0000919175 false 0000919175 2022-01-06
2022-01-06 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
to Section 13 or 15(d) of The Securities Exchange Act of
Report (Date of earliest event reported):
January 6, 2022
of registrant as specified in its charter)
750 Royal Oaks Dr.,
principal executive offices)
telephone number, including area code:
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.
pursuant to Rule 425 under the Securities Act (17 CFR
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
registered pursuant to Section 12(b) of the Act:
Name of each
exchange on which registered
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, 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. ☐
Entry into a Material Definitive Agreement.
6, 2022, Sugarmade, Inc. (the “Company”) entered into a Common
Stock Purchase Agreement (the “Purchase Agreement”) with
Dutchess Capital Growth Fund LP (“Dutchess”) providing for an
equity financing facility (the “Equity Line”). The Purchase
Agreement provides that upon the terms and subject to the
conditions in the Purchase Agreement, Dutchess is committed to
purchase up to $10,000,000 of shares of the Company’s common stock
over the 36-month term of the Purchase Agreement (the “Term”), which Term commences
immediately following the initial date of effectiveness of the
Registration Statement referenced below (the “Total Commitment”).
terms of the Purchase Agreement, Dutchess will not be obligated to
purchase shares of common stock unless and until certain conditions
are met, including but not limited to a Registration Statement on
Form S-1 (the “Registration Statement”)
becoming effective which registers Dutchess’ resale of any common
stock purchased by Dutchess under the Equity Line. The Purchase
Agreement obligates the Company to file the Registration Statement
within 45 business days of January 6, 2022.
From time to
time during the Term, the Company, in its sole discretion, may
provide Dutchess with one or more drawdown notices (each, a
to purchase a specified number of shares of common stock
Shares”), subject to the limitations discussed below. The
actual amount of proceeds the Company will receive pursuant to each
Drawdown Notice (the “Investment Amount”) is to be
determined by multiplying the number of Drawdown Notice Shares by
93% of the lowest traded price of the common stock during the five
business days prior to the Closing Date. Closing Date shall mean
the date that is eight business days after the Clearing Date.
Clearing Date shall mean the first business day that the Dutchess
holds the Drawdown Notice Shares in its brokerage account and is
eligible to trade the shares.
number of shares of common stock to be purchased pursuant to any
single Drawdown Notice cannot exceed the lesser of (i) $250,000;
(ii) 200% of the average daily traded value of the Drawdown Notice
Shares during the five days immediately preceding the Drawdown
Notice date; or (iii) that number of shares that would cause
Dutchess to beneficially own 4.99% of the number of shares of the
common stock outstanding immediately prior to the issuance of the
Drawdown Notice Shares.
In order to
deliver a Drawdown Notice and sell Drawdown Notice Shares to
Dutchess, certain conditions set forth in the Purchase Agreement
must be met, including: (a) the representations and warranties of
the Company shall be true and correct in all material respects as
of the date of the Purchase Agreement and the applicable closing
date; (b) since the date of the Company’s most recent filing with
the Securities and Exchange Commission (the “SEC”), no event that
had or is reasonably likely to have a material adverse effect has
occurred; (c) the Company has no knowledge of an event it
reasonably deems more likely than not to have the effect of causing
the Registration Statement to be suspended or otherwise ineffective
within 15 days following the delivery of the Drawdown Notice; and
(d) the Company shall have performed, satisfied and complied in all
material respects its obligations under the Purchase Agreement.
Notwithstanding the forgoing, the Company shall not issue any
Drawdown Notice Shares if the issuance of such shares would exceed
the aggregate number of shares of common stock which the Company
may issue without breaching the Company’s obligations under the
rules and regulations of the principal market upon which the common
stock trades, or if the issuance would violate such principal
market’s shareholder approval requirements.
Agreement contains customary representations, warranties, and
covenants by, among, and for the benefit of the parties. Unless
earlier terminated, the Purchase Agreement will terminate
automatically on the earlier to occur of: (i) the end of the
36-month Term; (ii) the date that the Company sells and Dutchess
purchases the Total Commitment amount; (iii) the date that the
Registration Statement is no longer effective; or (iv) the
occurrence of certain specified insolvency or bankruptcy-related
events. The Company may terminate the Purchase Agreement at any
time by written notice to Dutchess in the event of a material
breach of the agreement by Dutchess.
Agreement also provides for mutual cross-indemnification of the
parties and their affiliates in the event that either party incurs
losses, liabilities, obligations, claims, damages, liabilities,
costs, and expenses resulting from a breach of representations,
warranties, covenants, or agreements under the Purchase Agreement;
an untrue or misleading statement or misleading omission in the
Registration Statement or any preliminary or final prospectus
pursuant thereto; or a violation or alleged violation of federal or
state securities laws and regulations.
connection with the Equity Line, the Company also entered into a
Registration Rights Agreement, dated January 6, 2022, with Dutchess
(the “Registration Rights Agreement”), pursuant to which the
Company agreed to register for resale all of the shares issuable in
accordance with the Purchase Agreement in a Registration Statement
to be filed with the SEC.
description of certain terms of the Purchase Agreement and the
Registration Rights Agreement set forth herein does not purport to
be complete and is qualified in its entirety by the provisions of
such agreements, attached hereto as Exhibits 10.1 and 10.2,
respectively, and incorporated by reference herein.
Financial Statement and Exhibits.
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.
January 12, 2022
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