NOTE 16 – SUBSEQUENT EVENTS

As a result of the premature end of three Social Security Administration contracts discussed in Item 7, Management’s Discussion and Analysis section, Management Dispute and Interruption of Credit Line with Legalist , the Company has been notified of a significant liability. When the Company lost its operational funding and had to forfeit the SSA contracts, the Federal Department of Labor (DOL) takes on the responsibility of ensuring the guards are paid during the transition to a new contractor. Any remaining amounts due to the exiting contractor are forwarded to the DOL. In February 2026, the company was notified by the DOL that there is a wage payment shortage of $356,741 and the Company is required to reimburse the DOL this amount. The Company notified the DOL that it is unable to pay the requested amount in full and requested a payment schedule. As of the filing of this 10-K the schedule has not been finalized with the DOL. However, since the liability is certain it is included as a vendor payable on December 31, 2025, consolidated balance sheet.

On April 1, 2026, the Company received notice that an employment lawsuit was filed on behalf of a former employee. The issues revolve around terminated employees alleging the Company has failed to pay minimum wages, sick pay wages, meal period violations, rest period violations, wage statement violations and violation of the unfair business practices act. Management believes there is no merit in this case as in previous employee suits filed against the Company over the past three years. The suit is under review by counsel, and an action plan has yet to be determined.

On March 23, 2026, Ameriguard Security Services Inc. (AGSS), received an email from the Department of Veterans Affairs Regional Procurement Office West, located in Pheonix AZ that the Veterans Affairs Long Beach CA contract was not awarded to TransportUS Inc. (TUS) a subsidiary of AGSS. The contract had been managed by TUS for 7.5 years and provided approximately $9 Million in annual revenues. This is approximately 58% loss of total revenue projected to be earned in 2026.

The contract was awarded to a California Corporation with a 3.5-year term, representing a total contract award of $20,928,228. The process of transitioning the contract from TUS to the new contractor will take place during April 2026. This award to the new contractor is a part of the normal contract business operations and although significant to TUS, is not unusual in the industry. TUS continues to bid on other transportation contracts of equal value.

On May 6, 2026, the Company held a mediation conference regarding the counterclaim filed by former board members Anderson and Honore against Mr. Garcia, CEO, Mrs. Cashen and Slatic, Board Members and Mr. Goossen, Controller when suit filed, described in the 5^th paragraph of Note 14 – Litigation and Claims. The mediation was held at the request of the D&O insurance company, Sampo. The result of the mediation was the award of a $500,000 settlement to the Company. Since the mediation, the settlement document has not been approved by the opposing counsel. The positions held by the opposing counsel may prevent the settlement from going through. As of the date of the financial statements filing, the settlement is still pending.