INFORMATION STATEMENT OF
SUGARMADE, INC.
750 Royal Oaks Dr., Suite 108
Monrovia, California
To Our Stockholders:
On November 13, 2019, the Board of Directors
of Sugarmade, Inc. (the “Company” or “Registrant”) unanimously authorized and approved a reverse split
of the issued and outstanding shares of the Company’s common stock, par value $.001 (the “Shares” or “Common
Stock”), including Shares of Common Stock reserved for issuance, in a ratio to be determined by the Registrant’s Board
of Directors, not to exceed one for three hundred (1:300) basis (the “Reverse Split”).
The Reverse Split was authorized and approved
by the Joint Written Consent of the Board of Directors and Majority Consenting Stockholders of the Company dated November 13, 2019,
a copy of which is attached hereto as Exhibit A.
This Information Statement will be sent to
you for information purposes only and you are not required to take any action.
We Are Not Asking You for a Proxy and You
are Requested Not To Send Us a Proxy
By Order of the Board of Directors:
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/s/ Jimmy Chan
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Jimmy Chan
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Chief Executive Officer and Director
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Los Angeles, California
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December __, 2019
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SUGARMADE,
INC..
117 West 9th Street, Suite 316
Los Angeles, California 90015
Telephone: (310) 392-5606
Information Statement Pursuant to Section
14C of the Securities Exchange Act of 1934
This Information Statement is being filed by
Sugarmade, Inc. (the “Company” or “Registrant”) with the United States Securities and Exchange Commission
(the “SEC”) on November 15, 2019, based upon the Joint Written Consent of the Board of Directors and the consent of
the holders of a majority of outstanding shares of voting capital stock of the Company (the “Majority Consenting Stockholders”)
of the Company dated November 13, 2019 (the “Joint Written Consent”). A copy of the Joint Written Consent is attached
as Exhibit A to this Information Statement.
The purpose of this Information Statement is
to provide disclosure to our stockholders regarding the corporate action (the “Corporate Action”) ratified and approved
by the Joint Written Consent, based upon the unanimous approval by our Board of Directors and the Majority Consenting Stockholders,
including shares of outstanding Common Stock and shares of Preferred Stock. The outstanding shares of Preferred stock has been
designated into two series, shares of Series A Preferred Stock and shares of Series B Convertible Preferred Stock, par value $0.001
per share (the “Series B Preferred”) held by the holders of our voting capital stock (the “Majority Consenting
Stockholders,” as that term is defined below, to implement a reverse split in a ratio and at a time and date to be determined
by the Company’s Board of Directors, not to exceed a one for three hundred (1:300) basis, within sixty days from the date
of filing of this Information Statement on Form 14C with the SEC (the “Reverse Split”).
The Reverse Split ratio one for three hundred
(1:300) was based upon the recent share price of $0.014. Management anticipates moving forward with Reserve Split as it is necessary
to meet the required exchange criteria and, as set forth in the Information Statement on Schedule 14C, in order to satisfy any
exchange listing requirement and qualify for listing of its shares of Common Stock on an exchange, if and when the Company determines
that it is in the best interests of the Company and its stockholders to seek any listing, if ever.
In order the implement the Reverse Split, which
may be referred to as the “Corporate Action,” after filing of the Information Statement on Schedule 14C with the SEC,
the Company must make application with FINRA to process the Corporate Action announcement, designating the ratio of the Reverse
Split.
The Joint Written Consent of the Company’s
Board of Directors and the Majority Consenting Stockholders approving the Corporate Action was adopted pursuant to the provisions
of Section 228 of Title 8 of the Delaware General Corporation Law (“DGCL”).
Pursuant to Rule 14c-2(b) promulgated by the
SEC under the Securities Exchange Act of 1934 (the “Exchange Act”), the actions approved by the Joint Written Consent
of the Board of Directors and the Majority Consenting Stockholders cannot become effective until twenty (20) days from the date
of mailing of the Information Statement to our stockholders. This Information Statement shall constitute notice to our stockholders
of the above Corporate Action taken by the Corporation pursuant to the Joint Written Consent.
New Common Stock certificates will not be issued
on or after the date that FINRA approves the Reverse Split (the “Effective Date”) and may be issued subsequently with
respect to any certificates returned to the transfer agent upon a sale, exchange, or for any other purpose following the implementation
of the Reverse Split. No fractional shares will be issued in connection with the Reverse Split. Any fractional share will be rounded
up to the next full share.
