Executive Summary

Q3 2022 reporting was via a comprehensive 8‑K (Item 2.02) that included AmeriGuard’s nine-month results: revenue rose 13% to $18.84M, gross margin expanded to 13.81% (up 440 bps), and operating income more than doubled to $0.44M; net income before tax swung to $0.18M from a loss in the prior year-to-date .
Management outlined an aggressive post‑merger growth plan: pursue “two or three” new federal guard contracts in 18 months, acquire guard and transportation/cybersecurity companies, and target $100M annual sales with $10M of acquired revenue per quarter starting Q1 2023 .
No formal earnings call transcript or separate press release was found for Q3; results were furnished in the 8‑K and audited/unaudited financials appended therein .
Wall Street consensus estimates were unavailable for AGSS during this period (no analyst coverage on S&P Global). Estimates comparisons are therefore not provided.

What Went Well and What Went Wrong

What Went Well

Revenue growth and pricing: Nine-month revenue increased by $2.10M (+13%), driven by service fee increases on commercial contracts, pass-through payroll cost increases to federal contracts, and added patrol service revenue (~$240k) .
Margin expansion: Gross margin dollars rose 67% and gross margin percentage improved to 13.81% (+440 bps), reflecting pricing actions and mix .
Strategic confidence on contract wins: “We are confident of being awarded two or three new contracts in the next eighteen months,” with expected sales impact of ~$10–$15M .

What Went Wrong

Staffing/COVID policies raised overtime and execution risk: Federal vaccination and quarantine policies made staffing “very difficult,” increasing overtime “to levels never before seen” .
Inflationary pressures: Higher fuel and supplies lifted operating costs; vehicle expenses rose ~$117k over prior year YTD .
One-time merger-related costs: Other expenses of ~$259k YTD were tied to merger preparation; interest accrued on a shareholder buyout note also began to hit P&L .

Financial Results

Consolidated Performance (Nine Months Ended September 30)

Metric	9M 2021	9M 2022	YoY Change
Revenue ($USD)	$16,736,465	$18,838,996	+$2,102,531 (+13%)
Cost of Services ($USD)	$15,178,135	$16,237,701	+$1,059,566 (+7%)
Gross Margin ($USD)	$1,558,330	$2,601,295	+$1,042,965 (+67%)
Gross Margin (%)	9.41%	13.81%	+440 bps (+47%)
Operating Expenses ($USD)	$1,270,456	$2,070,812	+$800,657 (+63%)
Operating Income ($USD)	$201,985	$436,508	+$234,523 (+116%)
Other Income (Expense) ($USD)	$(515,426)	$(259,935)	+$255,491 (+50%)
Net Income Before Tax ($USD)	$(313,441)	$176,573	+$490,014 (+156%)

Notes: Management attributes growth to commercial pricing, contract payroll pass-throughs, and added patrol services; OpEx rose partly due to accounting changes allocating admin salaries and higher fuel/travel costs .

Full-Year Comparison

Metric	FY 2020	FY 2021	YoY Change
Revenue ($USD)	$19,491,197	$22,442,513	+$2,951,316 (+15%)
Cost of Services ($USD)	$17,052,496	$20,628,998	+$3,576,502 (+21%)
Gross Margin ($USD)	$2,438,701	$1,813,515	$(625,186) (−26%)
Gross Margin (%)	12.5%	8.1%	−440 bps (−35%)
Operating Expenses ($USD)	$1,435,921	$1,552,450	+$106,529 (+7%)
Operating Income ($USD)	$881,310	$149,353	$(731,957) (−83%)
Other Income (Expense) ($USD)	$2,031,197	$(500,000)	$(2,531,197) (−125%)
Net Income Before Tax ($USD)	$2,912,507	$(350,647)	$(3,263,154) (−112%)

Notes: 2020 benefited from PPP loan forgiveness (~$1.9M) while 2021 absorbed the $450k shell purchase cost and related initial expenses, compressing margins to more normal levels post‑COVID staffing reductions .

