia | 50 | Chairman of the Board, President and Chief Executive Officer | ||
| Chief Operating Officer, Secretary, Treasurer and Director | ||||
Chief Chief Financial Officer | ||||
| * | Appointed December 9, 2022. |
Directors serve until the next annual meeting and until their successors are elected and qualified. The following isdirectors of our company are elected by the vote of a descriptionmajority in interest of the business experienceholders of the voting stock of our company and hold office until the expiration of the term for which he or she was elected and until a successor has been elected and qualified.
Most of the authorized number of directors constitutes a quorum of the Board for the transaction of business. The directors must be present in person or telephonically at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board individually or collectively consent in writing to the action.
Directors may receive compensation for their services and reimbursement for their expenses as shall be determined from time to time by resolution of the Board. Our directors currently do not receive monetary compensation for their service on the Board of Directors.
Officers are appointed to serve until such time as their successors have been duly appointed by the Board of Directors.
The principal occupations for the past five years (and, in some instances, for prior years) of each of our executive officers and directors:
Officers
Lawrence Garcia is the CEO and ChairmanPresident of Ameriguard Security Service, Inc incorporated in state of California in 2002. Lawrence is a disabled veteran of the Board
Michael Goossen, CPA is also certified by the American Health Information Management Association as a Registered Health Information Administrator (RHIA) and by the American Academy of Professional Coders as a Certified Coding Specialist (CCS) and as a Certified Procedural Coder-Hospital (CPCH).
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Board of Directors
Douglas Anderson, Board Director. Mr. Anderson is responsible for budgeting, financial reportingthe CEO of Wall Street Capital Partners and public disclosure, personnel management,has been involved in or exposed to most aspects of corporate finance with over 20 years on Wall Street. Prior to his work in corporate finance, he served in the U.S. Marine Corps, including the elite Marine Reconnaissance Battalion. He held a Top-Secret clearance while serving operationally in the U.S. State Department at American Embassies overseas, as well as helping to createat the U.N. in New York, where he participated in Security Enhancement programs. Mr. Anderson was formally trained on Wall Street as an Underwriter. He has been interviewed and overseebroadcast nationally and internationally, many times as an expert both on NASDAQ and at the financial goals of HRAA. Prior to joining the Company,NYSE. Mr. McKeown was formerly the Chief Financial Officer of Perry Baromedical, a regulated medical device manufacturer and world leader in the manufacture, installation and service of FDA approved Hyperbaric Oxygen Chambers. Mr. McKeown also served as the Chief Financial Officer and Controller of National Healing Corporation, a leader in providing comprehensive outpatient wound care centers and wound and disease management solutions for hospitals. DuringAnderson earned his tenure at National Healing Corporation, Mr. McKeown gained relevant experience with healthcare coding and hospital contract negotiations. Prior to that, Mr. McKeown was the Senior Vice President, Chief Financial Officer and Chief Accounting Officer for Applied Digital, a former public company that provides RFID identification and security technology for various consumer and commercial applications. Mr. McKeown also served as a Tax Manager for Ernst and Young and was a senior accountant with Coopers & Lybrand. Mr. McKeown received his B.S. in Business Administrationundergraduate degree from the University of MaineWashington and is licensed as a Certified Public Accountantpostgraduate graduate education includes executive education from Harvard in the state of Maine.
Family Relationships
There are no family relationships among our executive officers and directors.
Board Leadership Structure and Role in Risk Oversight
Our Board of magicJack VocalTec Ltd. from July 2010 to May 2013 and also served as its Principal Accounting Officer. Mr. Russo servesDirectors focuses on the Advisory Board of Ocho Gaming, LLC. Ocho Gaming is a premiere operatormost significant risks facing our company and provider of online gaming inour company’s general risk management strategy, and ensure that risks undertaken by our Company are consistent with the Latin American market. Mr. Russo, along with his wife, is a co-founder of bracelet retailer FriendlyBands LLC. Mr. Russo also serves as a consultant to ResumeBear, a leading online job search technology company. Prior to his appointment as CFO of magicJack VocalTec Ltd., Mr. Russo served as CFO of YMax since 2005. Prior to joining YMax, from 1996-1999, he was a consultant and served as CFO of Group Long Distance, Inc. (GLD), a publicly traded reseller of local and long distance services. Prior to joining GLD, Mr. Russo was the Executive Vice President of the State Bank of South Australia. He holds a B.B.A. degree from Pace University in New York.
Limitation of products are basedLiability and Indemnification of Officers and Directors
Under Nevada General Corporation Law and our articles of incorporation, our directors will have no personal liability to us or our stockholders for monetary damages incurred as the result of the breach or alleged breach by a director of his “duty of care.” This provision does not apply to the directors’ (i) acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (ii) acts or omissions that a director believes to be contrary to the best interests of the corporation or our shareholders or that involve the absence of good faith on QlikView’s business intelligence platformthe part of the director, (iii) approval of any transaction from which a director derives an improper personal benefit, (iv) acts or omissions that provides an easy to use access to operational, financial and clinical healthcare information. In addition, HRAA’s IT department is developingshow a national remote medical coding environment that will enable HRAA to outsource medical coding operations for a variety of healthcare organizations. Over the past 25 years, he has built several IT organizations from scratch including a startup that Mr. Boyer founded in 1997 for which he raised over $42 million in venture capital. He has successfully built software products that generated over $300 million in revenue for their respective software firms and continues to develop innovative solutionsreckless disregard for the healthcare industry. Priordirector’s duty to joining HRAA; Mr. Boyerthe corporation or our shareholders in circumstances in which the director was aware, or should have been aware, in the Directorordinary course of performing a director’s duties, of a risk of serious injury to the corporation or our shareholders, (v) acts or omissions that constituted an unexcused pattern of inattention that amounts to an abdication of the Healthcare IT Practicedirector’s duty to the corporation or our shareholders, or (vi) approval of an unlawful dividend, distribution, stock repurchase or redemption. This provision would generally absolve directors of personal liability for McGladrey, where he managed an IT team that specializednegligence in business intelligence for hospitals, clinics, and healthcare organizations. Priorthe performance of duties, including gross negligence.
The effect of this provision in our articles of incorporation is to McGladrey, Mr. Boyer waseliminate the Director of Worldwide Healthcare for Sybase, Inc. where he managed the healthcare and federal program offices consisting of over 200 consultants and architects that delivered product and technology solutions. Mr. Boyer is an accomplished presenter and has presented on topics such as the value of Business Intelligence in Healthcare, Building Actionable and Predictive Analytics for Physicians, and Adoption the Critical Factor in Business Intelligence for HIMSS, HFMA, and other healthcare audiences. Mr. Boyer holds a patient for point of care technology that he developed to bring the patient, payer and provider together at the point of care to settle a claim. Mr. Boyer holds a B.S. in Business Administration from Elizabethtown College.
| Non-equity | ||||||||||||||||||||||||||||||
| Name and | Stock | Option | Incentive Plan | All Other | ||||||||||||||||||||||||||
| Principal | Salary | Bonus | Awards | Awards | Compensation | Compensation | Total | |||||||||||||||||||||||
| Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||
| Andrea Clark – | 2012 | 175,000 | – | – | – | – | 19,000 | (1) | 194,000 | |||||||||||||||||||||
| Chief Executive Officer | 2011 | 175,000 | – | – | – | – | – | 175,000 | ||||||||||||||||||||||
| Robert Rubinowitz – | 2012 | 175,000 | – | – | – | – | 19,000 | (1) | 194,000 | |||||||||||||||||||||
| Chief Operating Officer, President and Secretary | 2011 | 175,000 | – | – | – | – | – | 175,000 | ||||||||||||||||||||||
| Evan McKeown, | 2012 | – | – | – | – | – | – | – | ||||||||||||||||||||||
| CFO (2) | 2011 | – | – | – | – | – | – | – | ||||||||||||||||||||||
| Dean Boyer | 2012 | $ | 135,115 | – | – | – | – | – | $ | 135,115 | ||||||||||||||||||||
| Chief Technical Officer | 2011 | – | – | – | – | – | – | – | ||||||||||||||||||||||
| Peter Russo, | 2012 | – | – | – | – | – | – | – | ||||||||||||||||||||||
| Director (3) | 2011 | – | – | – | – | – | – | – | ||||||||||||||||||||||
| Michael Brainard, | 2012 | – | – | – | – | – | – | – | ||||||||||||||||||||||
| Director (3) | 2011 | – | – | – | – | – | – | – | ||||||||||||||||||||||
| David Kroin | 2012 | – | – | – | – | – | – | – | ||||||||||||||||||||||
| Director (4) | 2011 | – | – | – | – | – | – | – | ||||||||||||||||||||||
| Mitchell D. Kaye J.D. | 2012 | – | – | – | – | – | – | – | ||||||||||||||||||||||
| Director (4) | 2011 | – | – | – | – | – | – | – | ||||||||||||||||||||||
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We intend to enter into agreements to indemnify our directors and officers, in addition to the indemnification provided for in our bylaws. These agreements, among other things, indemnify our directors and officers for certain expenses (including attorneys’ fees), judgments, fines, and settlement amounts incurred by any bonussuch person in any action or incentive plan; earned but unpaid base salary and earned but unpaid bonus compensation, and accrued but unpaid vacation time.
Insofar as indemnification for incentive awards, as well as a benefit package, including medical, disability, insurance, 401(k) and other equity programs. The termliabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Rubinowitz AgreementSecurities and Exchange Commission, such indemnification is three (3) years and shall automatically be renewed for successive three (3) year terms thereafter, unless otherwise notified in writing ninety (90) days prior to the termination of the agreement. The Rubinowitz Agreement may be terminated by the Company for cause. Should the Company terminate the agreement without cause, Mr. Rubinowitz is entitled to receive two times his base salary at the time of termination; a pro-rata bonus payment on any bonus or incentive plan; any earned but unpaid base salary, and accrued but unpaid vacation time. Should the Rubinowitz Agreement be terminated by Mr. Rubinowitz two years after the effective date, Mr. Rubinowitz shall be entitled to receive: any earned but unpaid base salary and bonus compensation; any earned but unpaid vacation time; a pro-rata bonus or incentive plan award; and, at Mr. Rubinowitz ’s election, either (i) registered shares of the Company’s common stock equal to 100% of his base salary at the time of resignation, or (ii) fully vested and cashless exercisable discounted stock options. In the event there is: (1) a change of control of the Company; and (2) Mr. Rubinowitz is terminated within six months following such change of control, Mr. Rubinowitz shall be entitled to receive any earned but unpaid base salary, any earned but unpaid bonus compensation, two times his base salaryagainst public policy as of the date of the change of control, two times the average bonus paid to Mr. Rubinowitz over the three previous calendar years, and accrued but unpaid vacation time. Should the Rubinowitz Agreement be terminatedexpressed in the event of death or disability of Mr. Rubinowitz, Mr. Rubinowitz or his estate, shall be entitled to receive two times his base salary immediately prior to termination, a pro-rata bonus payment on any bonus or incentive plan; earned but unpaid base salarySecurities Act and earned but unpaid bonus compensation, and accrued but unpaid vacation time.