The Company’s Common Stock is subject
to quotation on the OTC Market under the symbol “SGMD.” Upon the approval by FINRA of the processing of the Corporate
Action relating to the Reverse Split, FINRA will change our symbol from “SGMD” to “SGMDD” for a period
of twenty (20) business days to indicate to the brokerage and investment community that the Reverse Split has occurred, following
which our symbol will be “SGMD” once again.
REVERSE SPLIT
On November 13, 2019, the Company’s Board
of Directors unanimously approved the of the Reverse Split of the issued and outstanding shares of Common Stock, including shares
of Common Stock reserved for issuance, in a ratio and at a time and date to be determined by the Company’s Board of Directors,
not to exceed a one for three hundred (1:300) basis within sixty (60) days from the date of filing of this amended Information
Statement on Form 14C with the SEC (the “Reverse Split”).
The Corporate Action, which provides for the
implementing the Reverse Split, was based upon and approved by the Joint Written Consent of the Board of Directors and Majority
Consenting Stockholders dated November13, 2019, a copy of which is attached hereto as Exhibit A.
Material Terms of the Reverse Split
As of December __, 2019, the Record Date, and
the date of filing of this Information Statement, the Company currently has _______ issued and outstanding shares of Common Stock,
which does not include shares of Common Stock reserved for issuance underlying certain convertible notes. The Company currently
has 2,000,000 issued and outstanding shares of Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred
Stock”) that will have one vote per share. In addition, the Company has issued and outstanding ______ shares of Series B
Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”) that have 1,000 votes per share. Chenlong
Tan and Allan Hung, directors and shareholders, are the holder of the outstanding shares of Series B Preferred Stock, which will
not be subject to the Reverse Split. Each share of Series B Preferred Stock has the equivalent of 1,000 votes of Common. Chenlong
Tan and Allan Hung, the holder of the Series B Preferred Stock and Jimmy Chan, an officer, director had Common Stockholder and
certain Common Stockholders owning in the aggregate approximately 70.59% of the total voting power of all issued and outstanding
voting shares of the Company (the “Majority Consenting Stockholders, have executed the Joint Written Consent, attached as
Exhibit A hereto. Chenlong Tan and Allan Hung, the holder of Series B Preferred Stock vote together with the holders of Common
Stock as a single class.
In the event that the Board of Directors implements
a one for three hundred (1:300) reverse, the maximum authorized by the Joint Written Consent, of which there can be no assurance,
there will approximately 3,869,671 shares of Common Stock issued and outstanding, excluding the shares reserved for issuance underlying
the convertible preferred shares and convertible notes. The Board of Directors believes that the Reverse Split will affect
all holders of shares of Common Stock and holders of convertible notes and preferred stocks. The Company believes that the Reverse Stock will benefit all stockholders, as without the Reverse Split, the
Company in all likelihood will have difficulties if and when it seeks to raise additional capital for its anticipated future growth
and seeks to up-list its shares of Common Stock on a National Exchange, of which there can be no assurance.
However, the reduction in the number of outstanding
shares of Common Stock following implementation of the Reverse Split, if implemented, could adversely affect the trading market
for our Common Stock by reducing the relative level of liquidity of the shares of Common Stock. Further, there can be no assurance
that the Reverse Split will result in a proportionate increase or, for that matter, any increase, in the price of the shares of
Common Stock subject to quotation on the OTC Market.
Any new shares issued following the Effective
Date of the Reverse Split will be fully paid and non-assessable shares. On the Effective Date of the Reverse Split, the number
of stockholders will remain unchanged because those stockholders who would otherwise receive only be entitled to receive a fractional
share will receive a number of shares rounded up to the next full number.
The Reverse Split will not change the number
of authorized shares of Common Stock, which will continue to be 1,990,000 shares of Common Stock, and the par value of our Common
Stock, which will continue to be $0.001 per share. While the aggregate par value of our outstanding Common Stock will be reduced
as a result of the Reverse Split, our additional paid-in capital will be increased by a corresponding amount. Therefore, the Reverse
Split will not affect our total stockholders’ equity. All share and per share information will be retroactively adjusted
to reflect the Reverse Split for all periods presented in our future financial reports and regulatory filings.
On December __. 2019, the date immediately
preceding the filing of this Information Statement on Schedule 14C, the closing price of our shares subject to quotation on the
OTC Market was approximately $0.__ and the total market value was approximately $___ million based on the ______ shares of Common
Stock issued and outstanding.
