Cautionary Note Regarding Forward-Looking Statements



Unless otherwise indicated, the terms "SMG Industries," "SMG," the "Company,"
"we," "us," and "our" refer to SMG Industries Inc. In this Quarterly Report on
Form 10-Q, we may make certain forward-looking statements, including statements
regarding our plans, strategies, objectives, expectations, intentions and
resources that are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The Securities and Exchange Commission
("SEC") encourages companies to disclose forward-looking information so that
investors can better understand a company's future prospects and make informed
investment decisions. This Quarterly Report on Form10-Q contains such
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements may be made directly in this
Quarterly Report, and they may also be made a part of this Quarterly Report by
reference to other documents filed with the SEC, which is known as
"incorporation by reference."

The statements contained in this Quarterly Report on Form 10-Q that are not
historical fact are forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995), within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended and Section 27A of the
Securities Act of 1933, as amended. Forward-looking statements may be identified
by the use of forward-looking terminology such as "should," "could," "may,"
"will," "expect," "believe," "estimate," "anticipate," "intends," "continue," or
similar terms or variations of those terms or the negative of those terms. All
forward-looking statements are management's present expectations of future
events and are subject to a number of risks and uncertainties that could cause
actual results to differ materially from those described in the forward-looking
statements. These statements appear in a number of places in this Form 10-Q and
include statements regarding the intent, belief or current expectations of SMG
Industries Inc. Forward-looking statements are merely our current predictions of
future events. Investors are cautioned that any such forward-looking statements
are inherently uncertain, are not guaranties of future performance and involve
risks and uncertainties. Actual results may differ materially from our
predictions. There are a number of factors that could negatively affect our
business and the value of our securities, including, but not limited to,
fluctuations in the market price of our common stock; changes in our plans,
strategies and intentions; changes in market valuations associated with our cash
flows and operating results; the impact of significant acquisitions,
dispositions and other similar transactions; our ability to attract and retain
key employees; changes in financial estimates or recommendations by securities
analysts; asset impairments; decreased liquidity in the capital markets; and
changes in interest rates. Such factors could materially affect our Company's
future operating results and could cause actual events to differ materially from
those described in forward-looking statements relating to our Company. Although
we have sought to identify the most significant risks to our business, we cannot
predict whether, or to what extent, any of such risks may be realized, nor is
there any assurance that we have identified all possible issues that we might
face.

In light of these assumptions, risks and uncertainties, the results and events
discussed in the forward-looking statements contained in this Quarterly Report
on Form 10-Q or in any document incorporated by reference might not occur.
Stockholders are cautioned not to place undue reliance on the forward-looking
statements, which speak only as of the date of this Quarterly Report on Form
10-Q or the date of the document incorporated by reference in this Quarterly
Report on Form 10-Q, as applicable. We are not under any obligation, and we
expressly disclaim any obligation, to update or alter any forward-looking
statements, whether as a result of new information, future events or otherwise
except as may be required by applicable law. All subsequent forward-looking
statements attributable to the Company or to any person acting on our behalf are
expressly qualified in their entirety by the cautionary statements contained or
referred to in this section. We urge readers to carefully review and consider
the various disclosures we make in this report and our other reports filed with
the SEC that attempt to advise interested parties of the risks, uncertainties
and other factors that may affect our business including the risk factors
included herein under Item 1A "Risk Factors." in our Annual Report on Form 10-K.

Overview



We are a growth-oriented transportation services company focused on the domestic
logistics market. Our primary business objective is to grow our operations and
create value for our stockholders through organic growth and strategic
acquisitions. We have implemented a Buy & Build growth strategy of acquiring
middle market transportation companies and generating organic growth
post-acquisition, when possible, by removing business constraints and strategic
cross-selling of services benefiting us with higher equipment utilization and
market share. We believe our business focus and equipment fleet position us to
be significant participant in the domestic United States infrastructure market.