Related Party Transactions
On July 7, 2022 the Board of directors of Health Revenue Assurance Holdings, Inc. on August 8, 2013. Mr. Brainard is a Director of ResumeBear, Inc., a company with which HRAA has a sales contract worth approximately $300,000, pursuant to which HRAA provides website development services to ResumeBear, Inc. Mr. Russo is the Chief Executive Officer and director for ResumeBear, Inc. In January 2014, the Company wrote off approximately $100,000 of the receivables with ResumeBear.
Director Independence
Lawrence Garcia, CEO and the President were paid in full from the net proceeds of the Securities Purchase Agreement, dated November 12, 2013.
Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:
● | the director is, or at any time during the past three years was, an employee of the Company; | |
| ● | the director or a family member of the director accepted any compensation from the Company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service); | |
| ● | a family member of the director is, or at any time during the past three years was, an executive officer of the Company; | |
| ● | the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the Company made, or from which the Company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions); | |
| ● | the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the Company served on the compensation committee of such other entity; or | |
| ● | the director or a family member of the director is a current partner of the Company’s outside auditor, or at any time during the past three years was a partner or employee of the Company’s outside auditor, and who worked on the company’s audit. |
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. |
Code of Ethics
We have not adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, because of the small number of persons involved in the management of the Company.
Director and Executive Compensation
No compensation has been paid and no stock options granted to any of our officers or directors in the last three fiscal years.
Employment Agreements
Prior to merger date no employment agreements were in place. It is the intention of ownership to rely on the recommendation of the compensation committee to be appointed by the Board of Directors
2023 Equity Incentive Plan
Our Board of Directors and stockholders owning a majority of our outstanding shares plan to adopt an Equity Incentive Plan. Details of the plan will be developed with the input of the Board of Directors along with the then established compensation committee.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Accordingly, we concluded that our disclosure controls and procedures were effective as of December 31, 2021.
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Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act, as amended. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and Principal Accounting Officer and effected by our Board of Directors, management and other personnel, 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.
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 December 31, 2021 due to the same material 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 a support staff in order to separate duties between different individuals. The Company lacks the appropriate personnel to handle all the varying recording and reporting tasks on a timely basis. The Company plans to address these material weaknesses as resources become available by hiring additional professional staff, such as a Chief Financial Officer, as funding becomes available, outsourcing certain aspects of the recording and reporting functions, and separating responsibilities. We have identified the following material weaknesses.
| 1. | As of December 31, 2021, we did not maintain effective controls over the control environment. Specifically, we have not developed and effectively communicated to our employees the accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert 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. |
| 2. | As of December 31, 2021, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness. |
Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2021, based on the criteria established in “INTERNAL CONTROL-INTEGRATED FRAMEWORK” issued by the COSO.
Change In Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our last fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.
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EXECUTIVE COMPENSATION
During the years ended December 31, 2022, and December 31, 2021 no compensation was paid to Lawrence Garcia, our president, treasurer, secretary and director paid by AGSS.
Employment Agreements
Prior to merger date no employment agreements were in place. It is the intention of ownership to rely on the recommendation of the compensation committee appointed by the Board of Directors.
Outstanding Equity Awards at Fiscal Year-End
There were no outstanding equity awards held by our officers as of December 31, 2022.
Board of Directors
All directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified, or until their earlier death, resignation or removal. Officers are elected by and serve at the discretion of the board.
Our directors are reimbursed for expenses incurred by them in connection with attending board meetings and receive a monthly honorarium for serving on the board.
Compensation committee
The board of directors plans to establish a compensation committee as required by Sarbanes-Oxley Act. The committee will make compensation recommendation to the board
2023 Equity Incentive Plan
Our Board of Directors and stockholders owning a majority of our outstanding shares plans to adopt an Equity Incentive Plan following the merger. Details of the plan will be developed with the input of the Board of Directors along with the then established compensation committee.
Executive Officer Compensation
The following table sets forth the annual compensation for years ended December 31, 2022, and 2021 to our Officers.
Executive positions and salaries:
| Name and Position | Year | Salary ($) | Bonus ($) | Other Compensation ($) | Total ($) | |||||||||||||
| Lawrence Garcia - CEO | 2022 | 146,551 | - | 21,279 | 167,830 | |||||||||||||
| 2021 | 129,190 | - | 19,789 | 148,979 | ||||||||||||||
| Michael Goossen, CPA - CFO(1) | 2022 | 134,250 | - | 650 | 134,900 | |||||||||||||
| 2021 | 98,423 | - | - | 98,423 | ||||||||||||||
| (1) | Mr. Goossen was an independent consultant until August 1, 2022. |
Director Compensation
Our directors are reimbursed for expenses incurred by them in connection with attending board meetings and receive a monthly honorarium for serving on the board.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information regarding beneficial ownership of our shares of common stock beneficially owned as of JanuaryDecember 31, 2014, for2022 by (i) each stockholderperson (or group of affiliated persons) who is known by us to beown more than five percent of the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to Preferredsecurities. All share ownership figures include shares of our Common Stock conversion rights (including accrued dividends), options or warrants held by that person that are currently exercisable orissuable upon securities convertible or become exercisable or convertibleexchangeable into shares of our Common Stock within 60sixty (60) days after Januaryof December 31, 20142022 which are deemed outstanding even if they have not actually been exercisedand beneficially owned by such person for purposes of computing his or converted. The shares issuable under these securities are treated as outstanding for computing theher percentage ownership, of the person holding these securities but are not treated as outstanding for the purposepurposes of computing the percentage ownership of any other person. Unless otherwise indicated, we believe that all persons named in this table have sole voting power and investment power over all the shares beneficially owned by them.
| Name and Address | Beneficial Ownership | Percentage | ||||||
| Lawrence Garcia | 80,578,125 | 86,26 | % | |||||
| Michael Goossen, CPA | 2,671,875 | 2.86 | % | |||||
| Douglas Anderson* | 3,515,625 | 3.76 | % | |||||
| All officers/directors as a group (3 people) | 86,765,625 | 92.88 | % | |||||
| Title of Class | Name Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent age of Class (1) | ||||||
| Directors and Executive Officers | |||||||||
| Common Stock | Andrea Clark*† | 6,599,604 | 12.07 | % | |||||
| Common Stock | Robert Rubinowitz*† | 6,599,617 | 12.07 | % | |||||
| Common Stock | Evan McKeown | 0 | 0 | % | |||||
| Common Stock | Peter Russo | 0 | 0 | % | |||||
| Common Stock | Michael Brainard | 0 | 0 | % | |||||
| Common Stock | David Kroin | 0 | 0 | % | |||||
| Common Stock | Mitchell D. Kaye | 0 | 0 | % | |||||
| Common Stock | Directors and executive officers as a group (7 people) | 13,199,221 | 24.14 | % | |||||
| 5% Stockholders | |||||||||
| Common Stock | Andrea Clark* | 6,599,604 | 12.07 | % | |||||
| Common Stock | Robert Rubinowitz* | 6,599,617 | 12.07 | % | |||||
| Common Stock | Michael Ciprianni** | 2,800,000 | 5.11 | % | |||||
| Common Stock | Donald Luneburg** | 3,213,900 | 5.87 | % | |||||
| Common Stock | Biomedical Value Fund, L.P. (2) | 23,057,648 | 21.22 | % | |||||
| Common Stock | Biomedical Institutional Value Fund, L.P. (3) | 6,020,924 | 5.54 | % | |||||
| Common Stock | Biomedical Offshore Value Fund, Ltd. (4) | 13,290,920 | 12.23 | % | |||||
| Common Stock | Class D Series Of Gef-Ps, L.P. (5) | 9,823,064 | 9.04 | % | |||||
| (1) | Based on | |
| * | Appointed on December 9, 2022. |
Certain Relationships and Related Transactions
Notes Payable – Related Party Transactions
On September 9, 2013, the CompanyJuly 7, 2022, Ameriguard entered into a one year Material Consulting Agreementbuyout agreement with Mr. Michael Ciprianniits minority shareholder Lillian Flores. The value of Ameriguard to provide certain consulting services relatedbe used for the buyout agreement was calculated using an independent evaluation service which determined the December 31, 2020 value to be approximately $6,400,000. As a 45% owner, Mrs. Flores’ share was approximately $2,885,000. After negotiation of some additional funds due Mrs. Flores, the Company’s businessfinal buyout amount was approximately $3,385,000. A 5-year promissory note was executed.
Director Independence
We currently have two independent directors as that term is defined in exchange for fourRule 4200 of Nasdaq’s listing standards.
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DESCRIPTION OF SECURITIES
Authorized Capital Stock
Our authorized capital stock consists of five hundred million one hundred twenty five thousand (4,125,000)(500,000,000) shares of common stock, in considerationpar value $0.001 per share. Immediately after giving effect to the Merger and related transactions, there were 93,417,302 shares of our common stock issued and outstanding.
Common Stock
The following is a summary of the servicesmaterial rights and restrictions associated with our common stock.
The holders of our common stock currently have (i) equal ratable rights to be rendered. On September 12, 2013,dividends from funds legally available therefore, when, as and if declared by the Consulting Agreement was filed as an exhibitBoard of Directors of the Company; (ii) are entitled to share ratably in all of the assets of the Company available for distribution to holders of common stock upon liquidation, dissolution or winding up of the affairs of the Company (iii) do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights applicable thereto; and (iv) are entitled to one non-cumulative vote per share on all matters on which stock holders may vote. Please refer to the Company’s Current ReportArticles of Incorporation, Bylaws and the applicable statutes of the State of Nevada for a more complete description of the rights and liabilities of holders of the Company’s securities.