Rationale for the Reverse Split
The Board of Directors believes that a Reverse
Split should, at least initially, increase the price of our shares of Common Stock to approximately $4.00 per share, in the event
that our Board of Directors elected to implement the maximum reverse based on a one for three hundred(1:300) ratio, which ratio
is subject to the discretion of our Board of Directors. Our stockholders should understand that as of the date of this Definitive
Information Statement, our Board has not determined the exact ratio of the Reverse Split nor the date that the Reverse Split will
be implemented. Nevertheless, the Joint Written Consent provides that the Reverse Split, if implemented, must be initiated within
60 days of the filing of this Definitive Information Statement, subject to approval of the Reverse Split by FINRA.
While the Reverse Split will not increase to
total market value of our Common Stock, the Board of Directors believes that the increase in the price of our shares of Common
Stock, which increase may not necessarily be sustained, should make our shares of Common Stock more attractive to potential investors,
encourage investor interest and trading in, and possibly the marketability of, our Common Stock.
In addition, because brokers’ commissions
on lower-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the
current per share price of our Common Stock can result in individual stockholders paying transaction costs (commissions, markups
or markdowns) that constitute a higher percentage of their total share value than would be the case if the share price of our Common
Stock were higher. This difference in transaction costs may also further limit the willingness of institutional investors to purchase
shares of our Common Stock.
Trading in our shares of Common Stock also
may be adversely affected by a variety of policies and practices of brokerage firms that discourage individual brokers within those
firms from dealing in low-priced stocks. These policies and practices pertain to the payment of brokers’ commissions and
to time-consuming procedures that make the handling of low-priced stocks unattractive to brokers from an economic standpoint. Similarly,
many brokerage firms are reluctant to recommend low-priced stocks to their customers and the analysts at many brokerage firms do
not provide coverage for such stocks. The Board also believes that the decrease in the number of shares of Common Stock outstanding
as a consequence of the Reverse Split, and the anticipated increase in the price of the Common Stock, could generate interest in
the Common Stock and possibly promote greater liquidity for the Company’s stockholders. However, the Company’s aggregate
market capitalization could be reduced to the extent that any increase in the market price of the Common Stock resulting from the
Reverse Split is proportionately less than the decrease in the number of shares of Common Stock outstanding.
The Board further believes that the total number
of shares of our Common Stock currently outstanding is disproportionately large relative to our present market capitalization and
that the Reverse Split would bring the number of outstanding shares to a level more in line with other companies with comparable
market capitalizations. Moreover, the Board considered that when the number of outstanding shares of Common Stock is unreasonably
large in relation to Company’s operations. Upon implementation of the Reverse Split and decrease the number of shares of
Common Stock that are issued and outstanding, our investors could more easily understand the impact on earnings or loss per share
attributable to future developments in our business.
We ultimately cannot predict whether, and to
what extent, the Reverse Split would achieve the desired results. The price per share of our Common Stock is a function of various
factors, including the profitability of our business operations.
Accordingly, there can be no assurance that
the market price of our Common Stock after the Reverse Split would increase in an amount proportionate to the decrease in the number
of issued and outstanding shares, or would increase at all, that any increase can be sustained for a prolonged period of time or
that the Reverse Split would enhance the liquidity of, or investor interest in, our Common Stock.
Notwithstanding the foregoing, our Board of
Directors believes that the potential positive effects of the Reverse Split outweigh the potential disadvantages. In making this
determination, our Board of Directors has taken into account various negative factors, including: (i) the negative perception of
Reverse Splits held by some stock market participants; (ii) the adverse effect on liquidity that might be caused by a reduced number
of shares outstanding; and (iii) the costs associated with implementing the Reverse Split. The effect of the Reverse Split upon
the market price of our Common Stock cannot be predicted with any certainty, and the history of similar stock splits for companies
in similar circumstances to ours is varied. It is also possible that the Reverse Split may not increase the per share price of
our Common stock in proportion to the reduction in the number of shares of our Common Stock outstanding or result in a permanent
increase in the per share price, which depends on many factors.
After considering the foregoing factors, our
Board determined that amending our Certificate of Incorporation to implement the Reverse Split is in our best interests and that
of our stockholders.
