8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 12, 2020

SUGARMADE, INC.

(Exact name of registrant as specified in its charter) 

Delaware	000-23446	94-3008888
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

750 Royal Oaks Dr., Suite 108 Monrovia, CA	91016
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (888) 982-1628

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Item 7.01 Regulation FD Disclosure.

On October 12, 2020, Sugarmade, Inc. (the “Company”) issued a letter to stockholders covering certain business updates. A copy of this letter to stockholders is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information contained in the websites is not a part of this Current Report on Form 8-K.

On October 14, 2020, the Company issued a press release announcing certain results of operations for the quarter ended September 30, 2020 for BudCars licensed cannabis delivery service brand (“BudCars”). The Company is an investor in BudCars and joint operator of BudCars’ first operating location in Sacramento, California. During early 2020, the Company gained a 40% stake in BudCars and in the Sacramento delivery operations via the acquisition of a 40% stake in Indigo Dye Group (“Indigo”). Under the terms of the Company’s agreement with Indigo, the Company also acquired an option to purchase an additional 30% interest in Indigo, upon the closing of which would provide the Company with a 70% controlling interest. As of the date hereof, this option has not yet been exercised, the Company’s stake in Indigo remains at 40%, and there is no assurance that the Company will exercise the option to acquire an additional 30% interest in Indigo. However, since late May 2020, the Company has been actively involved in development of Indigo’s operations with power to direct the activities and significantly impact Indigo’s economic performance. The Company also has obligations to absorb losses and right to receive benefits from Indigo. As such, in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 810-10-25-38A through 25-38J, Indigo is considered a variable interest entity (VIE) of the Company. A copy of this press release is attached hereto as Exhibit 99.2 and incorporated herein by reference. The information contained in the website is not a part of this Current Report on Form 8-K.

The information included in Item 7.01 to this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth under this Item 7.01 shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Letter to Stockholders dated October 12, 2020.
99.2	Press release of the registrant dated October 14, 2020.

 -1-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SUGARMADE, INC.
Date: October 21, 2020	By:	/s/ Jimmy Chan
	Name:	Jimmy Chan
	Title:	Chief Executive Officer and Chief Financial Officer

 -2-

EX-99.1

Exhibit 99.1

Sugarmade Issues Letter to Shareholders on Coming Expansion Steps

NEW YORK, Oct. 12, 2020 (GLOBE NEWSWIRE) -- via NetworkWire – Sugarmade, Inc. (OTCMKTS:SGMD) (“Sugarmade”, “SGMD”, or the “Company”) is pleased to issue the following Letter to Shareholders on behalf of the CEO:

Dear Valued Shareholder,

This is an exciting moment in the history of Sugarmade. We have assembled the building blocks of a coherent and cohesive strategic vision, and we are more grateful than ever for your continued patience, commitment, and support as we put in motion key next steps to manifest that vision and drive strong and sustained shareholder value as a key emerging leader in the California cannabis marketplace.

Today, I want to highlight two themes that will help to drive our value proposition for shareholders over the intermediate term: geographic expansion for BudCars and our move to vertically integrate through the establishment of cultivation operations. Together, they represent tangible catalysts driving both top and bottom line growth.

As you may be aware, we have been working to expand the scope, scale, and reach of BudCars, a rapidly growing leader in the California cannabis delivery space – where we hold a 40% stake, with an option to take a controlling 70% stake, and where we are actively engaged in strategic and operational execution of the business.

BudCars has demonstrated dramatic growth over the past 6-8 months, consistently surpassing our modeled expectations as customer acquisition and per-order volumes have powered organic growth within the geographic reach of the BudCars delivery zone in the Sacramento metropolitan area in Northern California. However, to fuel the next phase of our overarching vision, we must begin to expand our geographic reach.

Today, I have good news: that expansion is officially underway. We are expanding BudCars initially into the North San Francisco Bay Area and the Wine Country Counties. That will be followed by our grand opening of BudCars Los Angeles, which we anticipate now will take place sometime in November.

The initial move into the North Bay Wine Country area is ripe with potential. Recent data covering cannabis-related tax receipts from Sonoma County suggest the area is experiencing a cannabis boom, with growth of over 35%, according to a North Bay Business Journal report.

As we begin to see tourism return in the wake of the global pandemic health crisis, we anticipate this region to represent one of the strongest bets as well, and we are excited about positioning BudCars to capitalize on that growth trend.

