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Form 10-Q SMG Industries Inc. For: Jun 30

August 15, 2022 12:00 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

  

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number 000-54391

SMG INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware

51-0662991

(State or other jurisdiction of incorporation or
organization)

(IRS Employer Identification No.)

 

 

20475 State Hwy 249, Suite 450

 

Houston, Texas

77070

(Address of Principal Executive Offices)

(Zip Code)

(713) 955-3497

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes       No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes        No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  

Accelerated filer                   

 

 

Non-accelerated filer    

Smaller reporting company  

 

 

 

Emerging growth company   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes     No 

The number of shares of Common Stock, par value $0.001 per share, outstanding as of August 15, 2022, was 35,124,810.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Ticker symbol(s)

    

Name of each exchange on which
registered

None

N/A

N/A

SMG INDUSTRIES, INC.

Table of Contents

     

Page

Part I

Financial Information

 

 

Item 1.

Financial Statements

 

Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (Unaudited)

3

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)

4

 

Consolidated Statements of Changes in Stockholders’ Deficit for the Six Months Ended June 30, 2022 and 2021 (Unaudited)

5

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (Unaudited)

6

 

Notes to Unaudited Consolidated Financial Statements

7

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Qualitative and Quantitative Disclosures about Market Risk

26

Item 4.

Controls and Procedures

26

Part II

Other Information

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

Item 3.

Defaults upon Senior Securities

27

Item 4.

Mine Safety Disclosures

27

Item 5.

Other Information

27

Item 6.

Exhibits

28

Signatures

29

2

SMG INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30, 

December 31, 

    

2022

    

2021

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

1,667,245

$

257,768

Restricted cash

920,013

858,408

Accounts receivable, net of allowance for doubtful accounts of $1,243,088 and $1,041,387 as of June 30, 2022 and December 31, 2021, respectively

 

11,730,088

 

11,703,347

Prepaid expenses and other current assets

 

2,506,679

 

2,162,238

Current assets of discontinued operations

17,435

17,446

Total current assets

 

16,841,460

 

14,999,207

Property and equipment, net of accumulated depreciation of $13,929,165 and $11,262,193 as of June 30, 2022 and December 31, 2021, respectively

 

8,202,766

 

10,463,352

Right of use assets - operating lease

965,757

3,312,710

Other assets

 

434,824

 

448,887

Other assets of discontinued operations, net

1,500

1,500

Total assets

$

26,446,307

$

29,225,656

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

Current liabilities:

 

 

Accounts payable

$

2,565,808

$

3,958,515

Accounts payable – related party

188,555

 

94,602

Accrued expenses and other liabilities

 

4,097,202

4,055,113

Right of use liabilities - operating leases short term

 

568,800

816,671

Secured line of credit

 

8,964,841

9,468,759

Current portion of unsecured notes payable

 

3,009,169

1,168,420

Current portion of secured notes payable, net

 

3,531,599

3,527,960

Current portion of convertible note, net

 

4,409,199

1,616,672

Current liabilities of discontinued operations

436,074

588,283

Total current liabilities

 

27,771,247

25,294,995

Long term liabilities:

 

 

Convertible note payable, net

 

1,515,638

2,620,145

Notes payable - secured, net of current portion

 

18,706,646

14,535,751

Right of use liabilities - operating leases, net of current portion

 

509,425

2,545,950

Long term liabilities of discontinued operations

319,164

381,746

Total liabilities

 

48,822,120

45,378,587

Commitments and contingencies

 

 

Stockholders’ deficit

 

 

Preferred stock 1,000,000 shares authorized:

Series A preferred stock - $0.001 par value; 2,000 shares authorized; no shares issued and outstanding at June 30, 2022 and December 31, 2021

 

 

Series B convertible preferred stock - $0.001 par value; 6,000 shares authorized; no shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Common stock - $0.001 par value; 250,000,000 shares authorized; 35,124,810 and 33,731,162 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

35,125

33,732

Additional paid in capital

 

17,273,004

16,845,873

Accumulated deficit

 

(39,683,942)

(33,032,536)

Total stockholders’ deficit

 

(22,375,813)

(16,152,931)

Total liabilities and stockholders’ deficit

$

26,446,307

$

29,225,656

The accompanying notes are an integral part of these unaudited consolidated financial statements

