Company: AGSS
Filing Date: 2025-05-12
Form Type: 10-K
Source: 0001829126-25-003553
Chunk: 329

Company: AMERIGUARD SECURITY SERVICES, INC.
Filing Date: 2025-05-12
Form: 10-K
Item: Item 5
Chunk 329
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 expense is direct labor and expenses associated with that labor. We are not an exception. Our direct expenses average around 89%
of revenues. Total direct cost of services was approximately $23,400,000 in 2024 and approximately $19,160,000 in 2023.

The total direct cost of services saw an increase
of approximately $4,300,000, or 22%. This increase was expected due to the direct expenses of labor and vehicles of including a full year
of TUS direct expenses. The Company acquired TUS in the fourth quarter of 2023, so there were only 2 months of expenses reflected in 2023.
The increase is the net result of an increase in direct labor expenses in the amount of $2,700,000, an increase of approximately $2,000,000
in vehicle expenses. These increases were offset by a decrease in total subcontractor expenses of approximately $483,000. The gross margin increased approximately $1,200,000, a 66% increase. As a percentage, the gross margin percentage increased to
11.3% in 2024 from 8.6% in 2023.

9

Operating Expenses and Other Expense

Operation expenses increased in 2024 over 2023
by approximately $2,168,000. The largest category of increase was in loan interest, of approximately $1,220,000, resulting from utilizing
several high-interest loans necessary to cover the operational capital needs. Professional services experienced an increase of approximately
$529,000. Approximately $250,000 of this increase resulted from a class action lawsuit filed alleging labor law violations. Additionally,
there was an increase in the general and administrative expenses of approximately $157,000. Within the general and administrative expenses,
outside services expenses increased approximately $100,000. Advertising and marketing experience and increase of approximately $120,000.
TUS expenses the graphics put on the vans in this category and added 41 vans in 2024, total cost $90,235. AGC redesigned its website
and added social media advertising to increase guard services revenue. This program ended in October. There were increases in other operating
expense categories such as vehicle expense, general liability insurance, licenses and permits and depreciation totaling approximately
$354,000, which was offset by a decrease in administrative salaries and payroll taxes by approximately $240,000.

At this time, our operating structure and current
level of expense can handle twice the revenue stream with minor increases