Effects of the Reverse Split
Concurrent to the filing of this Information
Statement on Schedule 14C, the Company filed a Certificate of Amendment to our Certificate of Incorporation with the State of Delaware
on November 13, 2019 and made an application to FINRA on November ___, 2019 to approve the Reverse Split of our issued and outstanding
Common Stock, to be effective upon receipt of approval be FINRA (the "Effective Date"), which will also change our symbol
on the OTC Market from "SGMD" to "SGMDD" for a period of twenty (20) business days following the Effective
Date to indicate to the brokerage and investment community that the Reverse Split has occurred.
Except for the number of shares of Common Stock
outstanding, the rights and preferences of shares of our Common Stock prior and subsequent to the Reverse Split would remain the
same. We do not anticipate that our financial condition, the percentage of our stock owned by management, the number of our stockholders,
or any aspect of our current business would materially change as a result of the Reverse Split.
Our Common Stock is currently registered under
Section 12 of the Exchange Act and, as a result, we are subject to periodic reporting and other requirements. The proposed Reverse
Split would not affect the registration of our Common Stock under the Exchange Act.
After the Effective Date of the Reverse Split,
each stockholder would own a reduced number of shares of our Common Stock, based upon the ratio of the reverse, which will be subject
to the determination of our Board of Directors. However, a Reverse Split would affect all stockholders equally and will not affect
any stockholder’s percentage ownership of the Company, except for the immaterial result that the Reverse Split shall involve
in the rounding up of any fractional shares up to the next whole share, as described herein. There will be no payment of cash in
lieu of any fractional shares. Furthermore, the number of stockholders of record would not be affected by the Reverse Split. Authorized
but Unissued Shares; Potential Dilution and Anti-Takeover Effects.
Upon the Effective Date of the Reverse
Split, the Company is expected to have approximately 3,869,671 shares issued and outstanding, assuming a 1:300 Reverse Split
and will continue to have 1,990,000,000 shares of Common Stock authorized. The ultimate determination of the Board of
Directors on the ratio of the Reverse Split shall be based upon, among other factors, the prevailing market price of the
Company’s shares of Common Stock during the period prior the Reverse Split determination. After the Reverse Split is
implemented, there will be available, in any event, a significant number of authorized but unissued shares of Common Stock
available for issuance from time to time for business purposes as reasonably determined by the Board of Directors, including
for use in capital-raising transactions and acquisitions, among other purposes, consistent with our business objectives.
The significant increase in the proportion
of unissued authorized shares to issued shares after the Reverse Split could, under certain circumstances, have an anti-takeover
effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the
composition of our Board of Directors or contemplating a tender offer or other transaction for the combination of our company with
another company), we are not proposing the Reverse Split in response to any effort of which we are aware to accumulate any of our
shares of our Common Stock or to otherwise seek to obtain control of the Company. Our Board of Directors does not currently contemplate
recommending the adoption of any other proposals that could be construed to affect the ability of anyone to take over or change
the control of the Company.
We believe that the availability of the additional
shares will provide us with the flexibility to pursue potential transactions as they arise, to take advantage of desirable business
opportunities and to respond effectively in a changing corporate environment. For example, we may elect to issue shares of Common
Stock to raise equity capital, to make acquisitions using shares of Common Stock, to establish strategic relationships with other
companies, to adopt additional employee benefit plans or reserve additional shares for issuance under such plans, where the Board
determines it advisable to do so, without the necessity of soliciting further stockholder approval, subject to applicable stockholder
vote requirements.
If we issue additional shares for any of the
above purposes, the aggregate ownership interest of our current stockholders, and the interest of each such existing stockholder,
would be diluted, possibly substantially. Although we continually examine potential transactions, we have no current plans or arrangements
to issue any additional shares of Common Stock. Furthermore, the additional shares of Common Stock that would become available
for issuance upon the Effective Date of the Reverse Split could also be used by the Company’s management to oppose any potential
hostile takeover attempt or delay or prevent changes in control or changes in or removal of the Company.
For example, without further stockholder approval,
our Board of Directors could authorize the issuance and sale of shares of Common Stock in one or more private transactions to purchasers
who would oppose a takeover or favor the current Board. Although the Reverse Split was based upon business and financial considerations
that we consider reasonable and necessary as of the Record Date, as discussed above, stockholders nevertheless should be aware
that approval of one or more of the proposals could facilitate future efforts by management to deter or prevent a change in control
of the Corporation.
