Sugarmade Finalizes Terms of Landmark Deal to Acquire Top Hydroponics eCommerce Supplier, Scaling to $37Million Annualized Forward Sales
NEW YORK, October 22, 2019 -- InvestorsHub NewsWire – Sugarmade, Inc. (OTCQB:SGMD) ("Sugarmade", "SGMD", or the "Company"), a major supplier to the hydroponic cultivation and hemp sectors, is pleased to announce the finalization of terms between Sugarmade and BZRTH Inc. for a definitive agreement whereby Sugarmade will acquire BZRTH Inc. ("BZRTH"), a leading ecommerce supplier to the rapidly expanding hydroponic agricultural space. The Parties expect the acquisition to be finalized and closed by October 31, 2019.
The acquisition will position Sugarmade to book all revenues from both entities, creating a combined entity that, based on most-recent financial estimates, stands to produce $37 million in annual sales and positive cash flow and EBITDA, resulting in Sugarmade becoming one of the largest publicly traded companies in this fast growing sector.
"After months of negotiations, we now have robust terms set into place that represent enormous value for Sugarmade shareholders," commented Jimmy Chan, CEO of Sugarmade. "This acquisition, in itself, will dramatically augment the Company's top and bottom line numbers and massively expand our overall presence in the booming hydroponics and hemp ecommerce space. Further, it also represents the central piece of our overarching roll-up strategy to position Sugarmade as the dominant pick-and-shovel entity on the hydroponics side catering to producers in the explosive market for hemp and hemp-related crops in North America."
Management notes the investment boom in the production of raw hemp and hemp-related crops has tightened margins for growers through a massive expansion in the sheer number of producers. This process is driving an associated boom in the market for goods and services that improve efficiency in producing these crops as producers compete for market share and return on invested capital. Sugarmade and other companies in the hydroponic supplies markets are perhaps the most natural beneficiaries of this dynamic due to the ability to maximize output relative to inputs – invested capital, time, energy, and resources.
According to multiple sources, the global market for hydroponic and hemp cultivation supplies will remain robust for many years. For example, Maximize Market Research, PVT. LTD. recently forecasted the worldwide market during 2017 at US$26.6 billion and forecasts the market to reach US$37.7 Billion by 2026. Sugarmade has dedicated itself to becoming the dominant supplier in North America for products that address this need.
To effect this strategy, the Company places paramount importance on dominating the ecommerce side of the hydroponics market. The BZRTH acquisition will accompany its existing Master Marketing Agreement with BizRight, LLC, the sister company to BZRTH, whereby the Company will be able to vertically integrate ecommerce through ZenHydro.com (and several additional hydroponics ecommerce sales portals) with a 55,000 sq. ft. fulfillment center and a market leading logistics platform, resulting in an entity operating in a leadership position as a hydroponics equipment provider to the soaring North American hemp and hemp-related cultivation marketplace.
Mr. Chan continued, "With this acquisition, we believe Sugarmade has entered into a "best of all worlds" situation. It is clear that the hydroponics market is growing fast, as is the hemp marketplace. Additionally, the ecommerce sector is booming. Sugarmade and BZRTH capture growth from all of these market sectors and combine these with what is already stellar growth coming from BZRTH. We are pleased to announce today that since inception, the operations we are acquiring have grown astonishingly over 40% compound annual growth rate. Of course, this compares very favorably to the ecommerce sector, which grew at 15% last year and the overall retail market, which grew at only 3.9%. We cannot think of a better market in which to continue our expansion."
About Sugarmade, Inc.
Sugarmade, Inc. (OTCQB: SGMD) is a product and branding marketing company investing in operations and technologies with disruptive potential. The Company is becoming a leading supplier to the growing hemp industry and is benefitting from the growth of the hydroponic marketplace. The Company is in the process of acquiring several leading hydroponic and agricultural supply companies that are currently producing in excess of $70 million in annual revenues. The Company also operates Carryoutsupplies.com, a leader provider to the quick service restaurant industry.
FORWARD-LOOKING STATEMENTS: This release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements also may be included in other publicly available documents issued by the Company and in oral statements made by our officers and representatives from time to time. These forward-looking statements are intended to provide management's current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. They can be identified by the use of words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "would," "could," "will" and other words of similar meaning in connection with a discussion of future operating or financial performance. Examples of forward looking statements include, among others, statements relating to future sales, earnings, cash flows, results of operations, uses of cash and other measures of financial performance.
Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and other factors that may cause the Company's actual results and financial condition to differ materially from those expressed or implied in the forward-looking statements. Such risks, uncertainties and other factors include, among others. such as, but not limited to economic conditions, changes in the laws or regulations, demand for products and services of the company, the effects of competition and other factors that could cause actual results to differ materially from those projected or represented in the forward looking statements.
Any forward-looking information provided in this release should be considered with these factors in mind. We assume no obligation to update any forward-looking statements contained in this report.
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