AMERIGUARD SECURITY SERVICES, INC. Item 1.01 Entry into a Material Definitive Agreement
On,December 9, 2022 ,AmeriGuard Security Services, Inc. f/k/aHealth Revenue Assurance Holding, Inc. aNevada corporation ("we", "AGSS" or the "Company"), entered into a Definitive Share Exchange Agreement (the "Merger Agreement") withAmeriGuard Security Services, Inc. , aCalifornia 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 Share Exchange 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 transaction has been accounted for as a recapitalization of the Company, whereby AmeriGuard is the accounting acquirer.
Immediately after completion of such share exchange, the Company will hold a total of 640 issued and outstanding shares of AmeriGuard.
Item 2.01 Completion of Acquisition or Disposition of Assets
THE SHARE EXCHANGE AND RELATED TRANSACTIONS
The foregoing description of the Merger and related transactions does not purport to be complete and is qualified in its entirety by reference to the complete text of the Merger, which is filed as Exhibit 2.1 hereto, each of which is incorporated herein by reference.
OnDecember 9, 2022 , AGSS entered into the Merger Agreement. AmeriGuard became a wholly owned subsidiary of AGSS, and AGSS its only shareholder and will continue in its existence with one owner, AGSS. Pursuant to the Share Exchange, (a) the Majority Shareholder relinquished all of his 573 Amerigaurd common shares and the Minority Shareholders relinquished all of their 67 AmeriGuard common shares, constituting all issued and outstanding shares of AmeriGuard (the "AmeriGuard Shares"), and were issued an aggregate of 80,578,125 and 9,421,875 respectively of AGSS common shares, representing 86.26% and 10.09% of the outstanding Common Stock of AGSS and (b) AmeriGuard returned the A-1 Preferred Stock of AGSS for retirement. After the issuance of the common shares, the existing 3,417,302 common shares represent 3.66% of the outstanding common stock of AGSS. Pursuant to the terms of a settlement agreement, by and among Garcia, AmeriGuard, andLillian Flores ("Flores"), datedJuly 7, 2022 (the "Settlement Agreement"), AmeriGuard repurchased the 450 common shares of Flores for a total consideration of$3,384,950 payable in five equal annual installments compounded semi-annually at a three percent rate. The initial payment onJuly 8, 2022 , of$686,990 reduced the balance to$2,697,960 . The second through fifth installment are due onDecember 31, 2023 throughDecember 31, 2026 . Prior to Merger, under the terms of a stock pledge agreement, by and among Garcia, Flores and AmeriGuard, datedJuly 7, 2022 , 360 AmeriGuard common shares remained held in AmeriGuard treasury pledged to Flores. On Merger these pledged shares were substituted with 50,625,000 AGSS common stock of the 80,578,125 issued toLawrence Garcia . These pledged shares are redeemed and returned to Garcia based on a stock redemption agreement, by and among Garcia, Flores and AmeriGuard, datedJuly 7, 2022 . The purposes of the transactions described in this Current Report were to complete a business combination by a stock for stock merger and complete a recapitalization of the company with the result being that AmeriGuard became a wholly owned subsidiary of AGSS. Our business operations will now focus on the business of AmeriGuard and its management will be the management of AGSS.
There is no offering with this merger.
Effective immediately after the Share Exchange, the stock transfer books of AmeriGuard shall be closed.
1
DESCRIPTION OF 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 endedDecember 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 . . .
Item 2.02 Results of Operation and Financial Condition
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations and financial
condition of AmeriGuard, for the nine months ending September 30, 2022 and
2021along with the fiscal years ended December 31, 2021 and 2020, should be read
in conjunction with the Selected Consolidated Financial Data, our financial
statements, and the notes to those financial statements that are included
elsewhere in this Current Report. Our discussion includes forward-looking
statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual results and
the timing of events could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including those
set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking
Statements and Business sections in this Current Report. We use words such as
"anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect,"
"believe," "intend," "may," "will," "should," "could," and similar expressions
to identify forward-looking statements.