Preferred Stock
The holders of our Series A-1 Preferred Stock currently (i) have preferred equal ratable rights to dividends from funds legally available therefore, when, as and if declared by the Board of Directors of the Company; (ii) hold distribution preferences upon liquidation, dissolution or winding up of the affairs of the Company (iii) convert into seventy-two (72) shares, for each share of Series A-1 Preferred Stock, at the discretion of the holder; and (iv) are entitled to seventy-two (72) votes per share of Series A-1 Preferred Stock on Form 8-K.
Following the merger there were and are no Preferred Stock outstanding. Any future issuance will be at the discretion of the Board of Directors.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the February 2012 merger agreement. foreseeable future.
Transfer Agent
The balance due totransfer agent for our common stock is VStock Transfer, and its telephone number is (727) 289-0010.
Trading Information
Our common stock is currently approved for quotation on OTC Markets (otcmarkets.com) under the CEO was formalized insymbol “AGSS”.
37
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
AGSS’s common stock is quoted through the over-the-counter market on the OTC Market Pink under the symbol “AGSS.” There is a promissory note dated November 1, 2013.limited trading of AGSS’s common stock. The Company also owed its President $40,000following table sets forth high and low sales prices of AGSS common stock for a promissory note dated November 1, 2013 for funds advanced in September 2013. On November 12, 2013 the promissory notes for the CEO and the President were paid in full from the net proceeds of the Securities Purchase Agreement.
| High | Low | |||||||
| Third Quarter ended September 30, 2021 | $ | 4.39 | $ | 0.50 | ||||
| Fourth Quarter ended December 31, 2021 | $ | 4.39 | $ | 0.50 | ||||
| First Quarter ended March 31, 2022 | $ | 4.39 | $ | 0.50 | ||||
| Second Quarter ended June 30, 2022 | $ | 5.34 | $ | 1.70 | ||||
| Third Quarter ended September 30, 2022 | $ | 3.00 | $ | 1.25 | ||||
| Fourth Quarter ended December 31, 2022 | $ | 3.38 | $ | 1.00 | ||||
| First Quarter ended March 31, 2023 | $ | 3.35 | $ | 1.975 | ||||
As of March 27, 2023, there were approximately 91 record holders of AGSS common stock, not including shares held in which“street name” in brokerage accounts. As of March 27, 2023, there were approximately 93,418,291 shares of AGSS’s common stock issued and outstanding on record.
Dividends
AGSS has not declared or paid any director or executive officer or any security holder who is known to us to owncash dividends on its common stock.
Transfer Agent and Registrar
The transfer agent and registrar for AGSS’s common stock VStock Transfer LLC, 18 Lafayette Place, Woodmere, NY 11598, telephone number 212-828-8436.
Repurchases of record or beneficially more than 5%Our Securities
None of the shares of our common stock were repurchased by the Company during the fiscal year ended December 31, 2022.
Sales of Our Unregistered Securities during 2022 Not Previously Disclosed
None
Penny Stock Considerations
Our common stock will be deemed to be “penny stock” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or any member ofaccredited investor must make a special suitability determination regarding the immediate family or sharingpurchaser and must receive the household (other thanpurchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a tenant or employee) of any of the foregoing persons, had a direct or indirect material interest.
38
Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt.
Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities.
Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks; and
Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.
Because of these regulations, broker-dealers may encounter difficulties in their attempt to buy or sell shares of our common stock, which may affect the ability of Belair or any memberother holders to sell their shares in the secondary market and have the effect of reducing the immediate family or sharinglevel of trading activity in the household (other thansecondary market. These additional sales practice and disclosure requirements could impede the sale of our common stock even if our common stock becomes publicly traded. In addition, the liquidity for our common stock may be decreased, with a tenant or employee)corresponding decrease in the price of any ofour common stock. Our shares are likely to be subject to such penny stock rules for the foregoing persons is indebtedforeseeable future.
Reports to us.
We have used selling agentsfiled all necessary periodic reports, and consultants from time to time. The terms of those arrangements have been disclosed in previous filingsother information with the Securities and Exchange Commission.SEC. We have provided annual reports to our stockholders containing audited financial statements.
39
Our directors and officers are indemnified as provided byBylaws, subject to the provisions of the Nevada corporate law and our Bylaws. We have agreedRevised Statutes, contain provisions which allow the Company to indemnify eachany person against liabilities and other expenses incurred as the result of our directorsdefending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and certain officers against certain liabilities, including liabilities underin a manner which he reasonably believed was in or not opposed to the Securities Act.best interest of the Company. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SECSecurities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
EXPERTS
Financial Auditors
Our most current audited consolidated financial statements for the event that a claimyears ending December 31, 2021 and December 31, 2020, are included in this prospectus have been so included in reliance on the reports of BF Borgers CPA PC), Lakewood, CO, independent public accountants, given on this firm’s authority as experts in auditing and accounting.
Legal Counsel Providing Legal Opinion
The validity of the issuance of the shares of common stock will be passed upon for indemnification against such liabilities (other than our payment of expenses incurred or paidthe company by our director, officer or controlling personMcMurdo Lawa Group, LLC. Counsel has additionally consented to his opinion being included as an exhibit to this filing. Additionally, counsel has consented to being named in the successful defenseprospectus.
The legal counsel that passed their opinion on the legality of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with thethese securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Matthew McMurdo, Esq.
McMurdo Law Group, LLC
1185 Avenue of the SEC indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court’s decision.Americas, 3rd Floor
New York, NY 10036
40
We have filed with the Securities and Exchange CommissionSEC a registration statement on Form S-1 (File Number _________) under the Securities Act of 1933 forregarding the shares of common stock in this offering.offered hereby. This prospectus does not contain all of the information found in the registration statement, portions of which are omitted as permitted under the rules and regulations of the exhibits and schedule that were filed with the registration statement.SEC. For further information with respect toregarding us and our common stock, wethe securities offered by this prospectus, please refer you to the registration statement, and theincluding its exhibits and schedule that were filed with the registration statement.schedules. Statements containedmade in this prospectus aboutconcerning the contents of any contract, or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and we refer you to the full text of the contractagreement or other document filed as an exhibit to the registration statement. A copystatement are summaries of the terms of those documents. The registration statement and theof which this prospectus forms a part, including its exhibits and schedules, that were filed with the registration statement may be inspected without chargeand copied at the Public Reference Roompublic reference room maintained by the Securities and Exchange CommissionSEC at 100 F.F Street, N.E., Washington, DC 20549-6010, and copies of all or any part of the registration statementD.C. 20549. You may be obtained from the Securities and Exchange Commission upon payment of the prescribed fee. Information regardingobtain information on the operation of the Public Reference Room may be obtainedpublic reference room by calling the Securities and Exchange CommissionSEC at 1-800-SEC-0330.
The Securities and Exchange CommissionSEC maintains a web site that contains reports, proxy and information statements,on the Internet at www.sec.gov. Our registration statement and other information regarding registrants that we file electronically with the SEC. The addressSEC are available at the SEC’s website.
We make available to our stockholders annual reports (on Form 10-K) containing our audited consolidated financial statements and make available quarterly reports (on Form 10-Q) containing our unaudited interim consolidated financial information for the first three fiscal quarters of the site is www.sec.gov.each of our fiscal years.
If you are a stockholder, you may request a copy of these filings at no cost by contacting us at:
Ameriguard Security Services, Inc.
5470 W. Spruce Avenue, Suite 102
Fresno, CA
Telephone number: (559) 271-5984
41
Financial Statements
Index to Financial Statements
F-1
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Ameriguard Security Services, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Ameriguard Security Services, Inc. as of December 31, 2022 and 2021, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
We determined that there are no critical audit matters.
/S/ BF Borgers CPA PC (PCAOB ID 5041)
We have served as the Company’s auditor since 2021
Lakewood, CO
March 30, 2023
F-2
AmeriGuard Security Services, Inc.
