LOI provides for substantial stake in turnkey property, licensing, operations and associated equipment
NEW YORK, June 30, 2022 (GLOBE NEWSWIRE) -- via InvestorWire – Sugarmade, Inc. (OTC Pink: SGMD) ("Sugarmade", "SGMD" or the "Company") an emerging leader in the licensed cannabis sector, is excited to announce the signing of a Letter of Intent (the “LOI”) toward the acquisition of 40% of the business and associated property known as RMI Ventures (d/b/a Jerusalem Grade Farm) located in Lake County, California (“RMI Ventures” or “RMI”).
According to the LOI, the Parties agree to be bound to an agreement to complete a Definitive Acquisition Agreement whereby Sugarmade will become a minority owner of RMI Ventures, controlling 40% of the equity of RMI Ventures. Sugarmade management notes that the Company plans to pursue the acquisition of additional equity in RMI Ventures next year as market conditions improve.
The RMI acquisition follows the Company’s recently announced collaborative cannabis cultivation contract with Cannabis Global, Inc. (OTC Pink: CBGL) (“Cannabis Global”) to produce approximately 25,000 pounds of “Fresh Frozen” cannabis, which Cannabis Global will use in its product lines for distribution throughout the California cannabis marketplace.
“We plan to leverage this turnkey operation to fulfill some of the 25,000 pounds of fresh frozen flower stipulated in our purchase agreement with Cannabis Global,” noted Jimmy Chan, CEO of Sugarmade. “At the same time, this deal will allow us to seek more buyers and build our sales channel to support the eventual activation of our large production site at our nearby 640-acre project.”
Fresh Frozen cannabis is cultivated to be immediately flash frozen upon harvest (instead of the traditional post-harvest drying and curing process). As noted in the Company’s release dated May 4, Sugarmade and Cannabis Global signed a pre-booked, fixed-price contract in the amount of $700,000, which provides for cash payments from Cannabis Global to Sugarmade of $300,000 and notes for the balance of $400,000.
The LOI with RMI Ventures covers a minority stake acquisition that includes the associated real estate (the “Property”), cannabis-related licenses and the business operation. The acquisition will include minority ownership of a 10-year cultivation license at the Property based on a cultivation canopy size and other information outlined in the license issued by the County of Lake, California. The licensed outdoor canopy area at the Property covers 43,560 square feet of the total property, which measures 21.38 acres.
In addition, the Property includes an installed irrigation system, weather station, cultivation nursery and biomass curing room. The Property is located near the Company’s recently acquired 640-acre cultivation property in Lake County, California, outside of the Commercial Cannabis Cultivation Exclusion Zones.
Deploying the Company's capital to acquire the minority stake in RMI Ventures' turnkey 1-acre production property rather than activate its large 640-acre production property will allow the Company to begin delivering on its "Fresh Frozen" cannabis contract with Cannabis Global this season.
In addition, it will enable the Company to avoid supply and demand issues due to the perishable nature of cannabis flowers' short shelf life, save on costs related to licensing and cultivation taxes by reducing the canopy square-footage basis from the first 8 acres to be activated to 1 acre, and have enough time to activate the license for the 640-acre production property for an entire grow season in 2023.
“This acquisition will allow us to be more efficient on every level,” noted Jimmy Chan, CEO of Sugarmade. “It gives us much more optionality in scaling our vertically integrated model while avoiding unnecessary costs and wasteful spending as we prepare to hit the gas pedal when market conditions are more advantageous. The RMI business is an excellent property, and we look forward to updating current and prospective shareholders as we move toward a definitive agreement and an expanded equity position.”
Sugarmade, Inc. (OTC Pink: SGMD) is a product and branding marketing company investing in operations and technologies with disruptive potential. Our Brand portfolio includes CarryOutsupplies.com, SugarRush™, NUG Avenue, Lemon Glow and Budcars.
For more information, please visit 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, uncontrollable forces of nature 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.
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