Expansion in the North Bay Wine Country area will be a key driver for BudCars because it represents more than a doubling of our total delivery territory, with the newly added delivery radius focused on a strong and rapidly growing region.

That expansion move will be quickly followed by our BudCars LA grand opening, which, as noted above, we expect to take place next month. Los Angeles is an enormous market for cannabis sales. It stands as perhaps the largest metropolitan cannabis marketplace on the planet. And we will be thrilled to see BudCars lay down roots and start taking market share in the area.

Finally, we are also excited about building our cultivation presence. As noted in recent Company communications, we have secured a property zoned for cannabis cultivation, and we are currently working with regulators to move forward with the property. This move will function to widen our margins on BudCars sales as well as to position Sugarmade to capitalize on growing demand in a chronically undersupplied marketplace. Because of our access to end-market consumers through our BudCars distribution channel, we will also have an advantage over other cultivators in establishing a branded line of cannabis products, further supporting widening margins at each point in the chain.

These are exciting times for Sugarmade. We have a rapidly growing business, and we are taking concrete steps now to build on that growth. Once again, we are very grateful to our committed base of support, and I look forward to keeping you engaged as we continue to make new strides and reach new milestones.

Best Regards,

Jimmy Chan, CEO

About Sugarmade, Inc.

Sugarmade, Inc. (OTCMKTS: 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.

Corporate Contact:

Jimmy Chan

+1-(888)-982-1628

info@Sugarmade.com

Public Relations:

Tiger Marketing & Branding Agency

info@TigerGMP.com

www.TigerGMP.com

Corporate Communications:

InvestorBrandNetwork (IBN)

Los Angeles, California

www.InvestorBrandNetwork.com

310.299.1717 Office

Editor@InvestorBrandNetwork.com 

EX-99.2

Exhibit 99.2

Sugarmade Reports BudCars Calendar Q3 Data: New Sales Record Results, Nearly $2M in Gross Receipts, Up 66% Q/Q

NEW YORK, Oct. 14, 2020 (GLOBE NEWSWIRE) -- via NetworkWire – Sugarmade, Inc. (OTCQB:SGMD) (“Sugarmade”, “SGMD”, or the “Company”), and its BudCars Cannabis Delivery Service (“BudCars”), is pleased to provide shareholders with a preannouncement of BudCars’ performance for the three months ended Sept. 30, 2020, which featured steadily strong gross margins, nearly $2 million in gross receipts, and more than 60% growth in net sales, customer orders and gross profits on a sequential quarterly basis.

• Total Sept/Q BudCars gross receipts over $1.9 million ($1.55 million, net of sales taxes), representing 66% quarter over quarter sales growth
• Total Sept/Q BudCars gross profits of $903,667, representing 64% quarter over quarter gross profit growth on steady 47% gross profit margins
• Average daily gross sales increased 68% Q/Q to $21,246
• Total customer tickets increased 62% Q/Q on 3% growth in average ticket size

“BudCars continues to perform, setting records in basically every key metric we track,” stated Jimmy Chan, CEO of Sugarmade. “It was a tremendous quarter, with a big jump in customers and regional market share and robust margins on every sale. That paints a very motivating picture as we gear up to significantly expand our service territory, with upcoming expansion into the North Bay and Wine Country areas, as well as our upcoming grand opening of BudCars LA.”

Management notes that BudCars growth has continually tracked ahead of expectations. However, the Company believes that geographic expansion is the key to unlocking a further dramatic acceleration in growth. As announced in a recent Letter to Shareholders, the Company is expanding BudCars initially into the North San Francisco Bay Area and the Wine Country counties. That will be followed by the grand opening of BudCars Los Angeles, which is anticipated to take place in November.

The Company also achieved an additional strategic goal during the quarter by securing rights to a property zoned for cannabis cultivation where it intends to establish a licensed cannabis cultivation facility, which presents the potential to widen profit margins further through vertical supply chain integration and the establishment of a branded line of cannabis products.

About Sugarmade, Inc.

Sugarmade, Inc. (OTCMKTS: 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.

Corporate Contact:
Jimmy Chan
+1-(888)-982-1628
info@Sugarmade.com

Public Relations:
Tiger Marketing & Branding Agency
info@TigerGMP.comwww.TigerGMP.com

Corporate Communications:
InvestorBrandNetwork (IBN)
Los Angeles, California
www.InvestorBrandNetwork.com
310.299.1717 Office
Editor@InvestorBrandNetwork.com