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Sugarmade – “We See Superior Opportunities” - Rescinds Agreement - Saving 1.2 Billion Share Issuance and $1 MM Quarterly Cash Outlay
Sugarmade – “We See Superior Opportunities” - Rescinds Agreement - Saving 1.2 Billion Share Issuance and $1 MM Quarterly Cash Outlay.
About this update from Sugarmade, Inc.
[{"type":"text","content":"\n NEW YORK, Jan. 17, 2020 (GLOBE NEWSWIRE) -- via NetworkWire – 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 acquir...