SMG Industries, Inc. Reports Financial Results for Fiscal Year 2020
Transportation Services Company Reports $26.6 million in revenue for 2020, net of discontinued operations, an increase of $26.1 million from 2019
HOUSTON, TX, April 19, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire -- SMG Industries, Inc. (the “Company”) (OTCQB:SMGI), a growth-oriented transportation services company focused on the domestic infrastructure logistics market, today reported financial results for the full year ended December 31, 2020 and released its 2020 Annual Report on Form 10-K.
Fiscal Year 2020 Highlights
· Net of Discontinued Operations (MG Cleaners and Trinity Services), Revenues increased to $26.6 million in 2020, or about 5,100% from $508 thousand for the year 2019.
· Pro forma revenues for 2020, illustrating the Feb. 27, 2020 acquisition of 5J for the full year 2020, (net of discontinued operations), was $34.2 million.
· Selling, General and Administrative expenses were 19.8% of sales for 2020.
· Net loss from continuing operations for 2020 was $14.1 million, which included acquisition expenses of the transportation services business and one-time, non-operational write downs and impairment expenses associated with the oil and gas focused services and assets held for sale.
· Total Assets grew to approximately $27.4 million in 2020 from $6.4 million in 2019.
The Company made significant strides in its announced transformation to transportation services from an upstream oil and gas focused services company during the fiscal year 2020. SMGI acquired 5J Trucking and 5J Oilfield Services, sold its MG Cleaners subsidiary in December 2020, and positioned its other upstream oil and gas divisions, such as Trinity Services, for divestiture or sale. The Company’s pivot and focus last year to transportation services was in response to volatile oil prices and the global COVID pandemic effects on economic activity.
The discontinued operations of MG Cleaners and Trinity Services removed approximately $4.3 million in annual revenues from our results in 2020. See footnote 9 in our Company’s Annual Report on Form 10-k for more information and for the 2020 pro forma revenues presentation.
Mr. Jeffrey Martini, CEO of SMG, stated, “In the face of challenges including negative oil prices, industry volatility, and economic activity reductions caused by the COVID pandemic in 2020, the Company made strategic pivots in its business focus to reduce its exposure in upstream oil and gas concentration and focus more in transportation services including infrastructure. Currently, we believe the Company will continue to expand its service offerings in transportation organically and through acquisition with our Buy & Build strategy continuing to acquire market share of the estimated $700 billion US transportation industry.” Mr. Martini continued, “With the 5J acquisition, the Company’s total assets have grown to approximately $27.4 million, currently representing more than 100 tractors and semis, about 250 multi-axle trailers, 10 cranes, and 25 forklifts that serve more than 200 customers. Our 5J Transportation Group is particularly excited about the possible infrastructure investments proposed by the U.S. government and industry that could represent additional activity in wind energy, power transformers, compressors and bridge beams that we haul for customers.”
Further information is available, including management’s discussion and analysis of the financial results and disclosures, in the Company’s 2020 Annual Report on Form 10-k filed April 19, 2021.
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 heavy haul, super heavy haul, hot shot and drilling rig mobilization services. 5J’s dimensional permitted jobs can support up to 500-thousand-pound loads which include cargo associated with wind energy, power generation components, bridge beams, compressors, and refinery and construction equipment. SMG Industries, Inc. headquartered in Houston, Texas has facilities in Floresville, Henderson, Odessa, Palestine, Tomball, and Victoria, Texas. Read more at www.SMGIndustries.com.
Contact:
Matthew Flemming, SMG Industries, Inc. +1-713-821-3153
Source: SMG Industries, Inc.