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 1,227,654 | $ | 2,129,801 | ||||
| Accounts receivable, net (note 1) | 1,869,268 | 2,215,197 | ||||||
| Prepaid insurance | 110,829 | 107,884 | ||||||
| Related Party Receivable (note 3) | - | - | ||||||
| Total Current Assets | 3,207,751 | 4,452,882 | ||||||
| Other Non-Current Assets | ||||||||
| Fixed assets, net depreciation (note 4) | 298,806 | 132,802 | ||||||
| Operating Lease | 302,695 | - | ||||||
| Total Non-Current Assets | 601,501 | 132,802 | ||||||
| Total Assets | $ | 3,809,252 | $ | 4,585,684 | ||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 761,516 | $ | 418,342 | ||||
| Accrued Interest Due (note 6) | 49,035 | - | ||||||
| Accrued Payroll | 737,143 | 657,741 | ||||||
| Payroll liability - Pension (note 5) | 453,965 | 616,579 | ||||||
| Current portion of notes payable (note 6) | 719,563 | 127,615 | ||||||
| Total Current Liabilities | 2,721,222 | 1,820,277 | ||||||
| Long Term Liabilities | ||||||||
| Long term portion of notes payable (note 6) | 2,782,784 | 780,845 | ||||||
| Operating Lease | 294,387 | - | ||||||
| Total Liabilities | 5,798,393 | 2,601,122 | ||||||
| Stockholders’ equity | ||||||||
| Common stock, $ par value, shares issued and outstanding at December 31, 2022 and 2021 (Note 7) | 158,346 | 158,346 | ||||||
| Retained earnings/(defecit) | (2,147,486 | ) | 1,826,216 | |||||
| Total Stockholders’ Equity | (1,989,140 | ) | 1,984,562 | |||||
| Total Liabilities and Stockholders’ Equity | $ | 3,809,253 | $ | 4,585,684 | ||||
See accompanying notes to financial statements
F-3
AmeriGuard Security Services, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Years Ended | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Revenue | ||||||||
| Security Services | $ | 24,643,096 | $ | 22,418,328 | ||||
| Other related income | 304,305 | 24,185 | ||||||
| Total Revenue | 24,947,401 | 22,442,513 | ||||||
| Cost of Services | ||||||||
| Salaries and related taxes | 15,030,738 | 13,873,241 | ||||||
| Employee benefits | 3,052,774 | 2,915,322 | ||||||
| Sub-Contractor payments | 3,467,391 | 3,433,959 | ||||||
| Guard training | 202,826 | 222,298 | ||||||
| Vehicles and equipment expenses | 194,889 | 184,176 | ||||||
| Total Cost of Services | 21,948,618 | 20,628,996 | ||||||
| Gross Margin | 2,998,783 | 1,813,517 | ||||||
| Operating Expenses | ||||||||
| Salaries, payroll taxes and benefits | 1,161,982 | 365,433 | ||||||
| Vehicle expense | 433,424 | 295,054 | ||||||
| Professional services | 361,314 | 318,442 | ||||||
| Cellular services | 106,382 | 112,140 | ||||||
| General liability insurance | 87,119 | 111,287 | ||||||
| Advertising and marketing | 128,544 | 77,349 | ||||||
| General and administrative expenses | 645,268 | 294,062 | ||||||
| Loan interest | 105,826 | 59,439 | ||||||
| Depreciation expense | 42,927 | 52,273 | ||||||
| Total Operating Expenses | 3,072,786 | 1,685,479 | ||||||
| Net Income/(Loss) from Operations | (74,003 | ) | 128,038 | |||||
| Other Income (Expenses) | ||||||||
| Other Income | - | - | ||||||
| Other (Expense) | (344,105 | ) | - | |||||
| Total Other Income | (344,105 | ) | - | |||||
| Net Income/(loss) before Income Taxes | (418,108 | ) | 128,038 | |||||
| Income tax expense | 10,350 | 33,923 | ||||||
| Net Income/(loss) | $ | (428,458 | ) | $ | 94,115 | |||
| Net Income/(loss) per Common Share - Basic and Diluted | $ | (0.0046 | ) | $ | 0.0010 | |||
| Weighted Average Number of Common Shares Outstanding - Basic and Diluted | 93,417,302 | 93,417,302 | ||||||
See accompanying notes to financial statements
F-4
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Cash | $ | 185,600 | $ | 893,458 | ||||
| Accounts receivable | 1,011,929 | 1,246,814 | ||||||
| Accounts receivable - Related Party, net of allowance $117,632 and $0, respectively | - | - | ||||||
| Prepaid expenses | 1,181,321 | 3,600 | ||||||
| Other current assets | 70,020 | 688 | ||||||
| Total Current Assets | 2,448,870 | 2,144,560 | ||||||
| Property and Equipment, net | 400,126 | 365,017 | ||||||
| Software, net | - | 258,933 | ||||||
| Other assets | 8,865 | 8,871 | ||||||
| Finance costs, net | 2,232 | 2,477 | ||||||
| Total Other Assets | 11,097 | 270,281 | ||||||
| Total Assets | $ | 2,860,093 | $ | 2,779,858 | ||||
| Liabilities and Stockholders' Equity (Deficit) | ||||||||
| Accounts payable | $ | 520,054 | $ | 207,741 | ||||
| Due to officers | 115,000 | 75,000 | ||||||
| Accrued expenses | 103,142 | 64,077 | ||||||
| Accrued payroll | 693,826 | 412,186 | ||||||
| Loan payable to factor | 443,648 | 827,075 | ||||||
| Accrued interest | - | 4,524 | ||||||
| Line of credit, current portion | 46,166 | 25,000 | ||||||
| Capital Leases, current portion | 32,768 | 16,923 | ||||||
| Notes payable, current portion, net of discount | 372,161 | 202,557 | ||||||
| Long term debt, current portion | 43,956 | 37,513 | ||||||
| Settlement Payable | - | 115,278 | ||||||
| Other current liabilities | 51,257 | - | ||||||
| Total Current Liabilities | 2,421,978 | 1,987,874 | ||||||
| Capital Leases (net of current portion) | 34,300 | 23,974 | ||||||
| Line of credit (net of current portion) | - | 125,000 | ||||||
| Notes payable (net of current portion), net of discount | 124,054 | 273,751 | ||||||
| Long term debt (net of current portion) | 286,549 | 181,457 | ||||||
| Total Liabilities | $ | 2,866,881 | $ | 2,592,056 | ||||
| Commitments and Contingencies (see Note 8) | ||||||||
| Stockholders' Equity (Deficit): | ||||||||
| Preferred stock ($0.001 par value, 25,000,000 shares authorized, none issued or outstanding) | $ | - | $ | - | ||||
| Common stock ($0.001 par value, 500,000,000 shares authorized, 54,577,294 shares and 39,054,867 issued and outstanding at September 30, 2013 and December 31, 2012, respectively) | 54,577 | 39,055 | ||||||
| Additional paid-in capital | 6,616,797 | 2,738,545 | ||||||
| Subscription receivable | - | (5,000 | ) | |||||
| Accumulated deficit | (6,678,162 | ) | (2,584,798 | ) | ||||
| Total Stockholders' Equity (Deficit) | (6,788 | ) | 187,802 | |||||
| Total Liabilities and Stockholders' Equity (Deficit) | $ | 2,860,093 | $ | 2,779,858 | ||||
AmeriGuard Security Services, Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED December 31, 2021 and 2022
| Common Stock | Preferred Stock | Additional Paid-In | Stockholders’ | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Equity | Equity | ||||||||||||||||||||||
| Balance, December 31, 2020 | 2,743,302 | $ | 69,346 | 675,000 | $ | 10,000 | $ | 9,976,045 | $ | (7,191,705 | ) | $ | 2,863,685 | |||||||||||||||
| Owner draws (pre-merger) | - | - | (473,238 | ) | $ | (473,238 | ) | |||||||||||||||||||||
| Equity Merger | 89,999,000 | 89,000 | (10,000 | ) | (579,000 | ) | $ | (500,000 | ) | |||||||||||||||||||
| Cancelation and conversion of preferred stock | 675,000 | (675,000 | ) | |||||||||||||||||||||||||
| Net Income for year ended December 31, 2021 | 94,115 | $ | 94,115 | |||||||||||||||||||||||||
| Balance, December 31, 2021 | 93,417,302 | 158,346 | - | - | $ | 9,397,045 | $ | (7,570,828 | ) | $ | 1,984,562 | |||||||||||||||||
| Owner draws (pre-merger) | $ | (62,824 | ) | $ | (62,824 | ) | ||||||||||||||||||||||
| Shareholder buyout | (3,384,950 | ) | (3,384,950 | ) | ||||||||||||||||||||||||
| Retained Deficit of merger with related entity | (97,470 | ) | $ | (97,470 | ) | |||||||||||||||||||||||
| Net (Loss) for year ended December 31, 2022 | - | - | (428,458 | ) | (428,458 | ) | ||||||||||||||||||||||
| Balance, December 31, 2022 | 93,417,302 | $ | 158,346 | - | $ | - | $ | 6,012,095 | $ | (8,159,580 | ) | $ | (1,989,140 | ) | ||||||||||||||
See accompanying notes to financial statements
F-5
AmeriGuard Security Services, Inc.
STATEMENTS OF CASH FLOWS
| For the Years Ended | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Income/(Loss) | $ | (428,458 | ) | $ | 94,115 | |||
| Adjustment to reconcile net loss from operations: | ||||||||
| Changes in Operating Assets and Liabilities | ||||||||
| Accounts receivable, net | 345,929 | (23,372 | ) | |||||
| Prepaid insurance | (2,945 | ) | (32,949 | ) | ||||
| Depreciation | 42,927 | 52,273 | ||||||
| Accounts payable | 343,173 | 33,742 | ||||||
| Accrued Interest | 49,035 | - | ||||||
| Accrued Payroll | 79,402 | 75,693 | ||||||
| Payroll liability - Pension | (162,614 | ) | 77,237 | |||||
| Net Cash (Used)/provided in Operating Activities | 266,449 | 276,739 | ||||||
| Cash Flows Used from Investing Activities | ||||||||
| Purchase of fixed assets | (6,043 | ) | (24,552 | ) | ||||
| Building improvements | (224,132 | ) | - | |||||
| Operating lease liability | (79,358 | ) | - | |||||
| Purchase of Shell Corporations - AGSS | - | (500,000 | ) | |||||
| Payment for Shareholder buyout | (686,990.00 | ) | - | |||||
| Loan principle payments | (180,298 | ) | (227,097 | ) | ||||
| Owner distributions | (62,824 | ) | (473,238 | ) | ||||
| Net Cash Used by Investing Activities | (1,239,644 | ) | (1,224,887 | ) | ||||
| Cash Provided from Financing Activities | ||||||||
| Secure Transportation vehicle loan | - | 21,500 | ||||||
| Operating lease asset | 71,049 | - | ||||||
| Net Cash Provided by Financing Activities | 71,049 | 21,500 | ||||||
| Net Increase (Decrease) in Cash | (902,147 | ) | (926,648 | ) | ||||
| Cash at Beginning of Period | 2,129,801 | 3,056,449 | ||||||
| Cash at End of Period | $ | 1,227,654 | $ | 2,129,801 | ||||
| Supplemental Cash Flow Information: | ||||||||
| Income Taxes Paid | $ | 10,350 | $ | 33,923 | ||||
| Interest Paid | $ | 105,826 | $ | 59,439 | ||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Operating leases - right of use asset | $ | 302,695 | ||||||
| Operating leases - lease liability | $ | 294,387 | ||||||
See accompanying notes to financial statements
F-6
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | ||||||||||||||||
| (For the three months ended) | (For the nine months ended) | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenue | $ | 1,790,825 | $ | 1,985,516 | $ | 5,787,811 | $ | 3,619,611 | ||||||||
| Revenue - Related Party | 60,552 | - | 287,626 | - | ||||||||||||
| Total Revenue | 1,851,377 | 1,985,516 | 6,075,437 | 3,619,611 | ||||||||||||
| Cost of Revenues | 1,088,442 | 758,267 | 3,049,394 | 1,642,619 | ||||||||||||
| Gross Profit | 762,935 | 1,227,249 | 3,026,043 | 1,976,992 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Selling and administrative expenses (includes stock compensation of $290,162 and $0 as of September 30, 2013 and 2012, respectively) | 1,898,595 | 1,069,870 | 5,284,354 | 2,726,475 | ||||||||||||
| Research and development | - | 926 | 289 | 54,059 | ||||||||||||
| Asset Impairment | 946,931 | - | 946,931 | - | ||||||||||||
| Depreciation and amortization | 19,616 | 14,007 | 64,214 | 36,758 | ||||||||||||
| Total Operating Expenses | 2,865,142 | 1,084,803 | 6,295,788 | 2,817,292 | ||||||||||||
| Operating Income (Loss) | (2,102,207 | ) | 142,446 | (3,269,745 | ) | (840,300 | ) | |||||||||
| Other Income (Expense) | ||||||||||||||||
| Other income | 10,442 | 5,359 | 10,793 | 9,451 | ||||||||||||
| Interest expense | (357,127 | ) | (377,954 | ) | (721,829 | ) | (392,888 | ) | ||||||||
| Loss on extinguishment of debt | (112,583 | ) | - | (112,583 | ) | - | ||||||||||
| Total Other Income (Expense), net | (459,268 | ) | (372,595 | ) | (823,619 | ) | (383,437 | ) | ||||||||
| (Loss) before provision for income taxes | (2,561,475 | ) | (230,149 | ) | (4,093,364 | ) | (1,223,737 | ) | ||||||||
| Net (Loss) | $ | (2,561,475 | ) | $ | (230,149 | ) | $ | (4,093,364 | ) | $ | (1,223,737 | ) | ||||
| Net Loss Per Share | ||||||||||||||||