Revenue Mix (Selected Periods)

Period	Security Services ($USD)	Other Related Income ($USD)
9M 2022	$18,802,985	$36,011
FY 2021	$22,418,328	$24,185
FY 2020	$19,468,546	$22,651

KPIs and Balance Sheet Items

KPI	Value
Employees (as of 9/30/22)	294 total; 206 union-represented
Cash (9/30/22)	$1,658,329
Accounts Receivable (9/30/22)	$1,932,551
Working Capital Surplus (9/30/22)	~$1,240,000
Total Notes Payable (9/30/22)	$3,521,307 (current $719,563; LT $2,801,744)
Pension Liability (9/30/22)	$394,635
Federal Contract Concentration	~92% of revenue from four contracts
EPS (AmeriGuard, 9M 2022)	$275.89 basic/diluted; Wtd Avg Shares 640

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
New federal guard contracts	Next 18 months	Not provided	Target 2–3 awards; +$10–$15M annual sales impact	New
Acquisition cadence	Q1 2023 onward	Not provided	Aim for $10M acquired revenue per quarter; 1+ acquisitions per quarter	New
Revenue aspiration	Multi‑year	Not provided	“Aggressively… goal of $100 million in annual sales”	New
Small business status	Next 2 years	Not provided	Expect to remain below $25.5M average 5‑year revenue; plan to exceed thereafter	New
Segment expansion	2023	Not provided	Add Transportation (≥12% net cash returns) and Cybersecurity/IT	New
Dividends	Ongoing	None	No cash dividends anticipated; retain earnings for growth	Maintained

Earnings Call Themes & Trends

No Q3 2022 earnings call transcript was available; themes reflect filings narrative.

Topic	Previous Mentions (Q1 & Q2 2022)	Current Period (Q3 2022 8‑K)	Trend
M&A/Reverse merger	Shell, pursuing business combination; no ops/revenue	Merger closed; AmeriGuard now subsidiary; aggressive acquisition plan	Execution progressing
Technology/Cybersecurity	Not discussed	Explicit intent to acquire cybersecurity/IT capabilities; tech integration emphasis	Expanding focus
Staffing/COVID	Not discussed	Significant staffing challenges; overtime pressure due to policies; hope for easing with CDC guidance	Persistent headwind
Inflation	Not discussed	Elevated costs; contract structures allow wage pass‑throughs	Manageable via contracts
Regulatory/licensing	Not discussed	Multi‑state firearm licenses; union contracts; compliance affirmed	Stable
Government contracts	Not discussed	92% revenue concentration; multi‑year SSA/NIH‑EPA contract terms	Stable; concentrated
Internal controls (AGSS shell)	Material weaknesses; plan to rectify post merger	Transition to full executive team and public company processes	Improving post‑merger

Management Commentary

“We are confident of being awarded two or three new contracts in the next eighteen months. This activity will impact our total annual sales volume by approximately $10–$15 million.”
“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.”
“We also will be pressing hard to find a cybersecurity company to acquire… Executive Management is confident that we will… close a deal before the end of the 1st quarter 2023.”
“We anticipate the Company will be able to implement one new guard contract with annual revenues over $10 million.”
Industry outlook emphasizes tech-enabled guarding and consolidation; expected aggregate growth ≥4% with EBITDA potential “four to six percent and higher” for companies investing in technology .

Q&A Highlights

A formal Q3 earnings call transcript was not found; no Q&A content available in filings for this period.

Estimates Context

No S&P Global Wall Street consensus estimates were available for AGSS for Q3 2022 or FY 2022. As a result, we cannot present “vs. estimates” comparisons for revenue/EPS this quarter.

Key Takeaways for Investors

Revenue and gross margin improved meaningfully YTD through Q3 2022, with operating income up 116%; execution is strengthening despite staffing and inflation headwinds .
The post‑merger strategy is an explicit catalyst path: targeted federal contract wins plus acquisitions in guard, transportation, and cybersecurity with stated pacing (≥$10M per quarter) beginning Q1 2023 .
Balance sheet shows adequate liquidity ($1.66M cash; ~$1.24M working capital surplus), but startup costs for large contracts require substantial capital (e.g., ~$3M for a $15M annual contract), implying financing needs and potential dilution/leveraging .
Revenue concentration (~92% in four federal contracts) is both a stability source and a key risk; contract renewals/extensions must be monitored closely .
Near-term trading catalysts: confirmation of new federal awards, announced acquisitions (particularly cybersecurity), and updates on staffing normalization as COVID-era policies ease .
Medium-term thesis: scaling above the small business threshold, leveraging economies of scale to lift EBITDA margins to 8–10% in guard and ~12%+ in transportation while integrating technology .
Absence of analyst coverage and penny stock status may limit sponsorship and liquidity, but successful execution against stated milestones could reset investor perception .

AMERIGUARD SECURITY SERVICES, INC. (AGSS)·Q3 2022 Earnings Summary