UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): January 14, 2021 (December 31, 2020)

 

SMG INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

 

Delaware   000-54391   51-0662991
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification No.)

 

710 N. Post Oak Road, Suite 315    
Houston, Texas   77024
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code:

 

(713-821-3153)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

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 13(a) of the Exchange Act.   ¨

 

 

 

 

 

 

ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT

 

On February 27, 2020, the Company, James E. Frye (“Frye”) and 5J Oilfield Services LLC (“5J Oilfield”) entered into a membership interest purchase agreement (“Purchase Agreement”) pursuant to which the Company acquired 100% of the membership interests of 5J Oilfield from Frye in exchange for certain consideration, which included the issuance to Frye of 6,000 shares of SMGI Series B Convertible Preferred Stock, with a stated value of $1,000 per share in accordance with the Certificate of Designation of Preferences, Rights and Limitations of 5% of Series B Convertible Preferred Stock dated effective January 1, 2020 ( “SMGI Preferred Shares”).

 

On December 31, 2020, the Company, Frye and 5J Oilfield entered into an Amendment and Partial Recission of Membership Interest Purchase Agreement (“Recission Agreement”), effective as of February 27, 2020 (the “Effective Date”), pursuant to which the parties agreed to rescind the issuance of the SMGI Preferred Shares to Frye as of the Effective Date. There have not been any distributions, payments or other transactions effected with respect to the SMGI Preferred Shares between the issuance date and the date of the Recission Agreement. After this transaction was completed, none of the SMGI Preferred Shares are issued and outstanding.

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 

(d) Exhibits.

 

10.20 Amendment and Partial Recission of Membership Interest Purchase Agreement (“Recission Agreement”), effective as of February 27, 2020

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: January 14, 2021 SMG Industries Inc.
     
  By: /s/ Jeffrey Martini
  Name:   Jeffrey Martini
  Title: Chief Executive Officer

 

 

 

Exhibit 10.20

 

AMENDMENT AND PARTIAL RESCISSION OF
MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

This Amendment and Partial Rescission of Membership Interest Purchase Agreement (the “Amendment and Partial Rescission Agreement”), dated effective February 27, 2020 (the “Effective Date”) is made and entered into by and among 5J Oilfield Services, LLC, a Texas limited liability company (“5J”), and James E. Frye, Jr. an individual and the sole member and managing member of 5J (“5J Member”), on the one hand; and SMG Industries Inc., a Delaware corporation (“SMGI”). For purposes hereof each of 5J, the 5J Member and SMGI may be referred to as a “Party” and collectively as the “Parties”.

 

RECITALS

 

WHEREAS, the Parties entered into that certain Membership Interest Purchase Agreement effective as of the Effective Date (the “MIPA”) pursuant to which SGMI acquired from the 5J Member all of the 5J Interests (making 5J upon the closing of the transaction therein contemplated (“Transaction”) a wholly-owned subsidiary of SMGI; and

 

WHEREAS, the purchase price in the Transaction included, among other things, 6,000 shares of SMGI Series B Convertible Preferred Stock, with a stated value of $1,000 per share in accordance with the Certificate of Designation of Preferences, Rights and Limitations of 5% of Series B Convertible Preferred Stock dated effective January 1, 2020 ( “SMGI Preferred Shares”);

 

WHEREAS, no distributions, payments or other transactions have been effected with respect to the SMGI Preferred Shares since the Effective Date;

 

WHEREAS, the Parties wish to rescind the issuance of the SMGI Preferred Shares under the MIPA;

 

NOW, THEREFORE, the Parties hereto, intending to be legally bound, agree as follows:

 

ARTICLE 1

THE PURCHASE AND SALE OF 5J INTERESTS

 

1.1           Rescission of Issance of SMGI Preferred Shares. The Parties hereby rescind the issuance of the SMGI Preferred Shares to the 5J Member as of the Effective Date. The 5J Member hereby relinquishes any rights with respect to the SMGI Preferred Shares, and shall be treated for all purposes as if he had never owned the SMGI Preferred Shares.

 

1.2           MIPA. Except as otherwise provided herein, the MIPA shall remain in full force and effect.

 

ARTICLE 2

GENERAL PROVISIONS

 

2.1           Governing Law; Venue. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas. Any and all actions brought under this Amendment and Rescission Agreement shall be brought in the state or federal courts of Texas, located in the city of Houston, and each Party hereby waives any right to object to the convenience of such venue.

 

2.2           Counterparts and Facsimile Signatures. This Amendment and Rescission Agreement may be executed in two or more counterparts, which together shall constitute a single agreement. This Amendment and Rescission Agreement and any documents relating to it may be executed and transmitted to any other Party by facsimile or email as a .pdf copy, which facsimile or email shall be deemed to be, and utilized in all respects as, an original, wet-inked document.

 

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2.3           Amendment. This Amendment and Rescission Agreement may be amended, modified or supplemented only by an instrument in writing executed by each of SMGI, 5J and the 5J Member.

 

2.4           Parties in Interest: No Third-Party Beneficiaries. Except as otherwise provided herein, the terms and conditions of this Amendment and Rescission Agreement shall inure to the benefit of and be binding upon the respective heirs, legal representatives, successors and assigns of the Parties hereto. This Amendment and Rescission Agreement shall not be deemed to confer upon any person not a party hereto any rights or remedies hereunder.

 

2.5           Waiver. No waiver by any party of any default or breach by another party of any representation, warranty, covenant or condition contained in this Amendment and Rescission Agreement shall be deemed to be a waiver of any subsequent default or breach by such party of the same or any other representation, warranty, covenant or condition. No act, delay, omission or course of dealing on the part of any party in exercising any right, power or remedy under this Amendment and Rescission Agreement or at law or in equity shall operate as a waiver thereof or otherwise prejudice any of such party's rights, powers and remedies. All remedies, whether at law or in equity, shall be cumulative and the election of any one or more shall not constitute a waiver of the right to pursue other available remedies.

 

2.6           Recitals Incorporated. The recitals of this Amendment and Rescission Agreement are incorporated herein and made a part hereof.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the Parties have executed this Amendment and Rescission Agreement as of the date first written above.

 

5J OILFIELD SERVICES, LLC,
A Texas limited liability company
 
 
By: /s/ James E. Frye, Jr.  
Name: James E. Frye, Jr.
Title: Sole Member and Managing Member

 

 
MEMBER: JAMES E. FRYE, JR.
 
 
Signature: /s/ James E. Frye, Jr.  
Print Name: James E. Frye, Jr.

 

[SIGNATURE PAGE OF SMGI FOLLOWS]

 

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[SIGNATURE PAGE OF SMGI]

 

SMG INDUSTRIES, INC., a Delaware corporation
 
 
By: /s/ Jeffrey R. Martini  
Name: Jeffrey R. Martini
Title:     Chief Executive Officer

 

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