| basic and diluted | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.09 | ) | $ | (0.04 | ) | ||||
| Weighted Average Number of Shares Outstanding | ||||||||||||||||
| basic and diluted | 49,438,329 | 32,843,413 | 46,239,643 | 31,468,471 | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | ||||||||
| Nine Months Ended | ||||||||
| September 30, | September 30, | |||||||
| 2013 | 2012 | |||||||
| Cash flows from Operating Activities: | ||||||||
| Net loss | $ | (4,093,364 | ) | $ | (1,223,737 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 128,351 | 36,758 | ||||||
| Stock issued for compensation | 290,162 | - | ||||||
| Amortization of debt discount | 322,476 | 300,000 | ||||||
| Asset Impairment | 946,931 | - | ||||||
| Loss on early extinguishment of debt | 112,583 | - | ||||||
| Bad debt expense | 124,082 | - | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable, net | 110,803 | (332,604 | ) | |||||
| Prepaid expenses | 51,444 | 17,997 | ||||||
| Other assets | (69,332 | ) | (3,211 | ) | ||||
| Accounts payable | 312,313 | 40,149 | ||||||
| Unearned revenue | - | (32,988 | ) | |||||
| Accrued liabilities | 309,871 | 325,479 | ||||||
| Net Cash used in operating activities | (1,453,680 | ) | (872,157 | ) | ||||
| Cash flows from Investing Activities: | ||||||||
| Capitalization of internally developed software | (752,135 | ) | (92,727 | ) | ||||
| Purchases of property and equipment | (8,979 | ) | (9,639 | ) | ||||
| Net Cash used in investing activities | (761,114 | ) | (102,366 | ) | ||||
| Cash flows from Financing Activities: | ||||||||
| Shareholder Loan | 40,000 | - | ||||||
| Borrowings (Repayments) on line of credit, net | (24,606 | ) | 51,500 | |||||
| Payment for repurchase of common stock | - | (25,000 | ) | |||||
| Settlement payments | (115,278 | ) | - | |||||
| Loan proceeds | 1,220,000 | 443,908 | ||||||
| Loan proceeds from factor, net | (383,427 | ) | - | |||||
| Repayments of debt obligations | (472,753 | ) | (31,786 | ) | ||||
| Issuance of stock for cash net of offering cost | 1,243,000 | 394,583 | ||||||
| Net Cash provided by financing activities | 1,506,936 | 833,205 | ||||||
| Net decrease in cash | (707,858 | ) | (141,318 | ) | ||||
| Cash at beginning of period | 893,458 | 198,500 | ||||||
| Cash at ending of period | $ | 185,600 | $ | 57,182 | ||||
| Supplemental schedule of cash paid during the period for: | ||||||||
| Interest | $ | 376,539 | $ | 25,827 | ||||
| Income Taxes | $ | - | $ | - | ||||
| Supplemental schedule of non-cash investing and financing activities: | ||||||||
| Issuance of stock to repay debt | $ | 514,667 | $ | 563,908 | ||||
| Capital lease obligation incurred for use of equipment | $ | 90,099 | $ | 38,704 | ||||
| Beneficial conversion feature on convertible debt charged to additional paid in capital | $ | - | $ | 300,000 | ||||
| Conversion of $300,000 notes to common stock | $ | - | $ | 300,000 | ||||
| Shares issued as a loan fee | $ | 679,353 | $ | - | ||||
| Insurance premium finance contract recorded as prepaid asset | $ | 57,573 | $ | - | ||||
| Prepaid common stock issued for services | �� | $ | 1,278,021 | $ | - | |||
| Reclassification of line of credit to note payable | $ | 133,333 | $ | - | ||||
NOTE 1 – NATUREORGANIZATION AND DESCRIPTION OF BUSINESS AND GOING CONCERN
AmeriGuard Security Services, Inc. (the Company), was incorporated on November 14, 2002, with an S-Corp tax election. The corporation was incorporated with the issuance of shares of no-par value stock held by Lawrence Garcia, President and CEO with shares and Lillian Flores, VP of Operations with shares. The Company provides armed guard services as a federal contractor with licenses in 5 states and provides commercial guard services in California.
On July 7, 2021, the Company, entered into an agreement to gain 100% control of Health Revenue Assurance Holdings, Inc. (the “Company”) isInc (HRAA) a trusted sourcepublic corporation, incorporated in Nevada, by the purchase of timely, accurate and critical resources, technology and information that supports shares of Preferred A-1 Stock from the performanceseller, Custodian Ventures LLC. The purchase of revenue integrity in assuringHRAA allowed the existenceCompany to begin plans to consummate a reverse merger with HRAA becoming a wholly owned subsidiary of healthcare organizations. The Company and its subsidiaries’ products and services include business intelligence technology solutions, contract coding, billing, coding and compliance audits, education, revenue cycle consulting, physician services and ICD-10 transition services. The Company provides customized solutions to its clientsa public company. In March of 2022, a Certificate of Amendment was filed with the highest regard for ethical standardsNevada Secretary of State, changing the name of HRAA, to Ameriguard Security Services, Inc. (AGSS). Shortly thereafter, a stock name and responsibility.
On December 9, 2022, the Company executed the reverse merger agreement and became the subsidiary of AGSS. From that point forward, the financial statement filings will be the consolidation of Ameriguard Security Services, Inc, a mortgage loan related to such offices. Dream Reachers, LLC does not engage in real estate rental business. Its offices are occupied by Health Revenue Assurance Associates,Nevada company with Ameriguard Security Services, Inc. (“HRAA”) at no cost and HRAA pays the related mortgage’s principal and interest, taxes and maintenance. a California company.
The Company’s subsidiary HRAAaccounting year end is the sole member effective May 2011. Dream Reachers has been treated as a Subsidiary for accounting purposes in the Company’s unaudited condensed consolidated financial statements for all periods presented. (see Note 2)
Basis of Presentation
These financial statements are presented in United States dollars and have been prepared in accordance with U.S.United States generally accepted accounting principles (“GAAP”) for interimprinciples.
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 information andcondition or results of operations could be materially adversely affected.
The company receives over 90% of its total revenue from four Federal contracts as described in Note 9 below. These contracts have specific terms, typically five years with the instructionsopportunity 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 Form 10-Q and Article 8 of Regulation S-X.
The process required to acquire a government contract takes several months to complete prior to delivery of the informationproposal to the contracting agency. Due to the time span required to prepare a proposal and footnotes required by U.S. GAAPwining the contract is not guaranteed, the company maintains a department of individuals who monitor and write proposals for complete financial statements. Inall government contracts that become open for bid on a continuing basis. It is important to the opinioncompany that new contracts are acquired consistently to maintain and grow annual revenue.
Other risks to operations consist of management, all adjustments (allState and Federal regulations, staffing shortages, the ongoing impact of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the three months ended September 30, 2013 are not indicative of the results that may be expected for the year ending December 31, 2013 or for any other future period. These unaudited condensed consolidated financial statementsCOVID, accelerating inflation, and the unaudited notes thereto should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2013 (our “10-K”).overall business environment issues we cannot foresee.
F-7
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
In preparing financial statements in conformity with GAAP requiresgenerally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts inof assets and liabilities and the consolidateddisclosure of contingent assets and liabilities at the date of the financial statements.statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company’s consolidated financial statements include valuation of accounts receivable, valuationestimated useful lives and potential impairment of property and equipment, valuationalong with the collectability of some receivables from customers.
Cash and amortization period of software, valuation of beneficial conversion features in convertible debt, valuation of equity based instruments issued for other than cash, revenue recognition, and the valuation allowance on deferred tax assets.
The Company considers all highly liquid temporary cash investments with aan original maturity of three months or less when purchased to be cash equivalents. The Company’sOn December 31, 2022, and December 31, 2021, the Company had cash balances are maintainedand cash equivalents totaling $1,227,654 and $2,129,801 respectively.
Accounts Receivable
We record accounts receivable at various banks that are insured by the Federal Deposit Insurance Corporation subject to certain limitations.
Property and is in the process of being developedEquipment
Property and equipment are recorded at cost. Expenditures for marketmajor additions and capitalization ceases after the general release of the software. Amortization ofimprovements are capitalized software development costs begins upon initial product shipment after general release. Capitalized software development costs are amortized over the estimated life of the related product (generally thirty-six months) using the straight-line method. The Company evaluates its software assets for impairment whenever events or change in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of software assets to be held and used is measured by a comparison of the carrying amount of the asset to the future net undiscounted cash flows expected to be generated by the asset. If such software assets are considered to be impaired, the impairment to be recognized is the excess of the carrying amount over the fair value of the software asset.
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.
Net income/(loss) per common share is computed by dividing net income or loss being recorded in operations. On July 15, 2013by the Companyweighted 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.
F-8
Revenue Recognition
We recognize revenue when the Invoice for contracted services is issued a general release for oneas stipulated by the contract. Other services provided are recognized at the time the service is provided. Ninety eight percent of its products Visualizer ™. After the general release, the Company recorded approximately $64,000 in amortization expenserevenues are billed monthly and recognized in the accompanying unaudited consolidated financial statementsmonth the services were provided. Refunds and returns, which are minimal, are recorded as a reduction of September 30, 2013. At the end of September, 2013, therevenue. The Company has written off the capitalized research and development costsnot recorded a reserve for the visualizer software suite of multiple offerings and the OMC Initiater after an evaluation based in partreturns on the lack of cash flow and customer demand in ICD Visualizer after the general acceptance release date of July 15, 2013. In addition, the Company’s going concern opinion and cash liquidity concerns restrained the ability to make a capital investment in research and development to complete existing products in the pipeline as the available cash is needed to fund normal operating expenses. The resulting loss of $946,931 is presented as a line item entitled “asset impairment” on the consolidated statement of operations.