Overview
The following few pages contain summary Income Statement reports along with descriptions of the key changes for the two years endingDecember 31, 2021 and 2020, audited, and the nine months endingSeptember 30, 2022 and 2021, unaudited. A review of those pages that include variance analysis and industry information will give you a clear picture as to the performance of AmeriGuard over these two and a half years. In summary, 2020 was a profitable year financially despite COVID-19.As a company with 92% of revenue from federal contracts that were considered "essential", we continued to operate at full capacity. As you will see the Operational Net Income for 2020 was 4.5% which is high for our industry. The year ending 2021 reflects a normal year except for the purchase of AGSS. The reality of the guard industry and the Federal Contract market is that it operates on very tight gross margins. For companies our size around$20 million in annual sales, the bottom line fluctuates between 1.25% to 3%. However, the administrative overhead required to manage this volume of federal contracts can handle 2 to 3 times this number. Thus, as contracts revenue exceeds$20 million , the bottom-line profits grow significantly. As you will learn in our discussion about the strategic plan moving forward following merger with additional government contract and with acquiring a couple of competitors our operational net income % is expected to exceed the industry averages.
Nine months ended
The following table presents a summary of operating information for the nine
months ended
For the
Nine months ended Increase / Increase /
September 30, September 30, (Decrease) (Decrease)
2022 2021 $ %
Total Revenue $ 18,838,996 $ 16,736,465 $ 2,102,531 13 %
. . .
Item 3.02 Unregistered Sales of
OnDecember 9, 2022 , AGSS entered into the Merger Agreement. Pursuant to the Share Exchange, (a) the Majority Shareholder relinquished all of his 573 Amerigaurd common shares and the Minority Shareholders relinquished all of their 67 AmeriGuard common shares, constituting all issued and outstanding shares of AmeriGuard (the "AmeriGuard Shares"), and were issued an aggregate of 80,578,125 and 9,421,875 respectively of AGSS common shares, representing 86.26% and 10.09% of the outstanding Common Stock of AGSS and (b) AmeriGuard returned the A-1 Preferred Stock of AGSS for retirement.
Item 5.01 Changes in Control of Registrant.
In connection with the closing of the Merger, and as described in Item 5.02 of this Current Report, our sole officer and director resigned upon the closing of the Merger, and the officers and directors of AmeriGuard became our officers and directors.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Set forth below is information regarding 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 7, 2022
The following persons became our executive officers and directors upon
effectiveness of the Merger, and hold the positions set forth opposite their
respective names.
Name Age Position
Lawrence Garcia 50 Chairman of the Board, President and Chief
Executive Officer
Chief Operating Officer, Chief Marketing
Officer, Secretary, Treasurer and Director
Michael Goossen, CPA 60 Chief Financial Officer
Douglas Anderson* 60 Director
* Appointed
Lawrence Garcia is the CEO and President ofAmeriGuard Security Service, Inc incorporated in state ofCalifornia in 2002. Lawrence is a disabled veteran of theUnited States Navy and of Hispanic dissent. He has led the company from a small local guard company to a national company currently managing five Federal Government armed guard contracts with annual revenue of over$22 million .Mr. Garcia has twice been named, "Businessman of the Year" in theState of California .Michael Goossen , CPA is the Chief Financial Officer ofAmeriGuard Security Services, Inc. , aCalifornia Corporation . Michael has been a CPA since 1986, has worked in multiple industries as a CFO and CEO. During the past 20 years he has been providing small business consulting, offering CFO services and executive leadership development. Michael began working with AmeriGuard as a CFO consultant and business strategic services 3 years ago and became the full time CFO for AmeriGuard inAugust 2022 .Douglas Anderson , Board Director.Mr. Anderson is the CEO of Wall Street Capital Partners and 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 theU.S. Marine Corps , including the eliteMarine Reconnaissance Battalion . He held a Top-Secret clearance while serving operationally in theU.S. State Department at American Embassies overseas, as well as at the U.N. inNew York , where he participated in Security Enhancement programs.Mr. Anderson was formally trained on Wall Street as an Underwriter. He has been interviewed and broadcast nationally and internationally, many times as an expert both on NASDAQ and at the NYSE.Mr. Anderson earned his undergraduate degree from theUniversity of Washington and postgraduate graduate education includes executive education from Harvard in Finance and Texas A&M in Agriculture Science.Mr. Anderson has served as an Advisor, Director, public company CEO and public company Board Director over his career. 22 Related Party Transactions OnJuly 7, 2022 the AmeriGuard entered into a buyout agreement with its minority shareholderLillian Flores . The value of AmeriGuard to be used for the buyout agreement was calculated using an independent evaluation service which determined theDecember 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 dueMrs. Flores , the final buyout amount was approximately$3,385,000 . A 5-year promissory note was executed (exhibit 10.1) and the note is secured by a stock pledge (exhibit 10.2).
