NOTE 10 – NOTES PAYABLE

On February 05, 2025, the Company entered into a government purchase orders/receivables backed line of credit of $7,000,000 with a maturity date of August 5, 2026, with Legalist, Inc an investment firm specializing in alternative assets. The agreement requires the payments from the six Federal Contracts described in Note 13 – Concentration of Sales, to go directly to the lenders, with the Company allowed to draw on the credit line every week as needed for operations. Interest on the outstanding balance is accrued daily at the U.S. Prime Rate plus .0246%. The effective interest rate as of March 31, 2025, was 16.5%. As an active line of credit, the balance is presented as current.

The Company paid off all of its merchant advance debt and revenue purchase agreements that were taken out in December 2023 and January of 2024 totaling $1,475,000. The Company also paid off an SBA Loan that was entered into in June 2020, in the amount of $634,849. The Company also used the line of credit to pay off the two loans with First Class Industries in the amount of $496,000 and the loan with W.L.L Associates in the amount of $115,000.

In June 2020, AmeriGuard Security Services, Inc. received an SBA Loan through Fresno First Bank in the amount of $1,080,000 that was used to close out a Citibank loan in the amount of $312,339 with the remaining balance after expenses held in reserve. The SBA loan is a 10-year loan with monthly principal and interest payments. Interest rate is variable at prime rate plus 2.75%, adjusted every calendar quarter. Balance remaining on the SBA loan was $649,359 as of December 31, 2024, this note was paid in full on February 5, 2025, by the receivables backed credit line from Legalist Inc. discussed above.

On December 20, 2023, the company entered into a short-term loan agreement collateralized by accounts receivable from TVT Capital LLC. The agreement encumbered $1,199,200 of receivables resulting in a note payable of $800,000; the repayment term requires $49,967 per week for 24 weeks. During 2024, the Company was unable to pay the weekly payments as required by the note and went into default in April 2024. Negotiations for lower payments and total interest due continued throughout the following months and a final settlement was achieved in February 2025. Balance due December 31, 2024, of $580,000, this note was paid in full on February 5, 2025, by the receivables backed credit line from Legalist Inc. discussed above.

On January 2, 2024, the Company entered into a short-term loan agreement collateralized by accounts receivable with Cedar Advance Capital. The agreement encumbered $719,250 of receivables, resulting in a note payable of $525,000; the repayment term requires $22,477 per week for 32 weeks. During 2024, the Company was unable to pay the weekly payments as required by the note and went into default in April 2024. Negotiations for lower payments and total interest due continued throughout the following months and a final settlement was achieved in February 2025. Balance due December 31, 2024, of $475,000, this note was paid in full on February 5, 2025, by the receivables backed credit line from Legalist Inc. discussed above.

On January 2, 2024, the Company entered into a short-term loan agreement collateralized by accounts receivable with Velocity Capital Group. The agreement encumbered $565,150 of receivables resulting in a note payable of $412,500; the repayment term requires $17,660 per week for 32 weeks. During 2024, the Company was unable to pay the weekly payments as required by the note and went into default in April 2024. Negotiations for lower payments and total interest due continued throughout the following months and a final settlement was achieved in February 2025. Balance due December 31, 2024, of $420,000, this note was paid in full on February 5, 2025, by the receivables backed credit line from Legalist Inc. discussed above.

On April 16, 2024, The Company entered into a short-term loan agreement with 1800 Diagonal Lending LLC. The amount funded was $90,850, reduced by an original issue discount and fee of $15,850 and with an interest rate of 12%. Note requires 10 equal payments of $10,175 starting May 30, 2024. Note is collateralized with common share convertible at 71% of the lowest market value during the 10 days prior to conversion. Balance due on December 31, 2024, was $27,254. This loan was paid as per loan agreement as of March 31, 2025.

On April 16, 2024, The Company entered into a short-term loan agreement with 1800 Diagonal Lending LLC. The amount funded was $90,850, reduced by an original issue discount and fee of $15,850 and with an interest rate of 12%. The note requires 5 payments starting October 30, 2024, with a payment of $50,876, followed by 4 equal payments each month in the amount of $12,719. The note is collateralized with common share convertible at 71% of the lowest market value during the 10 days prior to conversion. Balance due on December 31, 2024, was $34,069. This loan was paid as per loan agreement as of February 28, 2025.

On June 17, 2024, The Company entered into a short-term loan agreement with 1800 Diagonal Lending LLC. The amount funded was $121,900, reduced by an original issue discount and fee of $21,900 and with an interest rate of 12%. The note requires 5 payments starting December 15, 2024, with a payment of $68,264, followed by 4 equal payments each month in the amount of $17,066. The note is collateralized with common share convertible at 71% of the lowest market value during the 10 days prior to conversion. Balance due on December 31, 2024, was $87,971. This loan was paid as per loan agreement as of April 15, 2025.

On August 19, 2024, The Company entered into a short-term loan agreement with 1800 Diagonal Lending LLC. The amount funded was $121,900, reduced by an original issue discount and fee of $21,900 and with an interest rate of 12%. Note requires 10 equal payments of $13,863 starting August 30, 2024. The note is collateralized with common share convertible at 71% of the lowest market value during the 10 days prior to conversion. Balance due on December 31, 2024, was $85,330. This loan was paid as per loan agreement as of June 30, 2025.