SMG INDUSTRIES, INC. | |||||
CONSOLIDATED BALANCE SHEETS | |||||
December 31, | December 31, | ||||
2020 | 2019 | ||||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ 263,814 | $ 29,568 | |||
Restricted cash | 715,274 | - | |||
Accounts receivable, net of allowance for doubtful accounts of $691,098 and $42,182 | |||||
as of December 31, 2020 and 2019, respectively | 4,920,967 | - | |||
Prepaid expenses and other current assets | 1,409,996 | 102,567 | |||
Current assets of discontinued operations | 437,787 | 1,572,127 | |||
Total current assets | 7,747,838 | 1,704,262 | |||
Property and equipment, net of accumulated depreciation of $5,991,572 and $451,195 | |||||
as of December 31, 2020 and 2019, respectively | 16,337,914 | 1,311,991 | |||
Right of use assets - operating lease | 1,270,989 | 46,882 | |||
Other assets | 499,707 | 2,620 | |||
Other assets of discontinued operations, net | 1,568,700 | 3,365,629 | |||
Total assets | $ 27,425,148 | $ 6,431,384 | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||
Current liabilities: | |||||
Accounts payable | $ 3,171,086 | $ 603,129 | |||
Accounts payable - related party | 205,444 | - | |||
Accrued expenses and other liabilities | 2,373,057 | 258,543 | |||
Right of use liabilities - operating leases short term | 575,517 | 29,313 | |||
Deferred revenue | 30,000 | 30,000 | |||
Secured line of credit | 4,046,256 | 10,204 | |||
Current portion of unsecured notes payable | 2,187,436 | 76,374 | |||
Current portion of secured notes payable, net | 4,010,627 | 717,504 | |||
Current portion of convertible note, net | 50,000 | - | |||
Current liabilities of discontinued operations | 2,243,037 | 4,042,055 | |||
Total current liabilities | 18,892,460 | 5,767,122 | |||
Long term liabilities: | |||||
Convertible note payable, net | 2,417,335 | 260,926 | |||
Notes payable - unsecured, net of current portion | 1,040,223 | - | |||
Notes payable - secured, net of current portion | 14,038,409 | 727,701 | |||
Right of use liabilities - operating leases, net of current portion | 846,212 | 17,569 | |||
Long term liabilities of discontinued operations | 1,008,362 | 579,514 | |||
Total liabilities | 38,243,001 | 7,352,832 | |||
Commitments and contingencies | |||||
Stockholders' deficit | |||||
Preferred stock 1,000,000 shares authorized: | |||||
Series A preferred stock - $0.001 par value; 2,000 shares authorized; 2,000 shares issued | 2 | 2 | |||
and outstanding at December 31, 2020 and 2019 | |||||
Series B convertible preferred stock - $0.001 par value; 6,000 shares authorized; no shares issued | |||||
and outstanding at December 31, 2020 and 2019, respectively | - | - | |||
Common stock - $0.001 par value; 250,000,000 shares authorized; 19,446,258 and 14,881,372 shares | |||||
issued and outstanding at December 31, 2020 and 2019, respectively | 19,447 | 14,881 | |||
Additional paid in capital | 10,978,254 | 4,756,194 | |||
Accumulated deficit | (21,815,556) | (5,692,525) | |||
Total stockholders' deficit | (10,817,853) | (921,448) | |||
Total liabilities and stockholders' deficit | $ 27,425,148 | $ 6,431,384 | |||
The accompanying notes are an integral part of these consolidated financial statements | |||||
SMG INDUSTRIES INC. | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
For the years ended December 31, 2020 and 2019 | ||||||||
December 31, 2020 | December 31, 2019 | |||||||
REVENUES | $ 26,665,719 | $ 508,659 | ||||||
COST OF REVENUES | 29,477,208 | 967,305 | ||||||
GROSS PROFIT | (2,811,489) | (458,646) | ||||||
OPERATING EXPENSES: | ||||||||
Selling, general and administrative | 5,267,186 | 1,707,982 | ||||||
Impairment expense | 1,084,671 | 565,466 | ||||||
Acquisition costs | 1,485,829 | 70,945 | ||||||
Total operating expenses | 7,837,686 | 2,344,393 | ||||||
LOSS FROM OPERATIONS | (10,649,175) | (2,803,039) | ||||||
OTHER INCOME (EXPENSE) | ||||||||
Interest expense, net | (3,801,020) | (573,028) | ||||||
Other income | 74,587 | 14,159 | ||||||
Other expense | (30,000) | - | ||||||
Gain (loss) on settlement of notes payable | (14,204) | (101,251) | ||||||
Gain on sale of assets | 220,315 | 3,669 | ||||||
Gain on extinguishment of debt | 94,339 | - | ||||||
Total other income (expense) | (3,455,983) | (656,451) | ||||||
NET LOSS FROM CONTINUING OPERATIONS | (14,105,158) | (3,459,490) | ||||||
Gain on disposal of discontinued operations | 572,741 | - | ||||||
Loss from discontinued operations | (2,336,573) | (524,868) | ||||||
NET LOSS | (15,868,990) | (3,984,358) | ||||||
Preferred stock dividends | (254,041) | (30,740) | ||||||
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (16,123,031) | $ (4,015,098) | ||||||
Net loss per common share | ||||||||
Continuing operations | $ (0.80) | $ (0.25) | ||||||
Discontinued operations | $ (0.10) | $ (0.04) | ||||||
Net loss attributable to common shareholders | $ (0.90) | $ (0.29) | ||||||
Weighted average common shares outstanding | ||||||||
Basic | 17,860,452 | 13,824,474 | ||||||
Diluted | 17,860,452 | 13,824,474 | ||||||
The accompanying notes are an integral part of these consolidated financial statements | ||||||||
