Company: AGSS
Filing Date: 2025-05-08
Form Type: 10-K/A
Source: 0001829126-25-003478
Chunk: 17

Company: AMERIGUARD SECURITY SERVICES, INC.
Filing Date: 2025-05-08
Form: 10-K/A
Chunk 17
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 have a Board of 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, 2023

Revenues and Cost of Services

For 2023 the Company experienced a 15.9% overall decrease in operational revenue, totaling approximately $3,977,000. The majority of the decline, approximately $4,600,000, was from the contract with the Environmental Protection Authority, EPA, that ended in May 2023. The result was only 5 months of revenue in 2023 compared to 12 months in 2022. This loss of revenue was offset by the revenue from the consolidation of TUS. The total revenue for TUS was approximately $920,000. The remaining $297,000 decline was experienced in the commercial services market, as businesses are facing declining sales and increasing costs, reduced security guard hours in 2023.

The total cost of goods sold saw a decline of approximately $2,784,000, a 12.7% decline as expected. This decline reflects the cost reduction due to the ending of the EPA contract, against a slight increase in direct labor costs due to the inflation rate experienced in 2023. Most direct expense categories within the Cost of Services section saw a decline from 2022 due to the ending of the EPA contract. Salaries and benefits declined approximately $670,000, sub-contractor expenses declined approximately $2,140,000, Training and supplies expense declined approximately $116,600. The only cost of goods sold category that increase was vehicle expenses from adding TUS. Vehicle expense increased approximately $138,000.

For the federal guard contracts, as the costs of labor increases within the unionized contract so does the revenue. For the Commercial operations there is a lag between cost increases and service rate increases. It continues to be our practice to adjust service rates annually in the month of February. Although we did increase our billing rates for new contracts during 2023, the existing companies did not see a rate increase since February 2023. As noted, the demand for guard services declined during 2023, and the increased cost of these services are out of line with the needs of the market. As AGS deals with the increases cost of labor, the customers are experiencing similar cost pressures and are less willing to pay for our traditional services. The conflict of AGS needing to raise services fees and customers needing to pay