Company: AGSS
Filing Date: 2025-11-17
Form Type: 10-Q
Source: 0001213900-25-111597
Chunk: 38

Company: AMERIGUARD SECURITY SERVICES, INC.
Filing Date: 2025-11-17
Form: 10-Q
Item: Item 8
Chunk 38
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 of its future lease payments. Variable payments are included in the future lease payments when those variable payments
depend on an index or a rate. The discount rate is the interest rate that equates the present value of future lease payments to the Right-of-Use
(ROU) asset or lease liability. The leasehold amortization was calculated using an incremental borrowing rate. The rate chosen was the
7-year
risk-free Treasury rate as of January 3, 2024, set at
3.91%. This rate was applied to determine the present value of the lease payments and record the right-of-use asset and
lease liability as recorded on the balance sheet as detailed in Note 6. 

The Company has elected, for all underlying classes
of assets, not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease
commencement. As of September 30, 2025, the Company does not have any leases that qualify for this election.

6

Revenue
Recognition

The Company recognizes revenue under ASC 606,
Revenue from contracts with customers. The core principle of the revenue standard is that a company should recognize revenue to depict
the transfer of services to customers in an amount that reflects the consideration to which the company expects to be entitled for those
services. There are five steps or qualifiers that determine the timing and amount of Revenue Recognition. Those five steps are:

    1.
    Identifying the contract with a
        customer. 

    2.
    Identifying the performance obligation
        in the contract. 

    3.
    Determine the transaction price.

    4.
    Allocate the transaction price to
        performance obligations. 

    5.
    Recognize the revenue when the entity
        satisfies the performance obligation. 

The Company generates and recognizes revenue in
three sales categories. Those being, Formal Contracts, Sales Agreements and Retail activities. For the retail activities, the revenue
is recognized on a cash basis at the time of sale. For the other two categories, the customers are billed at the end of the month the
services have been performed.

The formal contract and sales agreements stipulate
the exact services to be performed and the rate the services are to be billed, as per steps 1, 2 and 3. The Company provides details of
services provided with each billing invoice for customer review and approval. Any differences are resolved prior to payment, Step 4. The
Company recognizes