Accounting Matters
The Reverse Split would not affect the par
value of our Common Stock. As a result, on the Effective Date of the Reverse Split, the stated par value capital on our balance
sheet attributable to our Common Stock would be reduced and the additional paid-in capital account would be credited with the amount
by which the stated capital is reduced. The per-share net income or loss and net book value per share of our Common Stock would
be increased because there would be fewer shares of our Common Stock outstanding.
We present earnings per share (“EPS”)
in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings per Share,”
and we will comply with the requirements of SFAS No. 128 with respect to reverse stock splits. In pertinent part, SFAS No. 128
says as follows: “If the number of common shares outstanding decreases as a result of a reverse stock split, the computations
of basic and diluted EPS shall be adjusted retroactively for all periods presented to reflect that change in capital structure.
If changes in Common Stock resulting from reverse stock splits occur after the close of the period but before issuance of the financial
statements, the per-share computations for those and any prior-period financial statements presented shall be based on the new
number of shares. If any per-share computations reflect such changes in the number of shares, that fact shall be disclosed.”
Fairness of the Process
The Board of Directors did not obtain a report,
opinion, or appraisal from an appraiser or financial advisor with respect to the Reverse Split and no representative or advisor
was retained on behalf of the unaffiliated stockholders to review or negotiate the transaction. The Board of Directors concluded
that the additional expense of these independent appraisal procedures was unreasonable in relation to the Company’s available
cash resources and concluded that the Board of Directors could adequately establish the fairness of the Reverse Split without the
engagement of third parties.
Street Name Holders of Common Stock
The Company intends for the Reverse Split to
treat stockholders holding Common Stock in street name through a nominee (such as a bank or broker) in the same manner as stockholders
whose shares are registered in their names. Nominees will be instructed to affect the Reverse Split for their beneficial holders.
However, nominees may have different procedures. Accordingly, stockholders holding Common Stock in street name should contact their
nominees.
Stock Certificates
Mandatory surrender of certificates is not
required by our stockholders. The Company’s transfer agent will adjust the record books of the company to reflect the Reverse
Split as of the Effective Date of the Reverse Split. New certificates will not be mailed to stockholders.
Federal Income Tax Consequences
The following description of federal income
tax consequences of the reverse stock split is based on the Internal Revenue Code of 1986, as amended, the applicable Treasury
Regulations promulgated thereunder, judicial authority, and current administrative rulings and practices as in effect on the date
of this information statement. The discussion is for general information only and does not cover any consequences that apply for
special classes of taxpayers (e.g., non-resident aliens, broker-dealers or insurance companies). We urge all stockholders to consult
their own tax advisers to determine the particular consequences to each of them of the reverse stock split.
We have not sought and will not seek an opinion
of counsel or a ruling from the Internal Revenue Service regarding the federal income tax consequences of the reverse stock split.
We believe, however, that because the reverse stock split is not part of a plan to periodically increase or decrease any stockholder’s
proportionate interest in the assets or earnings and profits of our company, the reverse stock split would have the federal income
tax effects described below.
The exchange of pre-split shares for post-split
shares should not result in recognition of gain or loss for federal income tax purposes. In the aggregate, a stockholder’s
basis in the post-split shares would equal that stockholder’s basis in the pre-split shares. A stockholder’s holding
period for the post-split shares would be the same as the holding period for the pre-split shares exchanged therefore. Provided
that a stockholder held the pre-split shares as a capital asset, the post-split shares received in exchange therefore would also
be held as a capital asset.
There is no provision for stockholders’
receiving cash in lieu of any fractional share interest because any fractional shares will be rounded up to the third whole integer
in such a manner that every stockholder shall own at least 100 shares as a result of the Reverse Split, instead fractional shares
are being rounded up to the next whole share.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table lists the number of shares
of Common Stock of our Company and, with respect to the shares of Series B Preferred Stock, as of November 13, 2019, the Record
Date, and as of the date of this Information Statement, that are beneficially owned by (i) each person or entity known to our Company
to be the beneficial owner of more than 5% of the outstanding Common Stock; (ii) each officer and director of our Company; and
(iii) all officers and directors as a group. Information relating to beneficial ownership of Common Stock and voting Preferred
Stock by our principal stockholders and management is based upon information furnished by each person using “beneficial ownership”
concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner
of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security,
or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial
owner of any security of which that person has a right to acquire beneficial ownership within sixty (60) days. Under the rules
of the SEC, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be
a beneficial owner of securities as to which he/she may not have any pecuniary beneficial interest. Except as noted below, each
person has sole voting and investment power. Beneficial ownership is determined in accordance with the rules of the SEC and includes
voting or investment power with respect to the shares. Except as otherwise indicated, and subject to applicable community property
laws, the persons named in the table have sole voting and investment power with respect to all shares of our common stock held
by them.
