UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A/A
First Amendment
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed
by the Registrant [X]
Filed
by a Party other than the Registrant [ ]
Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)
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Definitive
Proxy Statement
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[X]
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Definitive
Additional Materials
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[ ]
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Soliciting
Material Pursuant to §240.14a-12
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STEM
HOLDINGS, INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[X]
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No
fee required.
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[ ]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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STEM
HOLDINGS, INC.
2201
NW Corporate Blvd, Suite 205
Boca
Raton, FL 33431
(561)
237-2931
NOTICE
OF ANNUAL
MEETING
OF SHAREHOLDERS TO BE
HELD
JUNE 25, 2021
TO
OUR SHAREHOLDERS:
You
are cordially invited to attend the Annual Meeting of Shareholders (the “Annual Meeting”) of Stem Holdings, Inc.,
a Nevada corporation (together with its subsidiaries, “Company”, “Stem”, “we”, “us”
or “our”), which will be held on June 25, 2021, at 12:00 Noon EDT. The meeting will be conducted by ZOOM. The meeting
will be held for the following purposes:
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1.
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To
elect eight (8) directors to hold office for a one-year term and until each of their successors are elected and qualified.
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2.
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To
amend the Company’s Articles of Incorporation to increase the number of authorized
Company Common Shares from 300,000,000 to 750,000,000.
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3.
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To
authorize a reverse stock split within a range of one (1) post-split common share for each two (2) pre-split common shares
outstanding on the record date and ten (10) pre-split common shares outstanding on the record date, at any time within one
(1) year of the approval of this Proposal. In this regard, the Board of Directors reserves its right to elect not to proceed,
and abandon, the reverse stock split if it determines, in its sole discretion, that this proposal is no longer in the best
interests of the Company’s shareholder.
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4.
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To
change the name of the Company to Driven by Stem, Inc.
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5.
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To
ratify the appointment of L J Soldinger Associates, LLC, independent registered public accounting firm, as our independent
registered public accounting firm for the fiscal year ending September 30, 2021; and
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6.
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To
transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof.
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A
copy of the Annual Report of the Company’s operations during the fiscal year ended September 30, 2020 is available on request
or at www.sec.gov.
The
Board of Directors has fixed the close of business on May 17, 2021, as the record date for the determination of shareholders
entitled to receive notice of and to vote at the Annual Meeting of Shareholders and any adjournment or postponement thereof. A
complete list of shareholders entitled to vote at the Annual Meeting will be available for inspection for ten days prior to the
Annual Meeting at the Offices of the Company located at 2201 NW Corporate Blvd, Suite 205, Boca Raton, FL 33431.
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By
Order of the Board of Directors
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/s/
Adam Berk
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Adam
Berk
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CEO
and Chairman of the Board
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May
20, 2021
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Boca
Raton, Florida
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YOUR
VOTE IS IMPORTANT
WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, TO ASSURE THAT YOUR SHARES WILL BE REPRESENTED, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO EVEN IF YOU HAVE PREVIOUSLY SENT
IN YOUR PROXY.
TABLE
OF CONTENTS
STEM
HOLDINGS, INC.
2201
NW Corporate Blvd, Suite 205
Boca
Raton, FL 33431
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD ON JUNE 25, 2021
GENERAL
INFORMATION ABOUT THE PROXY STATEMENT AND ANNUAL MEETING
General
This
Proxy Statement is being furnished to the shareholders of Stem Holdings, Inc. (together with its subsidiaries, “Company”,
“Stem”, “we”, “us” or “our”) in connection with the solicitation of proxies by
our Board of Directors (the “Board of Directors” or the “Board”) for use at the Annual Meeting of Shareholders
to be held via ZOOM on June 25, 2021, and at any and all adjournments or postponements thereof (the “Annual Meeting”)
for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. Accompanying this Proxy Statement is
a proxy/voting instruction form (the “Proxy”) for the Annual Meeting, which you may use to indicate your vote as to
the proposals described in this Proxy Statement. It is contemplated that this Proxy Statement and the accompanying form of Proxy
will be first mailed to Stem shareholders on or about May 25, 2021.
The
Company will solicit shareholders by mail through its regular employees and will request banks and brokers and other custodians,
nominees and fiduciaries, to solicit their customers who have stock of the Company registered in the names of such persons and
will reimburse them for reasonable, out-of-pocket costs. In addition, the Company may use the service of its officers and directors
to solicit proxies, personally or by telephone, without additional compensation.
