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SMG Industries, Inc. Reports Record First Quarter 2023 Revenue Results of $20.86 Million, a 29% Increase Over Q1 2022, and Positive Adjusted EBITDA

HOUSTON, TX - (NewMediaWire) - May 17, 2023 - SMG Industries, Inc. (“SMG” or the "Company") (OTCQB: SMGI), a growth-oriented transportation services company focused on the domestic infrastructure logistics market, today announced its unaudited consolidated revenues from operations for first quarter ended March 31, 2023, amounting to $20,869,763. This record revenue represents a 29% increase compared to the $16,181,053 reported in the comparable quarter Q1, 2022. The Company achieved positive Adjusted EBITDA, a non-GAAP measure, amounting to $1,083,610, continuing the upward trend resulting from increased revenues and firm pricing during the period. Additional information regarding Adjusted EBITDA, as well as a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure of net income (loss), is provided in the “Adjusted EBITDA Non-GAAP Net Income (Loss) Reconciliation Table” section below. 

 

The improvement in first quarter ended March 31, 2023 compared to the first quarter 2022 was driven by continued growth in volumes and consistent price improvements in the Company’s Industrial Division, supported by increased demand for super heavy haul projects, infrastructure, and additional production hauling revenue lines. The Company’s brokerage business, known as 5J Logistics Services, also contributed solid operating revenues. The positive performance of Adjusted EBITDA in Q1 was attributed to consistent sales volume, increased asset usage, and improved diversification of higher-margin revenue lines within the industrial division, as well as ongoing cost-cutting measures.

 

Mr. Matt Flemming, Chairman of SMG, stated, "The Company continues to experience the benefits of higher activity levels from its customers and is reaping the rewards of its commitment to new end market diversification. Additionally, the Company remains actively engaged in seeking opportunities for acquisitions that are accretive to its business, as well as identifying non-cyclical revenue lines to sustain growth initiatives, enhance competitiveness, and increase its equipment fleet utilization.”

 

For more detailed financial results, management's discussion and analysis, and risk factors, please refer to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2023, filed on May 15, 2023.

 

Forward-Looking Statements

This press release contains certain "forward-looking statements" with respect to our financial condition, business strategies, growth opportunities, acquisitions, listing plans and objectives of management, and other matters. Statements in this press release that are not historical facts are "forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, and involve a number of risks and uncertainties.

 

Forward-looking statements, including, without limitation, those relating to our future business prospects, listing plans, financial condition and acquisitions, whenever they occur in this press release are necessarily estimates reflecting the best judgment of the Company's senior management at the time such statements were made. There are a number of factors, many of which are beyond the Company's control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors include, among others, the risks and uncertainties discussed more fully under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and in the Company's subsequent filings with the Securities and Exchange Commission. Readers of this press release are cautioned not to place undue reliance on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. The Company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

 

About SMG Industries, Inc.:  SMG Industries is a growth-oriented transportation services company focused on the domestic infrastructure logistics market.  Through several of the Company’s wholly-owned subsidiaries branded as the “5J Transportation Group,” it offers specialized heavy haul, super heavy haul, flatbed, brokerage, and drilling rig mobilization services. 5J’s engineered permitted jobs can support up to 500-thousand-pound loads including infrastructure cargo associated with bridge beams, wind energy, power generation components, compressors, refinery and construction equipment.  SMG Industries is headquartered in Houston, Texas and has facilities in Floresville, Hempstead, Henderson, Houston, Odessa, Palestine, Victoria, Texas and Fort Mill, South Carolina. Read more at www.5J-Group.com and www.SMGIndustries.com 

 

Source:  SMG Industries, Inc. +1-713-955-3497


Contact:
Stan Abiassi – Market Street Capital, Inc.
stan@marketstreetcp.com
713-338-9415


SMG INDUSTRIES, INC. 
CONSOLIDATED BALANCE SHEETS 
(Unaudited) 
       
  
   March 31, December 31, 
    2023   2022  
       
ASSETS    
Current assets:    
 Cash and cash equivalents$313,595  $127,225  
 Restricted cash 1,105,818   1,105,818  
 Accounts receivable, net of allowance for doubtful accounts of $1,244,852 and $855,832    
  as of March 31, 2023 and December 31, 2022, respectively 12,565,878   12,185,792  
 Prepaid expenses and other current assets 2,100,032   2,308,067  
       
