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, 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. [phone]

Contact:
Stan Abiassi – Market Street Capital, Inc.
[e-mail]
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