Our wholly-owned operating subsidiaries are:



 ? 5J Trucking LLC


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? 5J Oilfield Services LLC




 ? 5J Specialized LLC


 ? 5J Transportation LLC

? 5J Logistics Services LLC

Together these business units are referred to as the "5J Transportation Group".

Our operating subsidiaries provide a range of transportation services such as:

? Transporting infrastructure components including bridge beams and power

generation transformers

? Transporting wind energy components

? Heavy haul of production equipment, heat exchangers, coolers, construction

equipment, refinery components

? Super heavy haul over-dimensional permit-required loads up to 500 thousand

pounds for engineered projects

? Transportation of midstream compressors

? Flatbed freight

? Crane services used to set equipment on compressor stations, pipeline

infrastructure and load drilling rig components

? Drilling rig relocation for drilling contractors and oil and gas operators




 ? Freight brokerage


In connection with our focus to expand our transportation services business and
exit certain up-stream oil and gas industrial-related businesses, the financial
results of the following business have been classified as discontinued
operations on our consolidated financial statements:

? MG Cleaners LLC. The Company sold this business in December 2020

? Trinity Services LLC

We are headquartered in Houston, Texas with facilities in Floresville, Hempstead, Henderson, Houston, Odessa, Palestine, Victoria, Texas and Fort Mill, South Carolina. Our web sites are www.SMGIndustries.com and www.5J-Group.com.

Acquisition, divestiture and wind-down of businesses



On February 27, 2020, we acquired one hundred percent of the membership
interests of each of 5J Oilfield Services LLC ("5J Oilfield") and 5J Trucking
LLC ("5J Trucking"), combined referred to as "5J". The aggregate purchase price
of 5J was $12.7 million, consisting of a combination of cash, notes and Series B
Convertible Preferred Stock.

In December 2020 we sold MG Cleaners LLC ("MG"), an oil and gas ("O&G") drilling
rig cleaning company. The results of operations of MG are reflected in the
Consolidated Statements of Operations for the year ended December 31, 2020 as
"net loss from discontinued operations".

In December 2020, the Company decided to cease the operations of Trinity
Services LLC ("Trinity"), an O&G drilling pad dirt construction company. The
assets and operations of Trinity are reflected on the December 31, 2021 and 2020
Consolidated Balance Sheets as "assets or liabilities of discontinued
operations" and the results of operations are reflected in the Consolidated
Statements of Operations for the years ended December 31, 2021 and 2020 as "net
loss from discontinued operations".

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In the second quarter of 2021 we formed 5J Transportation LLC in connection with
leasing the East Houston terminal operations for our flatbed services. In the
first quarter of 2021, we formed 5J Brokerage LLC, which was renamed 5J
Logistics Services LLC during the fourth quarter of 2021, our transportation
brokerage business, in connection with offering those services.

All of our 5J subsidiaries are referred to as the 5J Transportation Group.

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.

Critical Accounting Policies and Estimates



The preparation for financial statements and related disclosures in conformity
with United States generally accepted accounting principles (U.S. GAAP) requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. For a description of our
significant accounting policies, see the Company's audited consolidated
financial statements for the year ended December 31, 2021, included in the
Company's Form 10-K as filed with the SEC on April 15, 2022. We do not consider
any of our policies or estimates to be critical. Management will base its
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. Actual results could differ
from these estimates under different assumptions or conditions.

Results of Operations

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

The following table sets forth the results of our operations for the three months ended September 30, 2022 and 2021.



                                                  Three months ended September 30,
                                                      2022                 2021
Sales                                           $      19,331,484     $   14,772,939
Cost of goods sold                                     18,070,208         15,292,090
Gross profit (loss)                                     1,261,276          (519,151)
Operating expenses                                      2,404,852          1,455,253
Loss from operations                                  (1,143,576)        (1,974,404)
Other expense                                         (2,053,561)        (1,954,560)
Loss from continuing operations                       (3,197,137)        

(3,928,964)


Income (loss) from discontinued operations                (2,852)          

 316,926
Net loss                                              (3,199,989)        (3,612,038)
Preferred stock dividends                                       -           (25,000)

Net loss attributable to common shareholders $ (3,199,989) $ (3,637,038)




The Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021
present the assets and liabilities of MG and Trinity as discontinued operations.
The Consolidated Statements of Operations for the quarters ended September 30,
2022 and 2021 present the results of MG and Trinity as Net loss from
discontinued operations. The Consolidated Statements of Cash Flows for the
quarters ended September 30, 2022 and 2021 present operating, investing and
financing activities of MG and Trinity as cash flows from or used in
discontinued operations.