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 isas the exchange price that would be received forfrom selling an asset or paid to transfer a liability (an exit price) 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 forin which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, in an orderly transaction between market participants. such as inherent risk, transfer restrictions, and risk of nonperformance.
The Company classifies assets and liabilities recorded at fair value under theguidance also establishes a fair value hierarchy based upon the observabilityfor measurements of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:
| ● | Level |
| ● | Level | |
| ● | Level |
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| Accounts receivable | $ | 1,011,929 | $ | 1,246,814 | ||||
| Accounts receivable –Related party | 117,632 | - | ||||||
| Allowance for doubtful accounts | (117,632 | ) | - | |||||
| Total | $ | 1,011,929 | $ | 1,246,814 | ||||
September 30, 2013 | December 31, 2012 | |||||||
| Software | $ | 1,011,068 | $ | 258,933 | ||||
| Accumulated amortization | (64,137 | ) | - | |||||
| Asset Impairment | (946,931 | ) | - | |||||
| Software, net | $ | - | $ | 258,933 | ||||
September 30, 2013 | December 31, 2012 | |||||||
| Bank term loan | $ | 154,030 | $ | 38,897 | ||||
| Mortgage loan | 176,475 | 180,073 | ||||||
| 330,505 | 218,970 | |||||||
| Less current portion | (43,956 | ) | (37,513 | ) | ||||
| Total long term portion | $ | 286,549 | $ | 181,457 | ||||
September 30, 2013 | ||||
| Principal amount of notes payable | $ | 1,063,333 | ||
| Unamortized discount | (567,118 | ) | ||
| Notes payable, net of discount | 496,215 | |||
| Less current portion | (372,161 | ) | ||
| Total Long term portion | $ | 124,054 | ||
September 30, 2013 | ||||
| Equipment | $ | 79,210 | ||
| Less accumulated depreciation | (27,006 | ) | ||
| Total | $ | 52,204 | ||
| Year Ending December 31: | ||||
| 2013 | $ | 8,193 | ||
| 2014 | 32,768 | |||
| 2015 | 22,527 | |||
| 2016 | 3,580 | |||
| Total minimum lease payments | 67,068 | |||
| Less amount representing interest | (11,386 | ) | ||
| Present value of minimum lease payments | $ | 55,672 |
| Options | Shares | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value ($000) | |||||||
| Outstanding at January 1, 2013 | - | - | |||||||||
| Granted | 636,000 | - | 1.7 yrs. | ||||||||
| Exercised | - | - | |||||||||
| Forfeited or expired | - | - | |||||||||
| Outstanding at September 30, 2013 | 636,000 | $ | 0.4225 | 1.7 yrs. | - | ||||||
| Exercisable at September 30, 2013 | - | - | - | - | |||||||
| December 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Assets | ||||||||
| Cash | $ | 893,458 | $ | 198,500 | ||||
| Accounts receivable | 1,246,814 | 143,557 | ||||||
| Prepaid expenses | 3,600 | 24,512 | ||||||
| Other current assets | 688 | 5,842 | ||||||
| Total Current Assets | 2,144,560 | 372,411 | ||||||
| Property and Equipment, net | 365,017 | 352,499 | ||||||
| Software | 258,933 | - | ||||||
| Other assets | 8,871 | 8,865 | ||||||
| Finance costs, net | 2,477 | 2,803 | ||||||
| Total Other Assets | 270,281 | 11,668 | ||||||
| Total Assets | $ | 2,779,858 | $ | 736,578 | ||||
| Liabilities and Stockholders' Equity (Deficit) | ||||||||
| Accounts payable | $ | 207,741 | $ | 195,901 | ||||
| Due to officer | 75,000 | - | ||||||
| Accrued expenses | 64,077 | 23,266 | ||||||
| Accrued payroll | 412,186 | 73,685 | ||||||
| Loan payable to factor | 827,075 | - | ||||||
| Accrued interest | 4,524 | - | ||||||
| Line of credit, current portion | 25,000 | 98,500 | ||||||
| Capital Leases, current portion | 16,923 | - | ||||||
| Notes payable, current portion, net of discount | 202,557 | - | ||||||
| Long term debt, current portion | 37,513 | 283,640 | ||||||
| Advances on convertible promissory notes | - | 170,000 | ||||||
| Settlement Payable | 115,278 | - | ||||||
| Unearned revenue | - | 32,988 | ||||||
| Total Current Liabilities | 1,987,874 | 877,980 | ||||||
| Capital Leases (net of current portion) | 23,974 | - | ||||||
| Line of credit (net of current portion) | 125,000 | - | ||||||
| Notes payable (net of current portion), net of discount | 273,751 | - | ||||||
| Long term debt (net of current portion) | 181,457 | 218,417 | ||||||
| Total Liabilities | $ | 2,592,056 | $ | 1,096,397 | ||||
| Commitments and Contingencies (see Note 11) | ||||||||
| Stockholders' Equity (Deficit): | ||||||||
| Common stock ($0.001 par value, 75,000,000 shares authorized, 39,054,867 shares and 16,499,021 issued and outstanding at December 31, 2012 and 2011, respectively) | 39,055 | 16,499 | ||||||
| Additional paid-in capital | 2,738,545 | 751,010 | ||||||
| Subscription receivable | (5,000 | ) | - | |||||
| Accumulated deficit | (2,584,798 | ) | (1,127,328 | ) | ||||
| Total Stockholders' Equity (Deficit) | 187,802 | (359,819 | ) | |||||
| Total Liabilities and Stockholders' Equity (Deficit) | $ | 2,779,858 | $ | 736,578 | ||||
| For the Year-Ended | ||||||||
| December 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Revenues | $ | 5,806,848 | $ | 1,432,773 | ||||
| Cost of Revenues | 2,830,008 | 473,719 | ||||||
| Gross Profit | 2,976,840 | 959,054 | ||||||
| Operating Expenses | ||||||||
| Selling and administrative expenses (includes stock compensation of $0 and $818,595 in 2012 and 2011, respectively) | 3,853,820 | 1,976,655 | ||||||
| Research and development | 64,386 | 93,489 | ||||||
| Depreciation and amortization | 50,765 | 31,362 | ||||||
| Total Operating Expenses | 3,968,971 | 2,101,506 | ||||||
| Operating Loss | (992,131 | ) | (1,142,453 | ) | ||||
| Other Income (Expense) | ||||||||
| Other income | 10 | - | ||||||
| Interest expense | (465,349 | ) | (29,468 | ) | ||||
| Total Other Income (Expense), net | (465,339 | ) | (29,468 | ) | ||||
| Income (Loss) before provision for income taxes | (1,457,470 | ) | (1,171,921 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net Income (Loss) | $ | (1,457,470 | ) | $ | (1,171,921 | ) | ||
| Net Loss Per Share | ||||||||
| basic and diluted | $ | (0.04 | ) | $ | (0.08 | ) | ||
| Weighted Average Number of Shares Outstanding | ||||||||
| basic and diluted | 32,730,809 | 14,450,235 | ||||||
| Common Stock | Additional | Subscription | Accumulated | Total Stockholders' | ||||||||||||||||||||
| Shares | Amount | Paid-in Capital | Receivable | Deficit | Equity (deficit) | |||||||||||||||||||
| Balance at December 31, 2010 | 13,199,206 | $ | 13,199 | $ | 73,210 | $ | - | $ | 44,593 | $ | 131,002 | |||||||||||||
| Issuance of stock for services to officer | 3,299,815 | 3,300 | 815,295 | - | - | 818,595 | ||||||||||||||||||
| S-corp distributions | - | - | (137,495 | ) | - | - | (137,495 | ) | ||||||||||||||||
| Net loss 2011 | - | - | - | - | (1,171,921 | ) | (1,171,921 | ) | ||||||||||||||||
| Balance at December 31, 2011 | 16,499,021 | 16,499 | 751,010 | - | (1,127,328 | ) | (359,819 | ) | ||||||||||||||||
| Recapitalization | 13,499,226 | 13,499 | (13,499 | ) | - | - | - | |||||||||||||||||
| 2011 bridge note converted in 2012 related to reverse merger | 1,343,729 | 1,344 | 248,656 | - | - | 250,000 | ||||||||||||||||||
| Issuance of common stock for cash | 4,352,312 | 4,352 | 1,051,742 | - | - | 1,056,094 | ||||||||||||||||||
| Repayment of advances with shares | 1,265,381 | 1,266 | 312,642 | - | - | 313,908 | ||||||||||||||||||
| Value of beneficial conversion feature in convertible debt | - | - | 300,000 | - | - | 300,000 | ||||||||||||||||||
| Repurchase of shares pursuant to settlement agreement | (3,299,802 | ) | (3,300 | ) | (229,200 | ) | - | (232,500 | ) | |||||||||||||||
| Conversion of convertible debt | 3,000,000 | 3,000 | 297,000 | - | - | 300,000 | ||||||||||||||||||
| Shares issued to lender as fees | 2,375,000 | 2,375 | 341,125 | - | - | 343,500 | ||||||||||||||||||
| Offering costs paid | - | - | (325,911 | ) | - | - | (325,911 | ) | ||||||||||||||||
| Subscription receivable | 20,000 | 20 | 4,980 | (5,000 | ) | - | - | |||||||||||||||||
| Net Loss 2012 | (1,457,470 | ) | (1,457,470 | ) | ||||||||||||||||||||
| Balance at December 31, 2012 | 39,054,867 | $ | 39,055 | $ | 2,738,545 | $ | (5,000 | ) | $ | (2,584,798 | ) | $ | 187,802 | |||||||||||
| For the Year-Ended | ||||||||
| December 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Cash flows from Operating Activities: | ||||||||
| Net loss | $ | (1,457,470 | ) | $ | (1,171,921 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 50,765 | 31,362 | ||||||
| Stock issued for compensation | - | 818,595 | ||||||
| Amortization of debt discount | 304,808 | - | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (1,103,257 | ) | 50,693 | |||||
| Prepaid expenses | 20,912 | (24,512 | ) | |||||
| Other assets | 5,146 | (7,389 | ) | |||||
| Accounts Payable Related Party | 75,000 | - | ||||||
| Accounts payable | 53,783 | 204,618 | ||||||
| Unearned revenue | (32,988 | ) | 32,988 | |||||
| Accrued liabilities | 383,835 | - | ||||||
| Net Cash used in operating activities | (1,699,466 | ) | (65,566 | ) | ||||
| Cash flows from Investing Activities: | ||||||||
| Capitalization of internally developed software | (258,933 | ) | - | |||||
| Purchases of property and equipment | (20,985 | ) | (47,016 | ) | ||||
| Net Cash used in investing activities | (279,918 | ) | (47,016 | ) | ||||
| Cash flows from Financing Activities: | ||||||||
| Borrowings from long-term debt obligations | 51,500 | 262,500 | ||||||
| Payment for repurchase of common stock | (94,165 | ) | - | |||||
| Loan proceeds | 1,193,908 | - | ||||||
| Loan proceeds from factor, net | 827,075 | - | ||||||
| Repayments of debt obligations | (33,087 | ) | (38,715 | ) | ||||
| Proceeds from convertible promissory notes | - | 170,000 | ||||||
| Issuance of stock for cash net of offering cost | 730,183 | - | ||||||
| Payments on Capital Leases | (1,072 | ) | - | |||||
| Payments of stockholder distributions | - | (137,495 | ) | |||||
| Net Cash provided by (used in) financing activities | 2,674,342 | 256,290 | ||||||
| Net Increase (decrease) in cash | 694,958 | 143,708 | ||||||
| Cash at beginning of year | 198,500 | 54,792 | ||||||
| Cash at end of year | $ | 893,458 | $ | 198,500 | ||||
| Supplemental schedule of cash paid during the year for: | ||||||||
| Interest | $ | 36,156 | $ | 24,407 | ||||
| Income Taxes | $ | - | $ | - | ||||
| Supplemental schedule of non-cash investing and financing activities: | ||||||||
| Issuance of stock to repay debt | $ | 563,908 | $ | - | ||||
| Capital lease obligation incurred for use of equipment | $ | 38,704 | $ | - | ||||
| Beneficial conversion feature on convertible debt charged to additional paid in capital | $ | 300,000 | $ | - | ||||
| Shares issued as loan fee | $ | 343,500 | $ | - | ||||
| Conversion of $300,000 notes to common stock | $ | 300,000 | $ | - | ||||
| Transfer of accounts payable to notes payable | $ | 65,000 | $ | - | ||||
| December 31, | ||||||||
| 2012 | 2011 | |||||||
| Total assets | $ | 211,000 | $ | 230,000 | ||||
| Total liabilities | $ | 182,000 | $ | 185,000 | ||||
The estimated fair valuecarrying amount of certainthe Company’s financial instruments including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values becausevalue as of December 31, 2021 and December 31, 2022, due to the short-term nature of these instruments.