3

SMG INDUSTRIES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Six Months ended June 30, 2022 and 2021

(Unaudited)

Three months ended

Six months ended

    

June 30, 2022

    

June 30, 2021

    

June 30, 2022

    

 

June 30, 2021

REVENUES

$

18,076,897

$

12,243,091

$

34,257,950

$

19,845,419

COST OF REVENUES

 

16,935,840

12,955,028

31,660,945

21,655,536

GROSS PROFIT (LOSS)

 

1,141,057

(711,937)

2,597,005

(1,810,117)

OPERATING EXPENSES:

 

 

Selling, general and administrative

 

2,287,965

1,617,201

4,751,846

3,129,601

Total operating expenses

 

2,287,965

1,617,201

4,751,846

3,129,601

LOSS FROM OPERATIONS

 

(1,146,908)

(2,329,138)

(2,154,841)

(4,939,718)

OTHER INCOME (EXPENSE)

 

 

Interest expense, net

 

(2,178,694)

(1,321,988)

(4,797,731)

(2,570,777)

Gain on PPP Loan Forgiveness

3,148,100

3,148,100

Other income

9,048

18,902

19,541

Gain on disposal of assets

334,404

64,764

334,404

114,926

Total other income (expense)

(1,835,242)

1,909,778

(4,463,327)

711,790

NET LOSS FROM CONTINUING OPERATIONS

(2,982,150)

(419,360)

(6,618,168)

(4,227,928)

Income (loss) from discontinued operations

(38,126)

99,736

(33,238)

43,281

NET LOSS

(3,020,276)

(319,624)

(6,651,406)

(4,184,647)

Preferred stock dividends

(25,000)

(50,000)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(3,020,276)

$

(344,624)

$

(6,651,406)

$

(4,234,647)

Net loss per common share

Continuing operations

$

(0.08)

$

(0.02)

$

(0.19)

$

(0.21)

Discontinued operations

$

(0.00)

$

0.00

$

(0.00)

$

0.00

Net loss attributable to common shareholders

$

(0.08)

$

(0.02)

$

(0.19)

$

(0.21)

 

 

Weighted average common shares outstanding

Basic

 

35,124,810

20,958,782

34,722,766

20,235,320

Diluted

 

35,124,810

20,958,782

34,722,766

20,235,320

The accompanying notes are an integral part of these unaudited consolidated financial statements

4

SMG INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

For the six months ended June 30, 2022 and 2021

(Unaudited)

Series A

Series B

Additional

Preferred Stock

Preferred Stock

Common Stock

Paid In

Accumulated

    

Shares

    

Value

    

Shares

    

Value

    

Shares

    

Value

    

Capital

    

Deficit

    

Total

Balances at December 31, 2021

 

$

$

33,731,162

$

33,732

$

16,845,873

$

(33,032,536)

$

(16,152,931)

Shares issued for deferred financing costs

1,393,648

1,393

396,380

397,773

Share based compensation

15,605

15,605

Net loss

(3,631,130)

(3,631,130)

Balances at March 31, 2022

35,124,810

35,125

17,257,858

(36,663,666)

(19,370,683)

Share based compensation

15,146

15,146

Net loss

(3,020,276)

(3,020,276)

Balances at June 30, 2022

$

$

$

35,124,810

$

35,125

$

17,273,004

$

(39,683,942)

$

(22,375,813)

Balances at December 31, 2020

 

2,000

$

2

$

19,446,258

$

19,447

$

10,978,254

$

(21,815,556)

$

(10,817,853)

Share based compensation

17,973

17,973

Shares issued with debt and beneficial conversion feature on convertible notes

393,107

393

174,658

175,051

Preferred stock dividends

(25,000)

(25,000)

Net loss

(3,865,023)

(3,865,023)

Balances at March 31, 2021

 

2,000

2

19,839,365

19,840

11,170,885

(25,705,579)

(14,514,852)

Shares issued with debt and beneficial conversion feature on convertible notes

2,026,587

2,027

1,286,805

1,288,832

Share based compensation

15,892

15,892

Preferred stock dividends

(25,000)

(25,000)

Net loss

(319,624)

(319,624)

Balances at June 30, 2021

 