Director Independence
Because our common stock is not currently listed on a national securities exchange, we have used the definition of "independence" ofThe 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
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
The Company amended and restated our bylaws. The updated bylaws are attached hereto as Exhibit 3.2.
Item 5.06 Change in Shell Company Status.
Following the consummation of the Merger described in Item 2.01 of this Current Report on Form 8-K, we believe that we are no longer a shell corporation as that term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired. In accordance with Item 9.01(a),
period from
the nine months ended
Form 8-K on F-2-18, respectively, as required by Regulation S-X Rule 3-05(b).
(b) Pro forma financial information.
In accordance with Item 9.01(b), unaudited pro forma condensed combined financial statements as ofSeptember 30, 2022 , adjusted to give the effect of the acquisition of AmeriGuard, as if the acquisition had occurred atJanuary 1, 2021 , and the accompanying notes are included in this Report beginning on Page F-19. (c) Exhibits. 24
9.01(a) Financial Statements of Business Acquired
Financial Statements
Table of Contents
Audited Balance Sheets ofAmeriGuard Security Services, Inc. as ofDecember 31, 2021 and 2020, and the Related Audited Statements of Operations, Shareholders' Equity, and Cash Flows for the years endedDecember 31, 2021 and 2020. Report of Independent Registered Public Accounting Firm
F-2
Financial Statements
Balance Sheets as ofDecember 31, 2021 and 2020
F-3
Statements of Operations for the Years Ended
F-4
2020
Statement of Shareholders' Deficit for the Two Years Ended
F-5
Statements of Cash Flows for the Years Ended
F-6
2020
Notes to the Financial Statements for the Years Ended
F-7 2021 and 2020 Reviewed Balance Sheet ofAmeriGuard Security Services, Inc. as ofSeptember 30, 2022 , and the Related Audited Statements of Operations, Shareholders' Equity, and Cash Flows for the nine months endedSeptember 30, 2022 .
Financial Statements
Balance Sheets as ofSeptember 30, 2022 F-12 Statements of Operations for the Nine Months EndingSeptember 30, 2022 F-13 Statement of Shareholders' Deficit ofSeptember 30, 2022 F-14 Statements of Cash Flows for the Nine Months EndingSeptember 30, 2022 F-15 Notes to the Financial Statements for the Nine EndedSeptember 30, 2022 F-16 F-1
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of
Opinion on the Financial Statements
We have audited the accompanying balance sheets ofAmeriGuard Security Services, Inc. as ofDecember 31, 2021 and 2020, 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 ofDecember 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted inthe 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 thePublic Company Accounting Oversight Board (United States ) ("PCAOB") and are required to be independent with respect to the Company in accordance with theU.S. federal securities laws and the applicable rules and regulations of theSecurities 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. /s/ BF Borgers CPA PC BF Borgers CPA PC We have served as the Company's auditor since 2021Lakewood, CO April 25, 2022 F-2 AmeriGuard Security Services, Inc. BALANCE SHEETS December 31, December 31, 2021 2020 Assets Current Assets Cash$ 2,129,801 $ 3,056,449 Accounts receivable, net (note 1) 2,215,198 2,191,826 Prepaid insurance 107,883 74,934 Related Party Receivable (note 3) 10,596 - Total Current Assets 4,463,478 5,323,209 Other Non-Current Assets Fixed assets, net depreciation (note 4) 132,802 175,564 Receivable from related party - - Total Non-Current Assets 132,802 175,564 Total Assets$ 4,596,280 $ 5,498,773 Liabilities Current Liabilities Accounts payable$ 418,341 $ 384,598 Accrued Payroll 657,741 582,048 Payroll liability - Pension (note 5) 616,579 539,342 Current portion of notes payable (note 6) 127,615 194,856 Total Current Liabilities 1,820,276 1,700,844 Long Term Liabilities Long term portion of notes payable (note 6) 780,845 944,964 Total Liabilities 2,601,121 2,645,808
