SMG Industries Takes the "Going Dark" Route: What's Behind the Voluntary Deregistration?

The Move

SMG Industries Inc. (OTCQB: SMGI), a transportation and logistics company, just announced it’s voluntarily deregistering from SEC reporting requirements. The Houston-based firm plans to file a Form 15 on March 15, 2024, to shed its public company status. Once the filing goes through, they’ll be out in 90 days.

Why? According to CFO Tim Barnhart, the company wants to trim costs by roughly $1,000,000 annually and redirect resources toward core operations rather than regulatory compliance.

Why Companies Go Dark

For smaller public companies like SMGI—which has fewer than 300 holders of record—staying public can feel like deadweight. The constant 10-K, 10-Q, and 8-K filings aren’t just paperwork; they drain resources and attention. Management’s argument: the benefits of public status aren’t worth the administrative burden anymore.

By going dark, SMGI’s back-office operations become leaner. No more quarterly earnings pressure. No more investor relations overhead. Just focus on running the logistics business itself.

The Trade-offs

It’s not all upside. Once SMG Industries deregisters, its stock moves from OTCQB to the Expert Market—a less liquid venue. Shareholders will likely face tougher conditions selling their shares. The board acknowledged this risk but concluded that the long-term health of the company justifies the short-term illiquidity hit.

What Happens Next

Upon Form 15 filing, SEC reporting obligations stop immediately. The stock migration to Expert Market follows, making trading less accessible. For current SMG Industries shareholders, this is a potential friction point. For management, it’s a calculated trade-off to reduce costs and focus on building the business without public market distractions.

The question for investors: Is cutting $1,000,000 in annual overhead worth reduced trading liquidity? For SMGI, apparently yes.