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Sales for the quarter ended September 30, 2022 increased to $19,331,484, an
increase of 30.9% from $14,772,939 for the quarter ended September 30, 2021. The
increase in sales in the third quarter of 2022 was primarily driven by increased
revenues in our industrial transportation segment from higher customer activity
transporting drilling rigs, and in our heavy haul business transporting bridge
beams, over-dimensional infrastructure items and large natural gas compressors.
Our increase in revenues was also attributable to the general improvement in the
domestic United States economy from COVID-19 pandemic.

Cost of Goods Sold



Cost of goods sold for the three months ended September 30, 2022, was
$18,070,208, compared to $15,292,090 for the same period of 2021. As a
percentage of overall sales, the cost of goods sold was 93.5% during the three
months ended September 30, 2022, compared to 103.5% for the same fiscal period a
year ago. Cost of goods sold includes $1,389,753 and $1,337,233, in non-cash
depreciation charges for the three months ended September 30, 2022 and 2021,
respectively. The increase over the prior year was due to higher direct expenses
associated with the increased volume of revenues, including driver payroll and
settlements, and increased fuel and freight costs compared to the prior period.
We currently believe the Company will continue to improve cost of goods sold as
a percentage of sales through increased revenues covering more fixed costs
within cost of goods sold and higher utilization of our existing equipment fleet
through anticipated future increases in customer demand.

Gross Profit (Loss)

Gross profit for the three months ended September 30, 2022, was $1,261,276, compared to a gross loss of $519,151 for the same period of 2021. Our gross profit margin was 6.5% during the three months ended September 30, 2022, compared to a negative gross margin of 3.5% for the same fiscal period a year ago. The improvement in gross margin is due to higher revenues as described above and increased customer pricing as compared to the third quarter 2021 results.



Operating Expenses

                                 Three months ended September 30,
                                    2022                  2021
Operating expenses:
General and administrative    $       2,404,852     $       1,455,253
Operating expenses            $       2,404,852     $       1,455,253


Total operating expenses were $2,404,852 in the three months ended September 30,
2022, compared to $1,455,253 in the same period of 2021, representing an
increase in operating expenses of $949,599, or 65.3%, from the three months
ended September 30, 2021. The increase in operating expenses was primarily
attributable to higher wage expense from additional managerial personnel added
during the period for our newer divisions of brokerage & logistics, and super
heavy haul, as well as increased professional and general corporate expenses.

Loss From Operations



As a result of the preceding, our loss from operations was $1,143,576 during the
three months ended September 30, 2022, compared with $1,974,404 for the same
period of 2021. This $830,8288, or 42.1%, improvement in our loss from
operations was primarily attributable to gross margin improvement and higher
revenues in the third quarter 2022 compared to the year ago period.

Other Expense


Total other expense was $2,053,561 for the three months ended September 30, 2022
compared to other income of $1,954,560 for the three months ended September 30,
2021. Interest expense was $2,635,875 and $2,059,908 for the three months ended
September 30, 2022 and 2021, respectively, as a result of increased non-cash
amortization of debt costs associated with convertible debt issued in 2021 and
deferred finance costs resulting from shares issued. Additionally, the Company
recognized a gain of $564,814 from settlement of debt during the three months
ended September 30, 2022.