2,000

$

2

$

$

21,865,952

$

21,867

$

12,473,582

$

(26,050,203)

$

(13,554,752)

The accompanying notes are an integral part of these unaudited consolidated financial statements

5

SMG INDUSTRIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2022 and 2021

(Unaudited)

June 30, 

June 30, 

    

2022

    

2021

CASH FLOWS FROM OPERATING ACTIVITIES:

 

  

 

  

Net loss from continuing operations

$

(6,618,168)

$

(4,227,928)

Adjustments to reconcile net loss to net cash used in operating activities:

 

  

 

  

Stock based compensation

 

30,751

 

33,865

Depreciation

 

2,754,891

 

2,737,505

Amortization of deferred financing costs

 

2,387,577

 

566,039

Amortization of right of use assets - operating leases

 

226,072

 

209,753

Bad debt (recovery) expense

 

211,984

 

(9,980)

Gain on PPP loan forgiveness

 

 

(3,148,100)

Gain on disposal of assets

 

(334,404)

 

(114,926)

Changes in:

 

  

 

  

Accounts receivable

 

(238,725)

 

(4,348,033)

Prepaid expenses and other current assets

 

1,890,998

 

1,142,846

Other assets

 

(233,955)

 

(794,792)

Accounts payable

 

(1,392,707)

 

973,704

Accounts payable - related party

 

93,953

 

58,516

Accrued expenses and other liabilities

 

42,089

 

2,253,118

Right of use operating lease liabilities

 

(23,593)

 

(110,282)

Net cash used in operating activities from continuing operations

(1,203,237)

(4,778,695)

Net cash provided by operating activities from discontinued operations

608,519

Net cash used in operating activities

 

(1,203,237)

 

(4,170,176)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

  

 

  

Cash paid for disposal of MG Cleaners, LLC

 

 

(35,000)

Cash proceeds from disposal of property and equipment

 

329,271

 

Cash paid for purchase of property and equipment

 

(60,250)

 

(97,026)

Net cash provided by (used in) investing activities from continuing operations

269,021

(132,026)

Net cash provided by (used in) investing activities

 

269,021

 

(132,026)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

  

 

  

Proceeds (payments) on secured line of credit, net

 

(532,346)

 

1,819,234

Proceeds from notes payable

 

5,229,098

 

1,874,002

Payments on notes payable

(2,291,454)

(830,234)

Proceeds from convertible notes payable

 

 

1,405,000

Net cash provided by financing activities from continuing operations

2,405,298

4,268,002

Net cash provided by (used in) financing activities from discontinued operations

(226,932)

Net cash provided by financing activities

 

2,405,298

 

4,041,070

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

1,471,082

 

(261,132)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

 

1,116,176

 

979,088

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

$

2,587,258

$

717,956

Supplemental disclosures:

 

 

  

Cash paid for income taxes

$

$

Cash paid for interest

$

2,344,883

$

1,285,489

Noncash investing and financing activities

Prepaid expenses financed with note payable

$

1,960,439

$

1,239,367

Preferred stock dividend

$

$

50,000

Shares issued for deferred financing costs

$

397,773

$

Note receivable for property and equipment

$

275,000

$

608,786

Beneficial conversion feature on convertible notes payable

$

$

1,463,883

Non-cash increase in secured notes payable for settlement of accounts payable

$

$

196,188

Equipment financed with note payable

$

843,844

$

Right of use assets and operating lease obligation recognized

$

$

2,478,508

Convertible notes payable issued to settle accounts payable

$

$

208,129

The accompanying notes are an integral part of these unaudited consolidated financial statements

6

SMG INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — BACKGROUND AND BASIS OF PRESENTATION

SMG Industries Inc. (“we”, “our”, the “Company” or “SMG”) is a corporation established pursuant to the laws of the State of Delaware on January 7, 2008. The Company’s original business was the acquisition and stockpile of a rare metal known as Indium used in cell phones and other industrial applications. The Company eventually sold its stockpile and distributed most of the proceeds to its stockholders via special dividends and share repurchases.

The Company today is a growth-oriented midstream, logistics and oilfield services company that operates throughout the domestic Southwest United States. Through its wholly-owned operating subsidiaries, the Company offers an expanding suite of products and services across the oilfield market segments of drilling, completions and production.