Stockholders' equity
Common stock,
1,000 1,000 Retained earnings 1,994,159 2,851,965 Total Stockholders' Equity 1,995,159 2,852,965 Total Liabilities and Stockholders' Equity$ 4,596,280 $ 5,498,773 See accompanying notes to financial statements F-3 AmeriGuard Security Services, Inc. STATEMENTS OF OPERATIONS For the Years Ended December 31, December 31, 2021 2020 Revenue Security Services$ 22,418,328 $ 19,468,546 Other related income 24,185 22,651 Total Revenue 22,442,513 19,491,197 Cost of Services Salaries and related taxes 13,873,242 11,843,458 Employee benefits 2,915,323 2,446,800 Sub-Contractor payments 3,433,959 2,363,121 Guard training 222,298 179,871 Vehicles and equipment expenses 184,176 219,246 Total Cost of Services 20,628,998 17,052,496 Gross Margin 1,813,515 2,438,701 Operating Expenses Salaries, payroll taxes and benefits 365,433 407,819 Vehicle expense 295,054 248,098 Professional services 301,854 234,353 Cellular services 112,140 108,216 General liability insurance 111,287 76,635 Advertising and marketing 77,349 72,370 General and administrative expenses 289,333 288,430 Loan interest 59,439 63,232 Depreciation expense 52,273 58,238 Total Operating Expenses 1,664,162 1,557,391 Net Income/(Loss) from Operations 149,353 881,310 Other Income (Expense) Other Income - 2,031,197 Other (Expense) (500,000 ) Total Other Income (Expense) - 2,031,197 Net Income/(loss) before Income Taxes (350,647 ) 2,912,507 Income tax expense 33,923 48,498 Net Income/(loss)$ (384,570 ) $ 2,864,009
Net Income/(loss) per Common Share - Basic and Diluted
Weighted Average Number of Common Shares Outstanding - Basic
and Diluted 1,000 1,000
See accompanying notes to financial statements
F-4
AmeriGuard Security Services, Inc.
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED December 31, 2020 and 2021
Additional Total
Common Stock Paid-In Stockholders' Stockholders'
Shares Amount Capital Equity Equity
Balance, December 31, 2019 1,000 $ 1,000 $ - $ 318,013 $ 319,013
Owner draws - - (330,057 ) (330,057 )
Net Income for year ended
December 31, 2020 2,864,009 2,864,009
Balance, December 31, 2020 1,000 $ 1,000 $ - $ 2,851,965 $ 2,852,965
Owner draws - - (473,236 ) (473,236 )
Net Income for year ended
December 31, 2021 (384,570 ) (384,570 )
Balance, December 31, 2021 1,000 $ 1,000 $ - $ 1,994,159 $ 1,995,159
See accompanying notes to financial statements
F-5
AmeriGuard Security Services, Inc.
STATEMENTS OF CASH FLOWS
For the
Years Ended
December 31, December 31,
2021 2020
Cash Flows from Operating Activities
Net Income/(Loss) $ (384,570 ) $ 2,864,009
Adjustment to reconcile net loss from operations:
Changes in Operating Assets and Liabilities
Accounts receivable, net (23,372 ) (1,313,554 )
Prepaid insurance (32,949 ) (74,934 )
Related Party Receivable (10,596 ) -
Depreciation 52,273 58,238
Accounts payable 33,742 260,967
Accrued Payroll 75,693 133,559
Payroll liability - Pension (85,867 ) 266,542
Net Cash (Used)/provided in Operating Activities (212,542 ) 2,194,827
Cash Flows Used from Financing Activities Purchase of fixed assets (24,552 ) (157,856 ) Payment online of credit - (372,515 ) Reduction in balance from AmeriGuard Security Systems, Inc - 219,564 Loan principal payments (237,816 ) (139,845 ) . . .
© Edgar Online, source
