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News   Press Releases

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

SMGI | May 17, 2023

HOUSTON, TX, May 17, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire– 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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