NEW YORK, June 26, 2020 (GLOBE NEWSWIRE) — via NetworkWire — Sugarmade, Inc. (OTCQB:SGMD) (“Sugarmade,” “SGMD” or the “Company”) issues the following letter on behalf of the CEO:
Dear Valued Shareholder,
Allow me to begin by expressing our most sincere gratitude to our committed shareholders for your loyalty and patience as we gear up for continued expansion at Sugarmade.
As we have discussed in our recent corporate communications, our BudCars business is experiencing tremendous growth while maintaining very strong gross margins, with both topline sales and gross profits steadily increasing at better than 10% on a sequential week-over-week basis for multiple consecutive months. We are well ahead of our targets in terms of performance. All of this naturally points to the need for expansion given the clear strong ROI on display.
We are already preparing to open a Los Angeles BudCars hub next month. But we believe strongly that the opportunity in front of us is much larger than simply opening another hub in a new regional market. We have completed considerable analysis, the results of which point to strong returns from capital investment in both verticalizing BudCars operations and expanding to multiple new regions.
This path is supported by both end-demand data and our market positioning, and by data on the current California market from a licensing and real estate standpoint given the wave of distressed assets on the market right now, which will likely offer us a window within which to expand at extremely cost-effective levels in the second half of 2020.
To accomplish this, we have organized a Reg-A+ funding round targeting $6 million in capital financing. We have not yet established the precise pricing for this funding round, but we are committed to working with a top-tier investment banking partner. We have initially allowed a pricing scale with a price well above our current market pricing for SGMD shares. This is not due to any plans for a near-term reverse split. Instead, it reflects the rapid growth and strong financial performance we are currently experiencing and anticipate as we move into the second half of the year.
These funds will be used to expand our BudCars delivery service, initially establishing three additional locations within the following 12 months and a further eight potential locations across the California market within the coming 24 months.
In addition, as discussed above, we are seeking to further vertically integrate our supply chain by establishing our own cannabis cultivation and product manufacturing operations. Our analysis suggests we can expand our gross margins on a per unit basis significantly by establishing strong in-house farm-to-door verticalization. It will reduce cost of goods sold and fast-track in-house branded product development and marketing given our direct access to our own customer base.
The current market in California is prime for purchase right now as both cannabis-related licenses and real estate assets are on the market at distressed levels, with many firms operating on final capital resources or weakened balance sheets. The upshot is a lot of high-quality non-operating assets on the market just waiting to be scooped up and put back into action.
Finally, we have been working diligently with the excellent team at Tiger Global Management to increase our presence on social and digital media. We believe a great deal in our vision and feel it is in our shareholders’ best interests to tell our story to the world as we see powerful performance and results.
To that end, we have been putting our message out to our current and prospective shareholders and to the public at large with complete transparency, and we will continue to spread the word on Sugarmade’s vision and progress.
As always, thank you for your support and commitment. We will continue to update you every step of the way.
Jimmy Chan, CEO
About Sugarmade, Inc.
Sugarmade, Inc. (OTCQB: SGMD) is a product and branding marketing company investing in operations and technologies with disruptive potential. Our Brand portfolio includes CarryOutsupplies.com, SugarRush™ and Budcars.com. 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.