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Thursday, October 22, 2020

Sugarmade Inc (OTCMKTS:SGMD) Gets the Cannabis Boost

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Sugarmade Inc (OTCMKTS:SGMD) is a micro-cap player getting into the cannabis patch, according to the company’s latest release. As we all know by now, if you want to create short-term upward volatility in shares, make a credible strategic pivot into exposure to the cannabis juggernaut. SGMD stock provides a good example.

The company announced this week that it has entered into a Letter of Intent to develop and market patent protected active packaging for the cannabis industry. “The technology the Company intends to introduce will not only better preserve cannabis, including THC levels, via control of oxygen and carbon dioxide levels, humidity and thermodynamic cooling, but will also significantly improve the safety of cannabis via the ability to emit food safe oxidizers and other treatments to mitigate mold, bacteria and other pathogens, including powdery mildew.”

Sugarmade Inc (OTCMKTS:SGMD) trumpets itself as a product and brand marketing company investing in products and brands with disruptive potential.

Sugarmade’s brands include: 1) CarryOutSupplies.com, which supplies generic and customer printed items to the quick service restaurant industry, 2) CannaShroud and DabBox, which are unique cannabis packaging products and 3) Sugarmade Paper a tree free office and copy paper made from sugarcane waste.

The Company will soon be launching Sriracha Stix, a revolutionary culinary seasoning product under official license from Irwindale, California-based Huy Fong Foods, Inc., the maker of Sriracha Hot Chili Sauce. The Company has also recently acquired international paper contracts from Bao Coc International Paper and Plastics Limited, located in Vietnam.

SGMD is currently in development of several other innovative product lines, which are planned for mid-2017 introduction.

According to company materials, “Sugarmade, Inc. is a product and brand marketing company investing in products and brands with disruptive potential. Sugarmade’s brands include CarryOutSupplies.com, Sugarmade Tree Free Paper, FreeHand ThumbTray and CannaShroud™, the world’s first Cannabis specific shipping systems. During early 2017, the Company will be launching Sriracha Stix, a revolutionary culinary seasoning product under official license from Irwindale, California-based Huy Fong Foods, Inc., the maker of Sriracha Hot Chili Sauce.”

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The company’s latest release is actually quite revealing about the back room logic of the move:

“While the food industry has used modified atmosphere packaging for many years, recent advancements have given way to active and intelligent packaging. Active packaging is a smart system that involves interaction between packaging components and the internal gas atmosphere within the package. The intellectual property on which Sugarmade will base its new products takes active packaging one step further by adding intelligence to the packaging, which will allow for active feedback to the consumer and tracking throughout the entire supply chain.”

Naturally, before we get too carried away, we need to see if they will actually be able to execute on this idea. But the conceptual element here seems to make a lot of sense.

“We are very excited about this high-tech packaging and the already issued patents, which protect the intellectual property,” commented Jimmy Chan, CEO. “This packaging will enable us to help growers, dispensaries and consumers extend the shelf life of cannabis while making the product much safer for consumption. We plan to be the first company to offer active and intelligent packaging to the fast-growing cannabis industry. We believe this is especially important considering the developing standards in California and other jurisdictions that have recently approved recreational use.”

SGMD stock has been on fire of late, ripping 79% higher over the past month of action. In addition, the name has seen an influx in interest of late, with the stock’s recent average trading volume running above 440% beyond its prior sustained average level.

Earning a current market cap value of $21.7M, SGMD has virtually no cash on the books, which stands against about $1.2M in total current liabilities. SGMD is pulling in trailing 12-month revenues of $4.1M. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -19.6%. Clearly, the company’s recent move is designed to combat that degradation in sales growth. This is an exciting story, and we look forward to a follow-up chapter as events transpire. For continuing coverage on shares of SGMD stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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