On November 6, 2024, The Company entered into a short-term loan agreement with 1800 Diagonal Lending LLC. The amount funded was $124,020, reduced by an original issue discount and fees of $24,020 and with an interest rate of 12%. Note requires 5 payments starting March 15, 2025, with a payment of $47,541, followed by a payment of $47,541 on May 15, 2025, followed by 4 equal payments each month in the amount of $11,885. The note is collateralized with common share convertible at 71% of the lowest market value during the 10 days prior to conversion. Balance due on December 31, 2024, was $124,020. The last payment made by AGSS was May 16, 2025, leaving a balance due of $60,984. This balance was paid via 5 separate stock conversion with the final stock conversion completed August 18, 2025.

On November 08, 2024, The Company entered into a short-term loan agreement with First Class Industries. The amount funded was $160,000, reduced by an original issue discount and fees of $10,000 and with an interest rate of 7%. The note requires principal repayment January 04, 2025. Note is collateralized by Social Security Services – Urbana invoice #4065 in the amount of $485,785. Additionally, majority shareholder Lawrence Garcia agreed to transfer 150,000 of his shares to the lender following payment of loan. Balance due on December 31, 2024, was $160,000. This note was paid in full on February 5, 2025, by the receivables backed credit line from Legalist Inc. discussed above.

On November 20, 2024, The Company entered into a short-term loan agreement with First Class Industries. The amount funded was $336,000, reduced by an original issue discount and fees of $36,000 and with an interest rate of 12%. The note requires principal repayment January 20, 2025. The note is collateralized by Long Beach Veterans Administration invoice # VA-LB NOV24A in the amount of $376,829. Along with all future invoices until note paid. Additionally, majority shareholder Lawrence Garcia agreed to transfer 150,000 of his shares to the lender following payment of loan. Balance due on December 31, 2024, was $336,000. This note was paid in full on February 5, 2025, by the receivables backed credit line from Legalist Inc. discussed above.

On November 21, 2024, The Company entered into a short-term loan agreement with W.L.L Associates. The amount funded was $230,000, reduced by an original issue discount and fees of $30,000 and with an interest rate of 15%. Note requires principal repayment January 05, 2025. Note is collateralized by Social Security Administration – Durham NC #4060 in the amount of $457,520. Along with all future invoices until note paid. Additionally, majority shareholder Lawrence Garcia agreed to transfer 250,000 of his shares to the lender following payment of loan. Balance due on December 31, 2024, was $230,000. This note was paid in full on February 5, 2025, by the receivables backed credit line from Legalist Inc. discussed above.

On December 08, 2024, The Company entered into a short-term loan agreement with W.L.L Associates. The amount funded was $115,000, reduced by an original issue discount and fees of $15,000 and with an interest rate of 15%. The note requires principal repayment January 09, 2025. Note is collateralized by Social Security Administration – Urbana MD #4065 in the amount of $485,785. Along with all future invoices until note paid. Additionally, majority shareholder Lawrence Garcia agreed to transfer 100,000 of his shares to the lender following payment of loan. On January 8, 2025, W.L.L Associates modified the note, extending the payment date to February 12, 2025. Balance due on December 31, 2024, was $115,000. This note was paid in full on February 5, 2025, by the receivables backed credit line from Legalist Inc. discussed above.

On July 7, 2022, the Company entered into a buyout agreement with shareholder Lillian Flores. The total buyout amount was $3,384,950 representing 45% of the calculated business value as of December 31, 2020. Following the initial payment of $686,990, the company agreed to make 4 equal installments of principal and interest of $739,508 each December 31, starting 2023. Interest is calculated at a fixed rate of 3.110% compounded semi-annually. The company accrued interest on December 31, 2022, of $49,035. Balance remains in the amount of $2,697,960. All interest due was paid December 28, 2023, resulting in a balance of $0 on December 31, 2023. The Company requested a deferral of the payment of principal due December 31, 2023, and received a deferral from Mrs. Flores. On January 22, 2024, the Company entered into an agreement with Lillian Flores regarding the deferral of the required shareholder buyout payment of $611,253 due December 31, 2023. The deferral of the principal payment was requested by the Company for the purpose of capital retention. The agreement allows for a $16,500 monthly principal and interest payment starting in January 2024 through June 2024. Monthly interest is calculated at $1,585, leaving $14,915 applied to the principal. The agreement requires the remaining deferred principal of $521,763 to be paid by the Company on or before June 30, 2024. On June 30, 2024, Lillian Flores agreed to continue the extension payments of $16,500 amortized at 5%, with the remaining amount due December 31, 2026. Balance due December 31, 2024, was $2,531,096. During 2025 the Company made various principal and interest payments when possible throughout the year. The balance due as of December 31, 2025, is $2,457,991, of which $72,333 is included in current portion of notes payable.

The following schedule details the loans active as of December 31, 2025, and 2024: