Sugarmade CEO Issues Shareholder Letter on M&A Strategy
Following Landmark
Deal in
$24B Hydroponics Space
NEW
YORK, NY -- November 4, 2019 -- InvestorsHub NewsWire
-- Sugarmade,
Inc. (OTCQB:SGMD)
("Sugarmade", "SGMD", or the "Company"), a major supplier to the
hydroponic cultivation and hemp sectors, issues
the following Letter to Shareholders from the Company's
CEO:
Dear
Valued Shareholder,
As
announced in recent days, we have completed a landmark deal to
acquire BZRTH,
LLC ("BZRTH"), one
of the true market leaders on the ecommerce side of the
explosive hydroponic
agricultural space. This
acquisition alone should position Sugarmade as one of the largest
publicly traded companies in the overall hydroponics space,
driving EBITDA
profitability, net-positive cash flows, and top-line sales of $37
million on a forward basis.
Sugarmade
has acquired BZRTH in a
manner that is particularly friendly to Company common
shareholders. The transaction was for 650
million shares of common stock, of which 30% have already been
issued, cash,
preferred
shares,
and a
long-term
note,
where Sugarmade has two years to pay the remaining cash
component. Most
of the common
and preferred shares
will be subject to significant selling
restrictions,
which will limit the number
of shares insiders can liquidate,
aligning their interests
with
those of common shareholders.
In addition to the common stock, the
transaction included
3.5
million
shares
of Series B convertible preferred stock, $870K
in
cash (already
paid as
part of prior marketing agreement),
and 5% promissory notes in the sum of $7.13
million
that will come due in two years.
We have designed the terms of this acquisition to benefit both
current shareholders and the previous
owners of BZRTH who have built such
a
strong
business operation.
We
believe this
is a tremendous deal for our shareholders given the enormous top
and bottom-line growth that is already implicit in the deal and the
projections we have on hand for growth in this opportunity in the
quarters and years ahead.
While
that acquisition was a major step, we
feel it
is
really just the beginning. We are already in talks pursuing other
deals in what we would consider to be a comprehensive
multi-step
roll-up strategy designed to create a
truly market-dominant positioning for the Company based on our
driving strategic thesis: hydroponics is set to become the
difference-maker that separates successful producers of hemp and
hemp-related crops from the rest of the herd.
That
thesis is predicated on research and analysis demonstrating
that
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. In
other words, while demand for these crops is skyrocketing – and
will continue to skyrocket for years to come – the number of
producers competing in this niche is also ramping
sharply.
The
upshot is narrowing profit margins among competing producers, which
is translating into a boom for producers and distributors of what
we call "margin amplifiers". Hydroponics equipment is a prime
example of capital
expenditures that
can work to widen margins for producers of hemp and hemp-related
crops. In other words, the boom in demand for these crops should
show up most powerfully in the pick-and-shovel industries, like
hydroponics, that enable more efficient production.
We are absolutely committed to dominating the
hydroponics supply niche,
and BZRTH is the first of a string of planned
acquisitions
set to demonstrate that dominant positioning.
We will have more details on the path forward in the days and weeks
that follow.
Warm Regards,
Jimmy Chan, Sugarmade CEO
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. Sugarmade is also an
investor in fast growing Hempistry,
Inc., a Kentucky-based cultivator and 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.
Corporate
Contact:
Jimmy Chan
+1-(888)-982-1628
info@Sugarmade.com
Press & Media Inquiries:
EHC Branding Agency
Info@EHCBrandingAgency.Com
(626) MJ-BRAND