NOTE 3 – RELATED PARTY RECEIVABLE
On July 7, 2021, the company has entered into an agreement to purchase 100% of the Preferred A-1 Stock of Health Revenue Assurance Holdings, Inc. a SEC registered company for $. In March 2022, Health Revenue Assurance Holdings, Inc. name was changed to Ameriguard Security Services Inc. (AGSS). On December 9, 2022, we signed the definitive merger agreement initiating a reverse merger with AGSS, resulting in the Company becoming a 100% owned subsidiary of AGSS. Prior to the merger, the Company funded the operational expenses of AGSS and treated these expenses as related party expenses. These expenses we eliminated when the two companies were consolidated for the financial statement presentation.
The receivable balances on December 31, 2022, and 2021 were $ and $ respectively.
F-9
NOTE 4 – FIXED ASSETS
Fixed assets consist of the following on December 31, 2022, and 2021:
| Schedule of Fixed assets | ||||||||
| 2021 | 2020 | |||||||
| Leasehold Improvements | 224,132 | - | ||||||
| Machinery and Equipment | 278,551 | 246,974 | ||||||
| Vehicles | 110,274 | 131,775 | ||||||
| Total Fixed Assets | 612,957 | 378,749 | ||||||
| Accumulated Depreciation | (314,151 | ) | (245,947 | ) | ||||
| Fixed Assets, Net | $ | 298,806 | $ | 132,802 | ||||
NOTE 5 – PAYROLL LIABILITY – PENSION
The Company recognizes services revenuecompany 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 proportional performance methodcompany with a matching program up to 5% of recognizing revenue.
NOTE 6 – NOTES PAYABLE
In June 2020, AmeriGuard Security Services, Inc. received an SBA Loan through Fresno First Bank in selling and administrative expenses.
| 2012 | 2011 | |||||||
| Accounts receivable | $ | 1,246,814 | $ | 143,557 | ||||
| Allowance for doubtful accounts | - | - | ||||||
| Total | $ | 1,246,814 | $ | 143,557 | ||||
| December 31, | ||||||||
| 2012 | 2011 | |||||||
| Building and improvements | $ | 227,603 | $ | 227,603 | ||||
| Furniture | 119,810 | 118,187 | ||||||
| Computers and Equipment | 160,469 | 99,316 | ||||||
| 507,882 | 445,106 | |||||||
| Less - Accumulated depreciation | (142,865 | ) | (92,607 | ) | ||||
| Total | $ | 365,017 | $ | 352,499 | ||||
| December 31, 2012 | December 31, 2011 | |||||||
| Software | $ | 258,933 | $ | - | ||||
| Accumulated amortization | - | - | ||||||
| Software, net | $ | 258,933 | $ | - | ||||
In January 1, 2013):
| Year Ending December 31, | ||||
| 2013 | $ | 86,311 | ||
| 2014 | 86,311 | |||
| 2015 | 86,311 | |||
| Total | $ | 258,933 | ||
December 31, 2012 | December 31, 2011 | |||||||
| Bank term loan | $ | 38,897 | $ | 66,245 | ||||
| Convertible Bridge Loan | - | 250,000 | ||||||
| Mortgage loan | 180,073 | 185,812 | ||||||
| 218,970 | 502,057 | |||||||
| Less current portion | (37,513 | ) | (283,640 | ) | ||||
| Total long term portion | $ | 181,457 | $ | 218,417 | ||||
In December 2021, the Company entered into a second Bridge Loanfinancing agreement (the “Bridge Loan”)with Secure Transportation Inc. for the purchase of three used vehicles in the amount of $250,000$21,500. Note requires 12 equal payments of $1,900 with a third party lender. The primary purpose is to repaycalculated interest rates of 5% with the Initial Bridge Loan and to pay for certain professional fees in connection with a reverse merger with a Public Company. The Bridge Loan incurs interest at the rate of 12% per annum which will be due onlyfirst payment December 15, 2021. Balance remaining in the event the contemplated equity transaction does not materialize. Upon the closing of the transaction, all interest accrued but not paid shall be deemed cancelled and paid in full and the entire principal amount of the note shall be automatically converted into an aggregate of 1,343,749 shares of common stock at a conversion price of $0.19 per share which is equal to a discount of 25% of to the Purchase Price. The loan was converted to stock in February 2012 (See Note 12).
On July 2010 in the amount of $192,500 and matures July 2020, when a balloon principal payment of approximately $129,000 becomes due. The loan is collateralized by the real estate and is personally guaranteed by the stockholder of the Company. Interest is fixed at 6.625% for the first five years of the loan, and converts to an adjustable rate for the second five years at the Federal Funds Rate plus 3.25%, as established by the United State Federal Reserve. The balance under this mortgage loan as of December 31, 2012 was approximately $180,000 and is allocated to the current and long term debt line items in the accompanying consolidated balance sheet. Monthly payments for principal and interest are approximately $1,500 until July 2015, when the total monthly payment may vary due to the adjustable interest rate provision in the note.
| December 31, 2012 | ||||
| Principal amount of notes payable | $ | 815,000 | ||
| Unamortized discount | (338,692 | ) | ||
| Notes payable, net of discount | 476,308 | |||
| Less current portion | (202,557 | ) | ||
| Total long term portion | $ | 273,751 | ||
| 2013 | $ | 375,564 | ||
| 2014 | 420,954 | |||
| 2015 | 74,321 | |||
| 2016 | 6,848 | |||
| 2017 | 7,322 | |||
| Thereafter | 148,961 | |||
| Total | $ | 1,033,970 |
December 31, 2012 | ||||
| Equipment | 41,969 | |||
| Less accumulated depreciation | (5,926 | ) | ||
| Total | $ | 36,043 | ||
| Year Ending December 31: | ||||
| 2013 | $ | 16,923 | ||
| 2014 | 16,923 | |||
| 2015 | 11,282 | |||
| Total minimum lease payments | 45,128 | |||
| Less amount representing interest | (4,231 | ) | ||
| Present value of minimum lease payments | $ | 40,897 |
The Company's obligations underfollowing schedule details the factor agreement are secured by substantially all assets of the Company. In accordance with ASC 860 "Transfers and Servicing" regarding transfers of receivables with recourse, this factoring arrangement is accounted for as a secured financing. During 2012, the Company had factored approximately $3,850,000 of receivables and had received cash advances of approximately $3,272,000. Outstanding receivables purchased by the factorloans active as of December 31, 2012 were approximately $950,0002022, and included2021:
| Schedule of the loan active | ||||||||
| 2022 | 2021 | |||||||
| Current Portion: | ||||||||
| Notes and loans payable | $ | 719,563 | $ | 127,615 | ||||
| Total Current Portion | 719,563 | 127,615 | ||||||
| Long term Portion: | ||||||||
| Notes and loans payable | 2,782,784 | 780,845 | ||||||
| Total Long-term Portion | 2,782,784 | 780,845 | ||||||
| $ | 3,502,347 | $ | 908,460 | |||||
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NOTE 7 – STOCKHOLDERS’ EQUITY
On December 9, 2022, the Company executed a reverse merger agreement with AGSS resulting in accounts receivablesignificant adjustments to the equity section of both companies. The result of the merger was AGSS became the sole owner of the Company. Although the merger is dated December 9, 2022, for financial statement presentation purposes, we have presented the Equity Section as if the merger occurred in 2021.
