Sugarmade Issues Shareholder Letter on Expansion and the Road Ahead

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.