Sugarmade Signs LOI to Acquire California Hydroponic Supplier Sky Unlimited.
MANews-(C)2009-2018
18 October 2018 - US-based hydroponics supply company Sugarmade, Inc. (OTCQB: SGMD) has signed a binding letter of intent to acquire Sky Unlimited, LLC, dba Athena United, a California-based supplier of cannabis cultivation materials to wholesalers and large commercial cannabis cultivators the company said.
Sugarmade expects this acquisition to be highly accretive to earnings and shareholder value and thus is revising its guidance for full-year 2019 revenues to more than USD 70m.
The company's revenue within the cannabis cultivation supply sector is primarily derived from online sales, whereas Sky Unlimited's revenues are mainly generated via direct sales to wholesalers and large commercial cultivation companies.
Management believes that combining its focus on e-commerce with Sky Unlimited's larger commercial operator-focused business will result in strong marketing, manufacturing and logistical synergies, as well as improved margins and other corporate benefits.
Sugarmade's market strategy is to cover three major areas supplies for cannabis cultivation online and e-commerce; the wholesale market, which services brick and mortar retailers; and large-scale commercial cultivation operations.
The terms of the LOI call for the payment by the company of 10m common shares of Sugarmade, which will immediately vest as a non-refundable fee, to the owners of Sky Unlimited.
These shares will be subject to normal sales and registration restrictions imposed by the financial industry and governmental agencies.
In exchange for this non-refundable compensation, Sky Unlimited agrees to a non-shop and due diligence period not to exceed 180 days.
At closing and upon the completion of a successful audit of up to two years of financials, the company will pay Sky Unlimited an...
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