Net Loss From Continuing Operations


The result was that our net loss from continuing operations was $3,197,137
during the three months ended September 30, 2022, compared with $3,928,964 for
the same period of 2021. This $731,827, or 18.6%, improvement in our net loss
from continuing

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operations was primarily attributable to the Company's improved net loss from
continuing operations due to the gross margin improvements described above and
the recognition of gain from settlement of debt of $564,814.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

The following table sets forth the results of our operations for the nine months ended September 30, 2022 and 2021.



                                                  Nine months ended September 30,
                                                      2022                2021
Sales                                           $      53,589,434     $  34,618,358
Cost of goods sold                                     49,731,153        36,947,626
Gross profit (loss)                                     3,858,281       (2,329,268)
Operating expenses                                      7,156,698         4,584,854
Loss from operations                                  (3,298,417)       (6,914,122)
Other expense                                         (6,516,888)       (1,242,770)
Loss from continuing operations                       (9,815,305)       

(8,156,892)


Income (loss) from discontinued operations               (36,090)          

360,207
Net loss                                              (9,851,395)       (7,796,685)
Preferred stock dividends                                       -          (75,000)

Net loss attributable to common shareholders $ (9,851,395) $ (7,871,685)




The Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021
present the assets and liabilities of MG and Trinity as discontinued operations.
The Consolidated Statements of Operations for the nine months ended September
30, 2022 and 2021 present the results of MG and Trinity as Net loss from
discontinued operations. The Consolidated Statements of Cash Flows for the nine
months ended September 30, 2022 and 2021 present operating, investing and
financing activities of MG and Trinity as cash flows from or used in
discontinued operations.

Sales for the nine months ended September 30, 2022 increased to $53,589,434, an
increase of 54.8% from $34,618,358 for the nine months ended September 30, 2021.
The increase in sales during the nine months of 2022 was primarily driven by
increased revenues in our industrial transportation segment from higher customer
activity transporting drilling rigs, and in our heavy haul business transporting
bridge beams, over-dimensional infrastructure items and large natural gas
compressors. Our increase in revenues was also attributable to the general
improvement in the domestic United States economy from COVID-19 pandemic.

Cost of Goods Sold



Cost of goods sold for the nine months ended September 30, 2022, was
$49,731,153, compared to $36,947,626 for the same period of 2021. As a
percentage of overall sales, the cost of goods sold was 92.8% during the nine
months ended September 30, 2022, compared to 106.7% for the same fiscal period a
year ago. Cost of goods sold includes $4,144,644 and $4,074,738, respectively in
non-cash depreciation charges for the nine months ended September 30, 2022 and
2021. The increase over the prior year was due to higher direct expenses
associated with the increased volume of revenues, including driver payroll and
settlements, increased fuel and freight costs compared to the prior period. We
currently believe the Company will continue to improve cost of goods sold as a
percentage of sales through increased revenues covering more fixed costs within
cost of goods sold and higher utilization of our existing equipment fleet
through anticipated future increases in customer demand.

Gross Profit (Loss)


Gross profit for the nine months ended September 30, 2022, was $3,858,281,
compared to a gross loss of $2,329,268 for the same period of 2021. Our gross
profit margin was 7.2% during the nine months ended September 30, 2022, compared
to a gross loss margin of 6.7% for the same fiscal period a year ago. The
improvement in gross loss margin is due to higher volumes of revenues and more
favorable pricing as compared to the comparable nine month period 2021 results.

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Operating Expenses

                                 Nine months ended September 30,
                                    2022                 2021
Operating expenses:
General and administrative    $      7,156,698     $      4,584,854
Operating expenses            $      7,156,688     $      4,584,854
Total operating expenses were $7,156,698 in the nine months ended September 30,
2022, compared to $4,584,854 in the same period of 2021, representing an
increase in operating expenses of $2,571,844, or 56%, from the nine months ended
September 30, 2021. The increase in operating expenses was primarily
attributable to higher wage expense from additional managerial personnel added
during the period for our newer divisions of brokerage & logistics, and super
heavy haul, professional fees as well as general corporate expenses.

