SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of The Securities Exchange Act
Date of Report (Date of earliest event reported): February 8,
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
750 Royal Oaks Dr., Suite 108
of principal executive offices)
Registrant’s telephone number, including area code: (888)
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
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))
Securities registered pursuant to Section 12(b) of the Act:
of each class
of each exchange on which registered
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 [ ]
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 1.01 Entry into a Material Definitive Agreement.
On February 8, 2021, Sugar Rush, Inc., a Nevada corporation and
wholly owned subsidiary of Sugarmade, Inc., a Delaware corporation
(referred to herein together as the “Company”) entered into a
Common Share Purchase Agreement (the “Agreement”) with Nug Avenue,
Inc., a California corporation (the “Seller”). The Seller provides
services pertaining to the licensed and regulated delivery of
cannabis out of Lynwood, California, serving primarily the greater
Los Angeles Metropolitan area (the “Lynwood Operations”).
Pursuant to the Agreement, and subject to the satisfaction of the
conditions as set forth therein, the Company agreed to purchase a
seventy percent (70%) stake in the Seller’s Lynwood Operations for
a purchase price of five hundred sixty thousand dollars ($560,000)
(the “Stake Purchase”). Pursuant to the Agreement, the parties
agreed that the Stake Purchase will entitle the Company to receive
70% of the revenues and profits generated by the Seller from its
Lynwood Operations starting from February 8, 2021 (the “Effective
Date”). Under the terms of the Agreement, the Company agreed to
make periodic payments to the Seller to satisfy the $560,000
purchase price over a twelve (12) month period beginning on the
Effective Date. Pursuant to the Agreement, the parties agreed that
the $560,000 resulting from the Stake Purchase is to be used by the
Seller for the expansion of business opportunities for the Lynwood
Further, pursuant to the Agreement, the Seller agreed to grant the
Company an option to invest in all future business opportunities of
the Seller pertaining to any and all legal and regulated cannabis
business operations. The Seller and the Company agreed to negotiate
a formal agreement for this option within ninety (90) days of the
Effective Date. Further, pursuant to the Agreement, Seller agreed
to grant the Company unlimited participation rights in any future
financings of the Seller, and to negotiate a formal agreement for
such participation rights to be entered into by the Seller and the
Company within ninety (90) days of the Effective Date.
The closing (the “Closing”) of the Stake Purchase and other
transactions contemplated in the Agreement (collectively, the
“Transactions”) was subject to certain customary closing
conditions, such as, but not limited to, approval of the
Transactions contemplated in the Agreement by the Company’s board
of directors, there being no material adverse change in the
business of the Seller between the Effective Date and the date of
the Closing, and there being no prohibition against the proposed
Transactions in the Agreement.
On February 9, 2021 (the “Closing Date”), the Closing occurred, and
the Company acquired a 70% stake in the Seller’s Lynwood Operations
pursuant to the terms of the Agreement.
The foregoing description of the Agreement does not purport to be
complete and is qualified in its entirety by reference to the
Agreement, a copy of which is filed as Exhibit 10.1 to this Current
Report and is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of
disclosed in Item 1.01, the Company acquired a 70% stake in the
Seller’s Lynwood Operations in exchange for $560,000 pursuant to
the Agreement. The disclosure in Item 1.01 hereof relating to the
Agreement is incorporated by reference into this Item 2.01.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
disclosed in Item 1.01, pursuant to the Agreement, the Company
agreed to pay to the Seller $560,000 over a twelve (12) month
period beginning on the Effective Date. The disclosure in Item 1.01
hereof relating to the Agreement is incorporated by reference into
this Item 2.03.
Item 7.01. Regulation FD Disclosure.
On February 12, 2021, the Company issued a press release announcing
the Closing of the Agreement and the Company’s acquisition of 70%
of the Seller’s Lynwood Operations. A copy of the press release is
attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information included in this Item 7.01, including Exhibit 99.1,
shall not be deemed to be “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or otherwise subject to the liabilities of that section, nor shall
such information be deemed incorporated by reference in any filing
under the Securities Act or the Exchange Act, except as shall be
expressly set forth by specific reference in such a filing. The
information set forth under this Item 7.01 shall not be deemed an
admission as to the materiality of any information in this Current
Report on Form 8-K that is required to be disclosed solely to
satisfy the requirements of Regulation FD.
Item 9.01 Financial Statements and Exhibits.
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Date: February 12, 2021
Executive Officer and Chief Financial Officer