Sugarmade - “We See Superior Opportunities” -
Rescinds Agreement - Saving 1.2 Billion Share Issuance and $1 MM
Quarterly Cash Outla
NEW
YORK, January 16, 2020 -- InvestorsHub NewsWire – Sugarmade,
Inc. (OTCQB:SGMD)
(“Sugarmade”, “SGMD”, or the “Company”), today announces the
rescission of an agreement to acquire a hydroponic equipment
supplier. In a filing with the U.S. Securities & Exchange
Commission, Sugarmade outlines that approximately 1.2 billion
common share equivalents will be returned to the Company’s
treasury. Sugarmade’s board of directors has determined the
business combination is no longer viewed as the best shareholder
maximization strategy as industry upheaval accelerates.
Sugarmade has been presented with numerous other business
combination opportunities that its board of directors now believes
are superior and are under
consideration.
The
rescission will:
- Reduce
the outstanding shares to approximately 706 million via the return
of approximately 1.2 billion shares to SGMD’s
treasury.
- Result
in a cash flow savings of $1 million quarter for seven quarters due
to the elimination of the cash portion of the transaction
due.
- Eliminate shareholder dilution due to the
acquisition’s insufficient cash flow to meet debt
service.
- Allow
Sugarmade to immediately enter the significantly higher margin
regulated sectors of the cannabis marketplace where acquisition
targets are plentiful and are priced at meaningful
discounts.
“The
hydroponic transaction was proposed more than two years ago and
since that time the industry has changed significantly.
Simply Put - We have looked long and hard at the industry situation
and we have determined there are numerous other potentially larger
opportunities at this time for Sugarmade and its shareholders,”
commented CEO Jimmy Chan. “The previous transaction is not
the best way for us to maximize shareholder value. We are
very pleased to be returning all of the issued shares to the
treasury, which significantly lowers our outstanding shares,
placing us in a prime spot as an industry consolidator of the many
troubled assets in the sector. Thus, as a board of directors,
we are taking the bold step to rescind the Past of the industry in
favor of the Future of the industry and the more lucrative
opportunities that are currently under
consideration.”
The
shareholders of the acquired company have agreed to surrender
448,873,817 common shares and 750,000 Series B Convertible
Preferred shares. On an as-converted to common basis the
returns to Sugarmade’s treasury equal 448,873,817 relating to the
common shares to be surrendered and 750,000,000 million common
shares equivalents due to each Series B Convertible Preferred share
converting to common shares on a 1 for 1,000 basis. Thus, on a
common share equivalent basis, the surrender equals 1,198,873,817
common shares, if all Preferred Series B were
converted.
Additionally, as part of the Agreement, the
Company will retain or will receive 102,248 shares in the acquired
company.
A major
factor in the decision to rescind the transaction is the
significant upheaval currently being seen within the marketplace as
many cultivators, distributors, vendors and other market
participants struggle to maintain viability. This industry
turmoil has caused many struggling companies to seek publicly
traded partners that can assist in their return to viability.
Sugarmade has entered into discussions with representatives of
several of these companies operating in the regulated portion of
the cannabis sector.
The
Company’s board of directors believes entry into the regulated
portion of the cannabis business sector, which includes hemp and
legal THC cannabis cultivation, processing and marketing, is
particularly appealing due to the large number of assets within
that sub-sector that are currently available for purchase or
acquisition.
About
Sugarmade, Inc.
Sugarmade, Inc. (OTCQB:
SGMD) is a product and branding marketing company investing in
operations and technologies with disruptive potential. For
more information please reference
www.sugarmade.com
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