Loss From Operations



As a result of the preceding, our loss from operations was $3,298,417 during the
nine months ended September 30, 2022, compared with $6,914,122 for the same
period of 2021. This $3,615,705, or 52%, improvement in our loss from operations
was primarily attributable to gross margin improvement and higher revenues
reducing our gross loss during the nine month period ended September 30, 2022
compared to the year ago period.

Other Expense


Total other expense was $6,516,888 for the nine months ended September 30, 2022
compared to other expense of $1,242,770 for the nine months ended September 30,
2021. Interest expense was $7,433,606 and $4,630,685 for the nine months ended
September 30, 2022 and 2021, respectively, as a result of increased non-cash
amortization of debt costs associated with convertible debt issued in 2021 and
shares issued as deferred finance costs. Non-cash amortization of debt costs was
$3,124,398 and $1,096,867 for the nine months ended September 30, 2022 and 2021,
respectively. Additionally, the Company recognized a gain of $564,814 from
settlement of debt during the three months ended September 30, 2022 and
recognized a gain of $3,253,100 from PPP loan forgiveness during the three
months ended September 30, 2021.

Net Loss From Continuing Operations


The result was that our net loss from continuing operations was $9,818,305
during the nine months ended September 30, 2022, compared with $8,156,892 for
the same period of 2021. This $1,658,413, or 20.3%, increase in our net loss
from continuing operations was primarily attributable to increased interest
expense and PPP loan forgiveness in 2021, as described above.

Liquidity and Capital Resources



Our cash flows from operations are primarily funded through our financing
activities, including our accounts receivable line of credit facility, notes and
loans, stock sales, issuing our stock for services and various leases.
Currently, we believe we will need to continue to utilize lines of credit,
borrowings, and stock sales to sufficiently sustain our current level of
operations for the next 12 months. At present, we believe the industry and
general domestic economic activity has realized improvement relative to the
period one year ago as commodity prices have risen generating higher customer
activity in our industrial division, as well as economic improvement from
reduced COVID-19 pandemic prevalence in the markets we operate. These economic
improvements, currently anticipated by the Company are partially offset by
believed inflationary pressures such as higher fuel prices. We likely will
require additional capital to maintain or expand operations. Additionally, we
believe any material acquisition of another operating company would require
additional outside capital consisting of debt or equity. Failure to secure
additional funds could significantly hamper our ongoing operations particularly
if a down cycle in our industry continues further. As the business cycle
improves, and the pandemic dissipates in the markets we serve, we plan to
improve our cash flows provided in operating activities by focusing on
increasing sales by increasing utilization of the assets we have acquired and
offering higher value services that receive higher gross margins. However, there
can be no assurances given of industry improvement, pandemic relief or improved
cash flows of our business.

Historically, we have funded our capital expenditures internally through cash
flow, leasing, and financing arrangements. We intend to continue to fund future
capital expenditures through cash flow, as well as through capital available to
us pursuant to our line of credit, capital from the sale of our equity
securities and through commercial leasing and financing programs.

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On September 7, 2021, 5J Trucking, 5J Oilfield, 5J Transportation, 5J Logistics
Services (formerly 5J Brokerage) and 5J Specialized LLC (the "5J Entities")
entered into a loan agreement ("Loan Agreement") and security agreement
("Security Agreement") with Amerisource Funding Inc. ("Amerisource") in the
total amount of $12,740,000. Pursuant to the terms of the Loan Agreement, the 5J
Entities will pay interest only on a monthly basis through October 1, 2022 and
principal and interest thereafter over the remaining term through September 7,
2026. The Note bears interest at a rate of 12.0% per annum and may be prepaid
early at any time without penalty. The 5J Entities will also pay an annual
collateral management fee to Amerisource in the amount of 0.40% of the total
loan amount payable at the closing and each anniversary during the term of the
note. Amerisource is a related party of the Company due to its holdings of
common stock and convertible debt of the Company and has an officer on the Board
of Directors of the Company. On March 15, 2022, each of our 5J subsidiaries
entered into an agreement with Amerisource pursuant to which Amerisource agreed
to increase the loan commitment to the 5J entities from $12,740,000 to
$16,740,000. The Company received $4,000,000 of cash proceeds from this
agreement.