Voting
Securities
Only
shareholders of record as of the close of business on May 17, 2021 (the “Record Date”) will be entitled to
vote at the Annual Meeting and any adjournment or postponement thereof. As of the Record Date, there were approximately [number]
shares of common stock of the Company, issued and outstanding and entitled to vote representing approximately [number] holders
of record, plus shares held by CEDE. Shareholders may vote in person or by proxy. Each holder of shares of common stock is entitled
to one vote for each share of stock held on the proposals presented in this Proxy Statement. The Company’s bylaws provide
that a majority of all the shares of stock entitled to vote, whether present in person or represented by proxy, shall constitute
a quorum for the transaction of business at the Annual Meeting. The enclosed Proxy reflects the number of shares that you are
entitled to vote. Shares of common stock may not be voted cumulatively.
Voting
of Proxies
All
valid proxies received prior to the Annual Meeting will be voted. The Board of Directors recommends that you vote by proxy even
if you plan to attend the Annual Meeting. To vote by proxy, you must fill out the enclosed Proxy, sign and date it, and return
it in the enclosed postage-paid envelope. Voting by proxy will not limit your right to vote at the Annual Meeting if you attend
the Annual Meeting and vote in person. However, if your shares are held in the name of a bank, broker or other holder of record,
you must obtain a proxy executed in your favor, from the holder of record to be able to vote at the Annual Meeting.
Revocability
of Proxies
All
Proxies which are properly completed, signed and returned prior to the Annual Meeting, and which have not been revoked, will be voted
in favor of the proposals described in this Proxy Statement unless otherwise directed. A shareholder may revoke his or her Proxy at any
time before it is voted either by filing with the Secretary of the Company, at its principal executive offices located at 2201 NW
Corporate Blvd., Suite 205, Boca Raton, FL 33431, a written notice of revocation or a duly-executed Proxy bearing a later date or
by attending the Annual Meeting and voting in person.
Required
Vote
Representation
at the Annual Meeting of the holders of a majority of the outstanding shares of our common stock entitled to vote, either in person
or by a properly executed Proxy, is required to constitute a quorum. Abstentions and broker non-votes, which are indications by
a broker that it does not have discretionary authority to vote on a particular matter, will be counted as “represented”
for the purpose of determining the presence or absence of a quorum. Under the Nevada Revised Statutes, once a quorum is established,
shareholder approval with respect to a particular proposal is generally obtained when the votes cast in favor of the proposal
exceed the votes cast against such proposal.
In
the election of our Board of Directors, shareholders are not allowed to cumulate their votes. Shareholders are entitled to cast a vote
for each of the openings on the Board to be filled at the Annual Meeting. The eight nominees receiving the highest vote totals
will be elected as our Board of Directors. For approval of the proposed ratification of our independent registered accountants, the votes
cast in favor of the proposal must exceed the votes cast against the proposal. Accordingly, abstentions and broker non-votes will not
affect the outcome of the election of the Board of Directors or the ratification of the independent public accountants.
Shareholders
List
For
a period of at least ten days prior to the Annual Meeting, a complete list of shareholders entitled to vote at the Annual Meeting
will be available at the principal executive offices of the Company located at 2201 NW Corporate Blvd, Suite 205, Boca Raton,
FL 33431 so that stockholders of record may inspect the list only for proper purposes.
Expenses
of Solicitation
The
Company will pay the cost of preparing, assembling and mailing this proxy-soliciting material, and all costs of solicitation,
including certain expenses of brokers and nominees who mail proxy material to their customers or principals.
PROPOSAL
NO. 1
ELECTION
OF EIGHT DIRECTORS
The
Company’s Board of Directors currently consists of five (5) authorized directors. A total of eight (8) directors will be
elected at the Annual Meeting to serve until the next annual shareholder meeting. The persons named as “Proxies” in
the enclosed Proxy will vote the shares represented by all valid returned proxies in accordance with the specifications of the
shareholders returning such proxies. If no choice has been specified by a shareholder, the shares will be voted FOR the nominees.
If at the time of the Annual Meeting any of the nominees named below should be unable or unwilling to serve, which event is not
expected to occur, the discretionary authority provided in the Proxy will be exercised to vote for such substitute nominee or
nominees, if any, as shall be designated by the Board of Directors. If a quorum is present and voting, the nominees for directors
receiving the highest number of votes will be elected. Abstentions and broker non-votes will have no effect on the vote.