  Total current assets 16,085,323   15,726,902  
       
 Property and equipment, net of accumulated depreciation of $16,116,896 and $15,329,817    
  as of March 31, 2023 and December 31, 2022, respectively 4,950,858   5,414,830  
 Right of use assets - operating lease 615,051   734,504  
 Other assets 227,801   305,451  
       
  Total assets$21,879,033  $22,181,687  
       
LIABILITIES AND STOCKHOLDERS' DEFICIT    
Current liabilities:    
 Accounts payable$3,501,082  $3,014,598  
 Accounts payable - related party 853,092   565,603  
 Accrued expenses and other liabilities 3,452,804   2,850,547  
 Right of use liabilities - operating leases short term 688,803   650,945  
 Deferred revenue -   128,000  
 Secured line of credit 9,699,648   10,623,887  
 Current portion of unsecured notes payable 2,947,790   2,465,445  
 Current portion of secured notes payable, net 7,913,546   6,990,486  
 Current portion of convertible note, net 8,679,893   7,327,288  
 Current liabilities of discontinued operations 185,994   200,994  
       
  Total current liabilities 37,922,652   34,817,793  
       
Long term liabilities:    
 Convertible note payable, net 491,926   -  
 Notes payable - secured, net of current portion 12,508,420   13,307,309  
 Right of use liabilities - operating leases, net of current portion 169,361   278,137  
 Long term liabilities of discontinued operations 289,321   300,586  
       
  Total liabilities 51,381,680   48,703,825  
       
Commitments and contingencies    
       
Stockholders' deficit    
 Preferred stock 1,000,000 shares authorized:    
  Series A preferred stock - $0.001 par value; 2,000 shares authorized; 0 shares issued -   -  
  and outstanding at March 31, 2023 and December 31, 2022, respectively    
  Series B convertible preferred stock - $0.001 par value; 6,000 shares authorized; 0 shares issued    
  and outstanding at March 31, 2023 and December 31, 2022, respectively -   -  
 Common stock - $0.001 par value; 250,000,000 shares authorized; 48,747,530 and 39,180,297 shares   
  issued and outstanding at March 31, 2023 and December 31, 2022, respectively 48,748   39,181  
 Additional paid in capital 15,131,534   18,081,457  
 Accumulated deficit (44,682,929)  (44,642,776) 
       
  Total stockholders' deficit (29,502,647)  (26,522,138) 
       
  Total liabilities and stockholders' deficit$21,879,033  $22,181,687  
       
       
The accompanying notes are an integral part of these unaudited consolidated financial statements 
  
       
    - - -  
       


SMG INDUSTRIES INC. 
CONSOLIDATED STATEMENTS OF OPERATIONS 
For the three months ended March 31, 2023 and 2022 
(Unaudited) 
         
         
     March 31, 2023 March 31, 2022 
         
 REVENUES $20,869,763  $16,181,053  
         
 COST OF REVENUES  18,240,360   14,725,105  
         
 GROSS PROFIT  2,629,403   1,455,948  
         
 OPERATING EXPENSES:     
  Selling, general and administrative  3,062,601   2,463,881  
         
  Total operating expenses  3,062,601   2,463,881  
         
 LOSS FROM OPERATIONS  (433,198)  (1,007,933) 
         
 OTHER INCOME (EXPENSE)     
  Interest expense, net  (2,897,167)  (2,619,037) 
  Other income  8,634   -  
  Other expense  (203,474)  (9,048) 
  Total other income (expense)  (3,092,007)  (2,628,085) 
         
 NET LOSS FROM CONTINUING OPERATIONS  (3,525,205)  (3,636,018) 
         
  Income (loss) from discontinued operations  (1,835)  4,888  
         
 NET LOSS $(3,527,040) $(3,631,130) 
         
 Net loss per common share     
  Continuing operations $(0.08) $(0.11) 
  Discontinued operations $(0.00) $(0.00) 
  Net loss attributable to common shareholders $(0.08) $(0.11) 
         