Pursuant to the terms of the Security Agreement, the 5J Entities granted a security interest in all of their assets to Amerisource as collateral for the repayment of the Amerisource loan.



In connection with the Loan Agreement, the Company, the parent company of each
of the 5J Entities, entered into a pledge agreement pursuant to which the
Company has granted a security interest in all of its assets to Amerisource and
a guaranty agreement pursuant to which the Company has guaranteed the timely
payment of all amounts due under the Loan Agreement. The Loan Agreement includes
customary covenants, including a negative convent that the 5J Entities may not
create or permit for any lien to exist on the collateral nor enter into any new
debt agreement.

The proceeds from the issuance of the Note were used to pay down the outstanding
balance owed to Utica Leaseco LLC ("Utica") pursuant to a Second Forbearance
Agreement entered into by and between 5J Trucking and 5J Oilfield with Utica on
September 7, 2021 ("Forbearance Agreement"). The Utica agreement was paid in
full through the Amerisource Loan Agreement in November 2021.

On February 27, 2020, the 5J Entities entered into a Revolving Accounts
Receivable Assignment and Term Loan Financing and Security Agreement with
Amerisource Funding Inc. ("Amerisource") in the aggregate amount of $10,000,000
("Amerisource Financing"). The Company used a portion of the proceeds from the
Amerisource Financing to pay the cash portion of the purchase price of the 5J
Entities.

The Amerisource Financing provides for: (i) an equipment loan in the principal
amount of $1,401,559 ("Amerisource Equipment Loan"), (ii) a bridge term facility
in the amount of $550,690 ("Bridge Facility"), and (iii) an accounts receivable
revolving line of credit up to $10,000,000 ("AR Facility").

The AR Facility has been issued in an amount not to exceed $10,000,000, with the
maximum availability limited to 90% of the eligible accounts receivable (as
defined in the financing agreement). The AR Facility is paid for by the
assignment of the accounts receivable of each of the 5J Entities and is secured
by all instruments and proceeds related thereto. The AR Facility has an interest
rate of 4.5% in excess of the prime rate per annum, an initial collateral
management fee of 0.75% of the maximum account limit per annum, a non-usage fee
of 0.35% assessed on a quarterly basis on the difference between the maximum
availability under the AR Facility and the average daily revolving loan balance
outstanding, and a one time commitment fee equal to $100,000 paid at closing.
The AR Facility can be terminated by the 5J Entities with 60 days written
notice. There is an early termination fee equal to two percent (2.0%) of the
then maximum account limit if there are more than twelve (12) months remaining
in term of the AR Facility, or one percent (1.0%) of the then maximum account
limit if there twelve months or less remaining in the term of the AR Facility.
The Company is a guarantor of the Amerisource Financing.

The Amerisource Equipment Loan in the amount of $1,401,559 is secured by certain
equipment pledged as collateral, has a term of thirty-six (36) months during
which the 5J Entities shall make equal monthly payments of principal and
interest, bears an interest rate of prime rate plus five and one-quarter percent
(5.25%) and an origination fee equal to one and one-half percent (1.5%) of the
loan amount.

On February 27, 2020, the Company entered into a loan agreement with Amerisource
Leasing Corporation for the sale of a 10% convertible promissory note in the
principal amount of $1,600,000 ("Amerisource Note") to Amerisource ("Amerisource
Loan Agreement"). The Amerisource Note matures on February 27, 2023 and is
convertible into shares of the Company's common stock at a conversion price of
$0.25 per share. The interest rate on the Amerisource Note increases to 11% per
annum on February 27, 2021 and to 12% per annum on February 27, 2022. Interest
shall be paid on a quarterly basis. In addition, 2,498,736 shares of the
Company's

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common stock were issued to the noteholder in connection with the sale of the
Amerisource Note. The Amerisource Note may be prepaid at any time by the Company
on 10 days-notice to the noteholder without penalty.