The first significant impact on stockholders’ equity was the issuance of AGSS shares to the shareholders of Ameriguard Security Services, Inc (the Company) in exchange for shares of the Company, adding a net increase in common shares outstanding of . Next was the cancelation and conversion of series A-1 preferred shares held by AGSS on December 31, 2020. The final result in the accompanying consolidated balance sheet,total number of shares outstanding is .
The next part of stockholder’s equity impacted was Additional Paid-in Capital. The impact was a reduction of Paid-in Capital of $579,000. This reduction was caused by an $89,999 impact of issuing new shares, a $10,000 impact form the cancelation of preferred shares and finally the secured loan due to the lender was $827,075. Factor fees in 2012 were approximately $119,000, and are included in interest expenses. (See Note 3)
There were two other transactions that impacted stockholders’ equity that occurred to the Company’s equity section relating to owner draws and the conversion price. The discount is being amortized to interest expense over the termmerger with a related company. As a part of the note. In accordance with ASC 470-20-40, upon conversion, the remaining unamortized portionnormal activity of the beneficial conversion feature value was expensed.
| Years Ending December 31: | ||||
| 2013 | $ | 51,432 | ||
| 2014 | 6,360 | |||
| 2015 | 6,360 | |||
| 2016 | 6,360 | |||
| Total | $ | 70,512 |
NOTE 8 – COMMITMENTS AND CONTINGENCIES
The Settlement Agreementcompany has a seven (7) day grace period for payments to the former CMO, after which time, he may seek court intervention to enforce the payments. The Company's Chief Executive Officer and Chief Operating Officer, respectively, have personally guaranteed the payments of the Settlement Agreement. As a result of the Settlement Agreement, both parties are dismissing their respective filings and have agreed to not enter any more lawsuits concerning the scope of this matter.
NOTE 9 – CONCENTRATION OF SALES
The company generated approximately $349,000 or $0.25 per share.
Year ended December 31, 2012 | Year ended December 31, 2011 | |||||||
| U.S. Federal “expected” income tax | $ | (495,540 | ) | $ | (398,453 | ) | ||
| State income tax | (52,906 | ) | (58,596 | ) | ||||
| Non-deductible beneficial conversion interest | 102,000 | - | ||||||
| Non-deductible items | 24,769 | - | ||||||
| Stock compensation | - | 319,252 | ||||||
| S Corp non-deductible/taxable items | - | (31,703 | ) | |||||
| Change in valuation allowance | 421,677 | 169,500 | ||||||
| Total provision for income taxes | $ | - | $ | - | ||||
| 2012 | 2011 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forward | $ | 586,600 | $ | 169,500 | ||||
| Accrued salary and other | 35,821 | - | ||||||
| Total gross deferred tax assets | 622,421 | 169,500 | ||||||
| Deferred tax liabilities: | ||||||||
| Depreciation | (31,244 | ) | - | |||||
| Total gross deferred tax liabilities | (31,244 | ) | 169,500 | |||||
| Less valuation allowance | (591,177 | ) | (169,500 | ) | ||||
| Net deferred tax assets | $ | - | $ | - | ||||
| Securities and Exchange Commission Registration Fee | $ | 165 | ||
| Transfer Agent Fees* | $ | -0- | ||
| Accounting fees and expenses* | $ | 7,500 | ||
| Legal fees and expenses* | $ | 5,000 | ||
| Blue Sky fees and expenses* | $ | 1,000 | ||
| Total* | $ | 13,665 |
| ● | Social Security Administration, NSC | September 2022 through September 2027 | |||
| ● | Social security Administration, SSC | June 2022 through June 2027 | |||
| ● | Social Security Administration, WBDOC | - | June 2021 through July 2026 | ||
| ● | National Institute of Health- EPA | - | May 2020 through March 2025 |
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NOTE 10 – LITIGATION AND CLAIMS
As of December 31, 2022, there was one employment issue pending. The issue involves a terminated employee alleging discrimination and wrongful termination. A lawsuit has not been filed only a demand letter has been presented. Management has been working with the attorneys to find a reasonable settlement to this dispute without going to trial. After several months of discussion and negotiation it appears that the complaint will be settled for $23,000. It is anticipated that an agreement may be reached by the end of March 2023.
Per Attorney letters received there are no other pending cases or legal matters.
NOTE 11 – INCOME TAXES
Prior to the merger the Company had elected, with the consent of its stockholders, to be treated as an S Corporation under the Internal Revenue Code. In lieu of corporate income taxes, the stockholders of an S Corporation are taxed on their proportionate share of the Company’s income. As a result of the merger on December 9, 2022, the S Corporation status ends, and the consolidated 2022 tax return will be filed as a standard corporation. However, due to the losses incurred during the tax year ending 2022, there will be no tax liability for 2022. Therefore, no provision for income taxes has been included in the accompanying financial statements.
NOTE 12 – SUBSEQUENT EVENTS
On March 22, 2023, The Company was notified by the Contracting Officer of National Institute of Health-EPA our contract with them was not continuing and they were invoking the 45 days cancelation clause in the contract. As a result, the company will transition the closure of the contract on or about April 30, 2023. This will reduce on our annual revenue in the amount of approximately $5,122,000 in 2023, along with direct expenses that will be reduced by $4,650,000.
On March 23, 2023, the board of directors approved the purchase of TransportUS, Inc., a California Corporation, with a valuation of approximately $3.72 million, for $3 million. The purchase will be made with restricted common stock only based on market price at the date of closure. Estimated number of shares for purchase is to be 1.5 million. TransportUS Inc. has annual revenues of approximately $4,350,000 with operating net income potential of 10%.
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PART II – INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are our expenses related to our offering:
| Securities and Exchange Commission Registration Fee | $ | |||
| Legal Fees | $ | 25,000.00 | ||
| Accounting Fees* | $ | |||
| Printing and Engraving* | $ | - | ||
| Blue Sky Qualification Fees and Expenses* | $ | - | ||
| Transfer Agent Fee* | $ | - | ||
| Miscellaneous* | $ | |||
| TOTAL | $ |
| * | Estimated costs |
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant is a Nevada corporation, and the provisions of the Nevada Revised Statutes will be applicable to the indemnification the Registrant offers to its officers, directors and agents. In its By-laws the Registrant generally agrees to indemnify each person who is a director or officer of the Registrant or serves at the request of a director or officer as a director, officer, employee or agent of another company, in accordance with the Registrant’s By-laws, to the fullest extent permissible by the Nevada Revised Statutes or other applicable laws. In its By-laws the Registrant indicates that, in connection with any such indemnification, it is within the discretion of the Board of Directors whether to advance any funds in advance of disposition of any action, suit or proceeding.
Under the Articles of Incorporation, the By-laws, and the Nevada Revised Statutes, no director of the Registrant will be personally liable to the Registrant or its stockholders for monetary damages, or expenses in defense of an action, for breach of fiduciary duty as a director or by reason of the fact that he is or was a director, officer, employee or agent of the Registrant, or serving in such capacity for another entity at the request of the Registrant, except for liability (i) for any breach of the director’s duty of loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in good faith or there is reasonable cause to believe it was unlawful, or (iii) for any transaction from which the director derived an improper personal benefit. The Registrant has the power to purchase and maintain insurance on behalf of any persons potentially eligible for indemnification. The rights to indemnification are also applicable to those persons entitled to such rights by virtue of the Registrant’s consummation of a business combination, including such consummations wherein the Registrant is merged into or reorganized as a new entity.
The foregoing description of available indemnification is a summary only and is qualified in its entirety by the complete terms and provisions of the Nevada Revised Statutes and the Registrant’s Articles of Incorporation and By-laws, filed herewith as exhibits.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Below is a chart of all the shareholders who purchased shares since December 31, 2022.
None.
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ITEM 16. EXHIBITS
| Exhibit | Incorporated by Reference | Filed Furnished | |||||||
| No. | Exhibit Description | Form | Date | Herewith | |||||
| 2.1 | Definitive Share Exchange Agreement | 8-K | 12/14/2022 | ||||||
| 3.1 | Amended and Restated Articles of Incorporation | 8-K | 12/14/2022 | ||||||
| 3.2 | Amended and Restated | 8-K | 12/14/2022 | ||||||
| 3.3 | 8-K | 12/14/2022 | |||||||
| 3.4 | 8-K | 12/14/2022 | |||||||
| 8-K | 12/14/2022 | ||||||||
| 8-K | 12/14/2022 | ||||||||
| Filed | |||||||||
| * | ||
| To be filed by amendment. | |
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ITEM 17. UNDERTAKINGS
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The Registrant is registering securities under Rule 415 of the Securities Act and hereby undertakes:
1. To file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:
| (i) | Include any prospectus required by Section 10(a)(3) of the Securities Act; |
| (ii) | Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the forgoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospects filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement. |
| (iii) | Include any additional or changed material information on the plan of distribution. |
2. That, for the purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
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4. The undersigned Registrant hereby undertakes that:
A. For determining liability of the undersigned issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned issuer undertakes that in a primary offering of securities of the undersigned issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
| i. | Any preliminary prospectus or prospectus of the undersigned issuer relating to the offering required to be filed pursuant to Rule 424; |
| ii. | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned issuer or used or referred to by the undersigned issuer; |
| iii. | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned issuer or its securities provided by or on behalf of the undersigned issuer; and |
| iv. | Any other communication that is an offer in the offering made by the undersigned issuer to the purchaser. |
B. That for the purpose of determining liability under the Securities Act to any purchaser:
Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
“Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons of the issuer pursuant to the foregoing provisions, or otherwise, the issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.”
In the event that a claim for indemnification against such liabilities (other than the payment by the issuer of expenses incurred or paid by a director, officer or controlling person of the issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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Pursuant to the requirementrequirements of the Securities Act of 1933, as amended, the registrantRegistrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereuntothereto duly authorized in the City of Plantation, State of Florida,Fresno, California on February 12, 2014.
| By: | /s/ | |
Lawrence Garcia | ||
Chairman of the Board, | ||
Principal | ||
In accordance with the requirements of the Securities Exchange Act of 1934,1933, this report has beenregistration statement was signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Lawrence Garcia | ||||
| /s/ Mike Goossen | Dated: April 10, 2023 | |||
Kathy M. Griffin | ||||
| /s/ Douglas Anderson | Dated: April 10, 2023 | |||
Douglas Anderson Director | ||||
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