Headwaters, LLC executed a term sheet to acquire Stem Holdings, Inc. (OTCPK:STMH) in a reverse merger transaction on January 30, 2023. Pursuant to the Term Sheet, the Transaction will result in a reverse takeover of Stem Holdings and, subject to the satisfaction of all listing conditions, the listing of the combined entity on the Canadian Securities Exchange (the “CSE”) and the OTCQB Venture. Following the closing of the Transaction, it is expected that the former equity holders of Headwaters, LLC will own approximately 80% of the issued and outstanding shares of the Company.

The Transaction is subject to, among other matters, the execution of a mutually agreeable definitive agreement (the “Definitive Agreement”), completion of due diligence and subject to several conditions including, but not limited to, stockholder approval, delivery of acceptable financial statements, board of directors' approval and satisfaction of all regulatory and stock exchange approvals.