During the year ended December 31, 2021, we sold an aggregate of $5,287,740 principal amount of convertible promissory notes and issued 7,931,612 shares of restricted common stock in connection therewith.

We had net working capital deficit of $13,629,258, as of September 30, 2022, compared to a deficit of $10,295,788 as of December 31, 2021.

Cash Flows



The following is a summary of cash provided by or used in each of the indicated
types of activities during the nine months ended September 30, 2022 and 2021:

                                                                   Nine months ended September 30,
                                                                     2022                  2021
Cash provided by (used in):
Operating activities from continuing operations                 $     (580,253)            (5,886,248)
Operating activities from discontinued operations                             -                568,518
Operating activities                                                  (580,253)            (5,317,730)

Investing activities from continuing operations                         282,070              (132,026)
Investing activities from discontinued operations                             -                      -
Investing activities                                                    282,070              (132,026)

Financing activities from continuing operations                         683,308              5,639,904
Financing activities from discontinued operations                             -              (226,932)
Financing activities                                            $       683,308              5,412,972


Operating Activities



Net cash used in operating activities was $580,253 for the nine months ended
September 30, 2022, compared to cash used in operating activities of $5,317,730
during the same period of 2021, including $0 and $568,518 of cash flows provided
by discontinued operations, respectively.

For the nine months ended September 30, 2022, net cash used in continuing
operating activities of $580,253 consisted of net loss of $9,815,305, which
included non-cash costs of depreciation and amortization of $4,144,644, shares
issued for debt extension of $643,467, amortization of deferred financing costs
of $3,124,398, gain on settlement of debt of $564,814 and gain on disposal of
assets of $351,904. Changes in working capital accounts included changes in
accrued expenses and other liabilities of $706,001, other assets of $187,239 and
accounts payable of $144,341, partially offset by changes in prepaid expenses
and other current assets of $2,775,210.

For the nine months ended September 30, 2021, net cash used in continuing
operating activities of $5,886,248 consisted of net loss of $8,156,892, which
included non-cash costs of depreciation and amortization of $4,074,738, gain on
PPP forgiveness loan of $3,253,100, gain on sale of assets of $114,926,
amortization of deferred financing costs of $1,096,867. Changes in working
capital accounts included changes in accounts receivable of $6,508,178, other
assets of $306,029 and right of use operating lease liabilities of $277,329,
partially offset by changes in accounts payable of $2,454,235, prepaid expenses
and other current assets of $2,193,864 and accrued expenses and other labilities
of $2,155,223.

Investing Activities

Net cash provided by investing activities was $282,070 for the nine months ended September 30, 2022, compared to net cash used in investing activities of $132,026 for the nine months ended September 30, 2021.



For the nine months ended September 30, 2022, net cash provided by investing
activities consisted of $329,271 of cash proceeds from disposal of property and
equipment and $47,201 cash paid for fixed asset additions.

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For the nine months ended September 30, 2021, net cash used in investing activities consisted of $35,000 paid to the buyer of MG Cleaners and cash used for the purchase of equipment of $97,026.

Financing Activities


Net cash provided by financing activities was $683,308 for the nine months ended
September 30, 2022, compared to $5,412,972 for the nine months ended September
30, 2021, including $0 and $226,932 of cash used in related to discontinued
operations, respectively.

For the nine months ended September 30, 2022, net cash provided by financing
activities consisted of proceeds from notes payable of $5,229,098, partially
offset by repayment of notes payable of $3,624,328 and net payments on secured
line of credit of $921,462.

For the nine months ended September 30, 2021, net cash provided by financing
activities consisted of net proceeds from notes payable of $8,274,002, proceeds
from convertible notes payable of $3,255,000 and net proceeds on secured lines
of credit of $2,880,180, offset by payments on notes payable of $8,698,655 and
payment on convertible note payable of $50,000.

Off-Balance-Sheet Transactions

As of September 30, 2022, the Company has cash collateral deposit in the amount of $1,104,207 as collateral for its insurance policy.

Contractual Commitments

None

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