Officers and Directors
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Common Shares
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Preferred B
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As converted Basis
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Ownership Percentage
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1
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Christopher Dieterich
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0
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0
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0
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0.00
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%
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2
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Khoi Dang
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1,000,000
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0
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1,000,000
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0.04
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%
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3
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Jimmy Chan, CEO
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19,063,502
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373,500
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392,563,502
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17.18
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%
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4
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Amy Thai & LMK Capital
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20,644,733
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20,644,733
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0.90
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%
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As of the date of this filing, Jimmy Chan owns
19,063,502 commons shares and 373,500 Series B Preferred and his holdings represented 17.18% of the company, as fully converted
basis. He is currently employed by LMK Capital LLC as management consultant and is therefore a beneficial owner of shares owned
by LMK Capital LLC. Amy Thai and LMK Capital LLC, owns 20,644,733 of commons shares, which representing 0.90% of the company, as
fully converted basis. As a result, Mr. Chan beneficially owned 18.08% of the Company’s issued and outstanding shares of
Common Stock, as fully converted basis.
As of the date of this filing, Mr. Christopher
Dieterich has 0 shares in the company
As of the date of this filing, Mr. Khoi Dang
owns 1,000,000 commons shares, which represented 0.04% of the company, as fully converted basis.
ADDITIONAL INFORMATION
The Company is subject to the filing requirements
of the Exchange Act, and in accordance therewith files reports, proxy/information statements and other information including annual
and quarterly reports on Form 10-K and 10-Q (the “Exchange Act Filings”) with the SEC. Reports and other information
filed by the Company can be inspected and copied at the public reference facilities maintained at the Commission at 100 F Street,
NE Washington, D.C, 20549. Copies of such material can be obtained upon written request addressed to the Commission, Public Reference
Section, 100 F Street, NE Washington, D.C 20549, at prescribed rates. The Commission maintains a web site on the Internet (http://www.sec.gov)
that contains reports, proxy and information statements and other information regarding issuers that file electronically with the
Commission through the Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).
We will provide without charge, to each person
to whom a proxy/information statement is delivered, upon written or oral request of such person and by first class mail or other
equally prompt means within one business day of receipt of such request, a copy of any and all of the information that has been
incorporated by reference in this proxy statement (not including exhibits to the information that is incorporated by reference
unless such exhibits are specifically incorporated by reference into the information that the proxy statement incorporates). Such
requests should be directed to the address and phone number indicated below. This includes information contained in documents filed
subsequent to the date on which definitive copies of the proxy statement are sent or given to security holders, up to the date
of responding to the request.
By Order of the Board of Directors:
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/s/
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Name:
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Jimmy Chan
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Title:
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Chief Executive Officer and Director
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Los Angeles, California
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December __, 2019
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JOINT WRITTEN CONSENT
OF THE
BOARD OF DIRECTORS
AND
MAJORITY CONSENTING STOCKHOLDERS
OF
SUGARMADE, INC.
The undersigned, being all of the members of
the Board of Directors of Sugarmade, Inc., a Delaware corporation (the “Corporation”), acting together with the written
consent of the holders (the “Majority Consenting Stockholders”) of a majority of the outstanding voting shares of the
Corporation’s common stock, par value $0.001 (the “Common Stock”), Series B Preferred Stock par value $0.001,
acting pursuant to the authority granted by the provisions of Section 228 of Title 8 of the DGCL do hereby adopt the following
resolutions as of this 13th day of November, 2019 (the “Joint Written Consent”).
WHEREAS, the Corporation has received the written
consent of the Majority Consenting Stockholders, a copy of which is attached to this Joint Written Consent of the Corporation’s
Board of Directors and Majority Consenting Stockholders.