SMG is headquartered in Houston, Texas with facilities in Odessa, Floresville, Henderson, Victoria and Palestine, Texas, and Fort Mill, South Carolina.

In March 2020 the World Health Organization declared COVID-19 a pandemic. Throughout 2020 and into 2021 and through 2022, many variants of the virus arose. To date, the Company’s financial results and operations have not been materially adversely impacted by the COVID-19 pandemic. The extent to which the COVID-19 pandemic and global efforts to contain its spread will impact our operations going forward will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the pandemic and the actions taken to contain or treat the COVID-19 pandemic.

The accompanying unaudited interim consolidated financial statements of SMG have been prepared in accordance with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited consolidated financial statements and notes thereto for the years ended December 31, 2021 and 2020 in the Form 10-K filed on April 15, 2022. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the Form 10-K have been omitted.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The Company prepares its consolidated financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its wholly subsidiaries, 5J Trucking LLC, 5J Oilfield Services LLC, 5J Specialized LLC, 5J Transportation LLC and 5J Brokerage LLC (together referred to as “5J”), Momentum Water Transfer Services, LLC (“MWTS”), Jake Oilfield Solutions LLC (“Jake”) and Trinity Services LLC (“Trinity”), all of which have quarter ends of June 30 and fiscal year end of December 31. All intercompany accounts, balances and transactions have been eliminated in the consolidation.

Fair Value of Financial Instruments

The carrying value of short-term instruments, including cash, accounts payable and accrued expenses, and short-term notes approximate fair value due to the relatively short period to maturity for these instruments. The carrying value of long-term debt approximates fair value since the related rates of interest approximate current market rates.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows:

Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets

7

Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3: inputs to the valuation methodology are unobservable and significant to the fair value

The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.

Discontinued Operations

In December 2020 we sold MG and decided to cease the operations of Trinity. An entity that is disposed of by sale or ceasing of operations is reported as discontinued operations if the transaction represents a strategic shift that will have a major effect on an entity’s operations and financial results. As such, MG and Trinity are reported as discontinued operations.

Assets and liabilities of the discontinued operations are aggregated and reported separately as assets and liabilities of discontinued operations in the Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021. The results of discontinued operations are aggregated and presented separately in the Consolidated Statements of Operations as net income (loss) from discontinued operations for the three and six months ended June 30, 2022 and 2021. The cash flows of the discontinued operations are reflected as cash flows of discontinued operations within the Company’s Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021.

Amounts presented in discontinued operations have been derived from our consolidated financial statements and accounting records using the historical basis of assets, liabilities, results of operations, and cash flows of MG and Trinity. The discontinued operations exclude general corporate allocations.

Basic and Diluted Net Loss per Share

The Company presents both basic and diluted net loss per share on the face of the statements of operations. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted per share calculations give effect to all potentially dilutive shares of common stock outstanding during the period, including stock options and warrants, and using the treasury-stock method for stock options and warrant and the “if converted” method for convertible notes payable and preferred stock. If anti-dilutive, the effect of potentially dilutive shares of common stock is ignored. For the three and six months ended June 30, 2022, 1,525,000 of stock options, 1,763,335 of warrants and 79,467,400 shares issuable from convertible notes were considered for their dilutive effects. For the three and six months ended June 30, 2021, 1,700,000 of stock options, 1,763,335 of warrants, 4,000,000 shares issuable from Series A Preferred Stock and 42,961,290 shares issuable from convertible notes were considered for their dilutive effects. As a result of the Company’s net losses for the three and six months ended June 30, 2022 and 2021, all potentially dilutive instruments were excluded as their effect would have been anti-dilutive.

Reclassification

Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation.

Recent Accounting Pronouncements

The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.

NOTE 3 – GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, no adjustments to the consolidated financial statements have been made to account for this uncertainty. The Company concluded that the uncertainty surrounding the COVID-19 global pandemic, its negative working capital, and negative cash flows from operations are conditions that raised substantial doubt about the Company’s ability to continue as a going concern. The Company plans to continue to generate additional revenue (and improve cash flows from operations) in connection with its anticipated growth related to the Company’s February 2020 acquisition of 5J and its expanded revenue lines in heavy haul, super heavy haul, drilling rig mobilization, commodity freight, and brokerage services.