 Weighted average common shares outstanding     
  Basic  45,503,728   34,311,688  
  Diluted  45,503,728   34,311,688  
         
         
The accompanying notes are an integral part of these unaudited consolidated financial statements 
         
         
         
         
      -    
         


SMG INDUSTRIES INC. 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
For the three months ended March 31, 2023 and 2022 
(Unaudited) 
  
        
    March 31, 2023 March 31, 2022 
        
CASH FLOWS FROM OPERATING ACTIVITIES:    
 Net loss from continuing operations$(3,525,205) $(3,636,018) 
 Adjustments to reconcile net loss to net    
  cash used in operating activities:    
  Share based compensation 30,554   15,605  
  Depreciation and amortization 787,079   1,357,401  
  Amortization of deferred financing costs 326,372   1,497,032  
  Amortization of right of use assets - operating leases 119,453   114,044  
  Shares issued for debt extension 1,180,618   -  
  Bad debt expense 402,160   153,801  
  Changes in:    
   Accounts receivable (782,246)  (1,023,905) 
   Prepaid expenses and other current assets 862,472   1,484,614  
   Other assets 77,650   (598,625) 
   Accounts payable 736,483   (1,656,889) 
   Accounts payable - related party 287,489   46,716  
   Accrued expenses and other liabilities 602,257   50,256  
   Right of use operating lease liabilities (70,918)  29,037  
   Deferred revenue (128,000)  -  
 Net cash provided by (used in) operating activities from continuing operations 906,218   (2,166,931) 
 Net cash provided by operating activities from discontinued operations (28,100)  -  
 Net cash provided by (used in) operating activities 878,118   (2,166,931) 
        
CASH FLOWS FROM INVESTING ACTIVITIES:    
         Cash procceds from disposal of purchase of property and equipment 1,500   -  
         Cash paid for purchase of property and equipment (6,189)  (37,022) 
 Net cash used in investing activities from continuing operations (4,689)  (37,022) 
 Net cash used in investing activities from discontinued operations -   -  
 Net cash used in investing activities (4,689)  (37,022) 
        
CASH FLOWS FROM FINANCING ACTIVITIES:    
         Payment of deferred financing costs -   -  
         Proceeds on secured line of credit, net (952,667)  180,830  
     Payments on secured line of credit, net -   -  
         Proceeds from notes payable 2,000,000   5,229,098  
         Payments on notes payable (2,156,338)  (1,035,443) 
         Payments on convertible notes payable -   -  
         Proceeds from convertible notes payable 421,946   -  
 Net cash provided by (used in) financing activities from continuing operations (687,059)  4,374,485  
 Net cash provided by (used in) financing activities from discontinued operations -   -  
 Net cash provided by (used in) financing activities (687,059)  4,374,485  
        
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 186,370   2,170,532  
        
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 1,233,043   1,116,176  
        
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period$1,419,413  $3,286,708  
        
Supplemental disclosures:    
     Cash paid for income taxes$-  $-  
     Cash paid for interest$2,192,989  $1,144,694  
        
Noncash investing and financing activities    
 Prepaid expenses financed with note payable$645,194  $1,353,151  
 Shares issued for deferred financing costs$543,136  $397,773  
     Convertible notes payable issued to settle accounts payable and accrued expenses$250,000  $-  
     Note receivable for property and equipment$9,243  $275,000  
 Equipment financed with note payable$327,661  $843,844  
        
        
The accompanying notes are an integral part of these unaudited consolidated financial statements 
        
        
        
        
   -   -  
        


SMG Industries, Inc. Non-GAAP Reconciliation of  
Adjusted EBITDA Schedule for Q1 2023  
  For the Quarter Ended March 31, 2023
   
Net Income (Loss) $(3,525,205)
   
Depreciation $787,079 
Taxes $7,500 
Interest $1,417,895 
Amortization expenses $1,479,272 
Non cash Stock options expense $30,554 
Transaction related expenses $82,478 
Contract CFO Consulting Services $23,080 
CTO Services $62,499 
Other One-time/Non-Cash charges $501,454 
Out of Period Costs/Insurance Adjustments $217,004 
   
Total Adjusted EBITDA for the Quarter ended March 31, 2023$1,083,610 


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