NOW, THEREFORE, BE IT RESOLVED as follows:
RESOLVED, that the Corporation file: (i) an
Information Statement on Schedule 14C with the SEC with respect to implement a reverse split of the issued and outstanding shares
of Common Stock, including the shares of Common Stock reserved for issuance underlying the Corporation’s convertible preferred
shares and convertible notes (the “Reverse Split”), provided that the Reverse Split: (i) does not exceed one for three
hundred (1:300); and (ii) is implemented within sixty (60) days of the filing of the Definitive Information Statement; and
FURTHER RESOLVED, that this Joint Written Consent
of the Board of Directors and Majority Consenting Stockholders shall be added to the corporate records of this Corporation and
made a part thereof, and the resolutions set forth above shall have the same force and effect as if adopted at a meeting duly noticed
and held by the Board of Directors and the Majority Consenting Stockholders of this Corporation; and
FURTHER RESOLVED, that this Joint Written Consent
may be executed in counterparts and with facsimile signatures with the effect as if all parties hereto had executed the same document,
all counterparts of which shall be construed together and shall constitute a single Joint Written Consent; and
FURTHER RESOLVED, that pursuant to the provisions
of the DGCL, based upon the 1,160,901,375 issued and outstanding shares of Common Stock and 1,123,501 million shares of Series
B Preferred Stock having one thousand (1,000) votes per share, the affirmative vote of 1,142,201,189 shares of voting capital stock
are required to approve the Corporate Action, and pursuant to this Joint Written Consent of the Corporation’s Board of Directors
and the Majority Consenting Stockholders of the Corporation, the Corporate Action has received the affirmative vote of holders
of 1,612,583,052 shares of voting capital stock and have hereby authorized, ratified and approved the forgoing actions and thereby
direct that this Joint Written Consent of the Board of Directors and Majority Stockholder be filed with the minutes of the meetings
of the Corporation.
The number of shares of Corporation’s
voting capital stock issued and outstanding as of November 13, 2019 (the “Record Date”) are: (i) 1,160,901,375 shares
of Common Stock; and (ii) 1,165,001 shares of Series B Preferred Stock having one thousand (1,000) votes per share or 1,165,001,000
votes, collectively representing a total 2,284,402,375 shares of voting capital stock. The number of shares of the Corporation’s
voting capital stock, including shares of Common Stock and Series B Preferred Stock owned of record and beneficially by the Majority
Consenting Stockholders and consenting to the adoption of these resolutions, total 1,612,583,052 shares of voting capital stock,
representing 70.59% of the total voting capital stock of the Corporation.
FURTHER RESOLVED, that any action or actions
heretofore taken by any officer of the Corporation for and on behalf of the Corporation in connection with the foregoing resolutions
are hereby ratified and approved as duly authorized actions of the Corporation. This Joint Written Consent shall be added to the
corporate records of the Corporation and made a part thereof, and the resolutions set forth above shall have the same force and
effect as if adopted at a meeting duly noticed and held by the Corporation. This Joint Written Consent may be executed in counterparts
and with facsimile signatures with the effect as if all parties hereto had executed the same document. All counterparts shall be
construed together and shall constitute a single Joint Written Consent.
By Order of the Board of Directors:
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/s/
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Name:
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______________
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Title:
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Chief Executive Officer and Director
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Los Angeles, California
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December __, 2019
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TABLE OF MAJORITY CONSENTING STOCKHOLDERS
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Common Shares (1)
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Common Shares (2)
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Preferred B
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As converted Basis
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Ownership %
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1
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Allan Huang
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70,274,568
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294,448
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364,722,568
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15.97
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%
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2
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Chenlong Tan
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70,274,568
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294,448
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364,722,568
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15.97
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%
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3
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Shanshan Huang
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16,000,000
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72,954,976
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36,448
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125,402,976
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5.49
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%
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4
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Zhengjun Ji
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14,000,000
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63,835,604
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31,892
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109,727,604
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4.80
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%
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5
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Yutong Yuan
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14,000,000
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63,835,604
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31,892
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109,727,604
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4.80
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%
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6
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Shuangsheng Ye
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15,000,000
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43,400,000
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54,182
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112,582,000
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4.93
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%
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7
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Jing Zhang
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292,000
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657,000
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1,095
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2,044,000
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0.09
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%
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8
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William Stanton
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158,864
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357,300
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596
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1,112,164
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0.05
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%
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9
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Rong Zheng
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—
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4,333,333
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5,000
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9,333,333
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0.41
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%
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10
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Jimmy Chan
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19,063,502
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373,500
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392,563,502
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17.18
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%
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11
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Amy & LMK Capital
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20,644,733
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20,644,733
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0.90
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%
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Voting Shares
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1,612,583,052
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70.59
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%
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Outstanding Shares
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2,284,402,375
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100
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%
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