Item 7.01 Regulation FD Disclosure
Sugarmade
Inc., a Delaware corporation (the “Company”) makes the following disclosures pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934, generally referred to as Regulation FD Disclosure. The disclosures below are intended to furnish
and disclose material, financial and other current information and to facilitate disclosure of information to investors.
Sugarmade Inc., a Delaware corporation
(the “Company”) makes the following disclosures pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934,
generally referred to as Regulation FD Disclosure.
On May 20, 2019, the Company
provided specific information to its investors concerning the status of its pending transactions to acquire BZRTH, LLC and relative
to the proposed acquisition of Sky Unlimited Group, LLC (Sky Unlimited”), both of which are leading providers of hydroponic
cultivation supplies.
These updates are outlined below:
Sugarmade’s plans to
fully acquire BZRTH, Inc. (“BZRTH”) a company associated with BizRight, LLC (“BizRight”) remain unchanged.
The Company reports today on
the significant progress that has been made toward full closure of the acquisition transactions.
As a matter of background information:
On December 13, 2017,
separate agreements and understandings with the shareholders of BizRight contemplated, in part, a share exchange agreement wherein
the Company would acquire all of the issued and outstanding shares of BizRight stock in exchange for the Company’s shares,
a promissory note and earn-out shares. The negotiations required, among other requirements, that BizRight to provide BZRTH’s
audited financial statements compliant with the Securities Exchange Act of 1934, to be filed by the Company in connection with
the transaction. BRZTH is currently having its financial statements audited. Sugarmade now plans to fully acquire BZRTH, a company
associated with BizRight and has amended the Master Marketing Agreement giving Sugarmade the same rights under the Master Marketing
Agreement for both BizRight and BZRTH.
The Current Update:
Sugarmade’s management
reports strong progress has been made toward BZRTH audit completion with most of the major audit components having been finalized.
Pending the closing report from the audit team, Sugarmade plans to move toward closure of several financial transactions that will
provide the required funds to complete the acquisition of BZRTH. Upon closing, Sugarmade will possess full ownership of BZRTH and
related operations, thus allowing for full revenue recognition onto the financial statements of the Company.
As of the date of this
filing, the Company has provided approximately Eight Hundred Thousand Dollars ($800,000) toward the closing of the acquisition.
In addition, 200,000,000 in the common shares in the Company have been issued toward closure.
On April 16, 2019, the “Company,
entered into an investment agreement with K & J Funds, LLC, an accredited investor, pursuant to which it committed to purchase
up to $20,000,000, upon the effectiveness of a registration statement on Form S-1, of the Company’s common stock. The Company
plans to utilize a portion of the funds received via this arrangement, in addition to funds from planned upcoming pending financings,
to complete the acquisition of BZRTH.
In addition, Sugarmade continues
to move toward closure of the planned acquisition of Sky Unlimited Group, LLC (“Sky Unlimited”). On October 15, 2018,
the Company signed a Letter of Intent and agreements to acquire Sky Unlimited, a Southern California-based, supplier of hydroponic
cultivation supplies to the wholesale sector and to large commercial cultivators. Under the terms of the Letter of Intent and
agreements (with both binding and non-binding elements), the Company will acquire all of the issued and outstanding shares (or
the business and assets) in exchange for the Company’s shares of authorized and cash. Sky Unlimited Group LLC is currently
having its financial statements audited. Revenue recognition will occur when the transaction is closed.
FORWARD-LOOKING STATEMENTS:
This filing 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. At this time there are no assurances the
Company’s acquisition efforts will be successful.