8

NOTE 4 – REVENUE

Disaggregation of revenue

All of the Company’s revenue from continuing operations is currently generated from services. As such no further disaggregation of revenue information is provided. All revenues are currently in the southern region of the United States.

Customer Concentration and Credit Risk

During the six months ended June 30, 2022 and 2021, no customers exceeded 10% of revenue. No customer accounted for 10% of accounts receivable as of June 30, 2022 and December 31, 2021.

NOTE 5 – PROPERTY AND EQUIPMENT, NET

Property and equipment at June 30, 2022 and December 31, 2021 consisted of the following:

    

June 30, 2022

    

December 31, 2021

Equipment

$

7,805,619

$

7,768,597

Trucks and trailers

11,536,365

11,167,001

Downhole oil tools

 

659,873

 

659,873

Vehicles

 

1,538,528

 

1,538,528

Building

493,529

493,529

Furniture, fixtures and other

 

98,017

 

98,017

Property and equipment, gross

 

22,131,931

 

21,725,545

Less: accumulated depreciation

 

(13,929,165)

 

(11,262,193)

Property and equipment, net

$

8,202,766

$

10,463,352

Depreciation expense for the three months ended June 30, 2022 and 2021 was $1,397,490 and $1,319,104, respectively. Depreciation expense for the six months ended June 30, 2022 and 2021 was $2,754,891 and $2,737,505, respectively.

NOTE 6 – ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses as of June 30, 2022 and December 31, 2021 included the following:

    

June 30, 2022

    

December 31, 2021

Payroll and payroll taxes payable

$

1,386,191

$

1,929,414

State and local tax payable

 

495,097

 

422,781

Interest payable

548,221

482,950

Accrued operational expenses

1,546,037

1,006,343

Accrued general and administrative expenses

100,300

178,561

Other

 

21,356

 

35,064

Total Accrued Expenses and Other Liabilities

$

4,097,202

$

4,055,113

9

NOTE 7 – NOTES PAYABLE

Notes payable included the following as of June 30, 2022 and December 31, 2021:

    

June 30, 

    

December 31, 

2022

2021

Secured notes payable:

 

  

 

  

Secured note payable issued December 7, 2018 to a shareholder, bearing interest of 10% per year, due one year after issuance. On March 6, 2020, the note was extended to June 30, 2020. Note is currently past due. If a default notice is received the interest rate will be 14%

$

100,000

$

100,000

Secured note payable issued December 7, 2018 to a shareholder, bearing interest of 10% per year, due one year after issuance. On March 6, 2020, the note was extended to June 30, 2020. Note is currently past due. If a default notice is received the interest rate will be 14%.

 

100,000

 

100,000

Secured note payable issued December 7, 2018, bearing interest of 10% per year, due one year after issuance. Note is currently past due. If a default notice is received, the interest rate will be 14%.

 

100,000

 

100,000

Secured note payable issued on December 7, 2018 related to the acquisition of MWTS, bearing interest of 6% per year and due in monthly installments of $7,500, with a maturity date of December 8, 2023.

 

792,470

 

792,470

Secured note payable issued May 1, 2019 to a shareholder, bearing interest of 10% per year, due July 1, 2019, principal balance $100,000. Note was extended to March 30, 2020. Note is currently past due. If a default notice is received the interest rate will be 14%.

 

100,000

 

100,000

Secured note payable issued June 17, 2019 to a shareholder, bearing interest of 10% per year, due June 30, 2020. Note is currently past due. If a default notice is received, the interest rate will be 14%.

 

80,000

 

80,000

 

Secured note payable with a related party issued February 27, 2020 in connection with the 5J acquisition, bearing interest of 10% per year, due February 1, 2023.

 

2,000,000

 

2,000,000

Various notes payable secured by equipment of 5J Trucking, LLC, bearing interest ranging from 5.32% to 5.5% maturing from January 2023 through March 2023.

195,435

343,723

Secured note payable with a related party issued on February 27, 2020, bearing interest of 10.0% per year, due March 1, 2023.

311,449

545,050

Secured promissory notes for Jake, SMG Industries, Inc, and 5J Trucking LLC, with Small Business Administration Economic Injury Disaster Loans, bearing interest 3.75% annually and matures in June, August, and September 2050.