SMG INDUSTRIES INC. | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
For the years ended December 31, 2020 and 2019 | ||||||
December 31, 2020 | December 31, 2019 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net loss from continuing operations | $ (14,105,158) | $ (3,459,490) | ||||
Adjustments to reconcile net loss to net | ||||||
cash used in operating activities: | ||||||
Stock based compensation | 66,566 | 246,099 | ||||
Depreciation and amortization | 4,901,689 | 240,318 | ||||
Amortization of deferred financing costs | 609,396 | 516,956 | ||||
Amortization of right of use assets - operating leases | 286,790 | 305,903 | ||||
Impairment expense | 1,084,671 | 565,466 | ||||
Bad debt expense | 474,708 | 52,737 | ||||
Loss on settlement of liabilities | 21,407 | 69,512 | ||||
Gain on disposal of assets | (220,315) | (3,669) | ||||
Gain extinguishment of debt | (94,339) | - | ||||
Changes in: | ||||||
Accounts receivable | 2,782,038 | 29,716 | ||||
Prepaid expenses and other current assets | 558,182 | (77,568) | ||||
Accounts payable | (2,158,362) | 936,797 | ||||
Accounts payable - related party | 130,444 | - | ||||
Accrued expenses and other liabilities | 2,067,828 | 198,506 | ||||
Right of use operating lease liabilities | (136,050) | (305,903) | ||||
Deferred revenue | - | 30,000 | ||||
Net cash used in operating activities from continuing operations | (3,730,505) | (654,620) | ||||
Net cash used in operating activities from discontinued operations | (242,162) | 340,317 | ||||
Net cash used in operating activities | (3,972,667) | (314,303) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Cash paid for acquisition of 5J Entities, net | (6,320,168) | - | ||||
Cash paid for acquisition of Trinity Services, LLC | - | (500,000) | ||||
Cash paid for disposal of MG Cleaners, LLC | (75,000) | - | ||||
Cash received from sale of property and equipment | 4,200 | - | ||||
Cash paid for purchase of property and equipment | (404,200) | (28,107) | ||||
Net cash used in investing activities from continuing operations | (6,795,168) | (528,107) | ||||
Net cash used in investing activities from discontinued operations | (42,368) | (15,325) | ||||
Net cash used in investing activities | (6,837,536) | (543,432) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Payment of deferred financing costs | (223,558) | - | ||||
Proceeds from secured line of credit, net | 4,156,238 | - | ||||
Payments on secured line of credit, net | - | (33,015) | ||||
Proceeds from notes payable | 5,584,048 | 1,180,000 | ||||
Payments on notes payable | (1,385,535) | (819,105) | ||||
Proceeds from sales of common stock | - | 359,000 | ||||
Proceeds from convertible notes payable | 3,144,295 | 50,000 | ||||
Payments in MG Cleaners acquisition - related party | - | (21,000) | ||||
Net cash provided by financing activities from continuing operations | 11,275,488 | 715,880 | ||||
Net cash provided by financing activities from discontinued operations | 484,235 | 170,130 | ||||
Net cash provided by financing activities | 11,759,723 | 886,010 | ||||
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 949,520 | 28,275 | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 29,568 | 1,293 | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ 979,088 | $ 29,568 | ||||
Supplemental disclosures: | ||||||
Cash paid for income taxes | $ - | $ - | ||||
Cash paid for interest | $ 1,979,483 | $ 221,140 | ||||
Noncash investing and financing activities | ||||||
Capitalization of ROU assets and liabilities - finance | $ - | $ - | ||||
Capitalization of ROU assets and liabilities - operating | $ - | $ 352,785 | ||||
Non-cash consideration paid for business acquisitions | $ 4,380,000 | $ 1,939,000 | ||||
Non-cash consideration paid for increase in secured notes payable | $ 5,840,622 | $ - | ||||
Non-cash consideration paid for prepaids from debt financing | $ 331,065 | $ - | ||||
Non-cash consideration increase in convertible notes payable | $ 225,000 | $ - | ||||
Intangible assets acquired from issuance of note payable, related party | $ - | $ - | ||||
Debt discount from issuance of common stock warrants | $ 59,439 | $ 214,090 | ||||
Preferred stock dividend | $ 254,041 | $ 30,740 | ||||
Expenses paid by related party | $ 69,516 | $ - | ||||
Settlement of accounts payable and accrued interest with common stock issuance | $ 66,000 | $ 144,016 | ||||
Settlement of notes payable with common stock issuance | $ - | $ - | ||||
Settlement of accounts payable with note payable | $ - | $ 123,818 | ||||
Prepaid expenses financed with note payable | $ 100,997 | $ 234,914 | ||||
Equipment received in exchange for settlement of notes receivable | $ 223,200 | $ - | ||||
Shares issued for deferred financing costs | $ 419,788 | $ - | ||||
Note payable for property and equipment | $ 1,353,500 | $ - | ||||
Beneficial conversion feature on convertible notes payable | $ 1,057,710 | $ - | ||||
Capitalized accrued interest | $ - | $ 4,559 | ||||
The accompanying notes are an integral part of these consolidated financial statements | ||||||