NOMINEES
FOR ELECTION AS DIRECTOR
The
following sets forth certain information about each of the director nominees:
Adam
Berk (43)
Mr.
Berk has been a director, President and Chief Executive Officer of the Company since its inception in June 2016. From January
2013 until January 2015 Adam was the CEO of HYD For Men, an artisanal men’s grooming company that patented the first solution
to extend the life of a razor blade by 400%. HYD For Men is currently sold at HSN, Walgreens, Bed Bath & Beyond, Drugstore.com, Birchbox, GiantEagle, Meijers, and Kinney Drugs. Recently, HYD For Men was acquired by Lucas Investment Group. From January
2015 until January 2017 Adam was the Co-President of Consolidated Ventures of Oregon a Cannabis holding company. Mr. Berk’s
experience as a founder and principal executive of several start-up companies and skills associated therewith led to the conclusion
that he should serve as an executive and director of the Company. From 2002 through 2013, Mr. Berk was employed with Osmio, Inc.
(currently GrubHub, an Aramark subsidiary), the first patented web-based corporate expense management system that concentrated
on food ordering for law firms, investment banks and consulting firms. He served as chief executive of Osmio from 2002-2007.
Steven
Hubbard (72)
Mr.
Hubbard has served as Chief Financial Officer, Secretary and a member of the Board of Directors of the Company since its inception
in June 2016. He served as Chief Financial Officer and Secretary of Diego Pellecer, Inc., a cannabis-related real estate company
From April 2013 through September 2013 and Chief Financial Officer and Secretary of Diego Pellicer Worldwide, Inc. (a publicly
reporting company) from September 2013 through December 2014. He served as Chief Financial Officer of Kind Care LLC DBA TJ’s
Organic Garden from December 2014 through August 2015 and has been Chief Financial Officer of Consolidated Ventures of Oregon,
Inc. since August 2015. Commencing several years prior to April 2013, Mr. Hubbard served as an outside management consultant to
several early stage companies, primarily providing financial services. Mr. Hubbard’s experience as a founder and principal
executive of several start-up companies, his experience as an auditor with Arthur Andersen & Co prior to 2012 and the skills
associated therewith led to the conclusion that he should serve as a director of the Company.
Garrett
M. Bender (60)
Mr.
Bender has served as a member of the Board of Directors of the Company since its inception in June 2016. He is the Principal and
Co-Founder of Ascot Development LLC, a real estate development firm, which commenced operations in 2003. He has guided Ascot through
numerous acquisition and sale transactions and strategically manages Ascot’s land portfolio. Mr. Bender’s experience
as a founder and principal executive of several start-up companies and the sales and marketing skills associated therewith led
to the conclusion that he should serve as a director of the Company.
Lindy
Snider (60)
Ms.
Snider has served as a member of the Board of Directors of the Company since its inception in June 2016. She is the founder and
for over five years has been CEO of Lindi Skin, the first full line of skin care products for cancer patients. This botanically
based skin care line serves the special needs of individuals undergoing cancer treatment and is found in most major cancer centers
in the U.S.
Ms.
Snider is an active investor in cannabis related businesses. Focused on new business development, brand marketing and investing,
Ms. Snider identifies and helps develop innovative companies in the space. She is a passionate entrepreneur and a champion of
both start-ups and women-owned businesses. She serves on the following boards and advisories: Sqor.com, Greenhouse Ventures, Intiva,
Blazenow, Kind Financial, Elevated Nation, as well as the following philanthropic boards: Fox Chase Cancer Foundation, Cancer
Forward, Philadelphia Orchestra, PSPCA, Schuylkill Center for Environmental Education, National Museum of American Jewish History,
The Middle East Forum, Shoah Foundation’s Next Generation Council, The Ed Snider Youth Hockey Foundation, and The Snider
Foundation. Ms. Snider’s experience as a founder and principal executive of several start-up companies and her service as
an independent director of several for-profit and charitable organizations and the skills associated therewith led to the conclusion
that she should serve as a director of the Company.
Dennis
Suskind (75)
Mr.
Suskind has been a director of the Company since May 2020. During his career, he has worked jointly with the Commodity Futures
Trading Commission (CFTC) to develop hedge exemptions and went on to build the most significant global precious metals arbitrage
business. His team traveled worldwide to educate producers and consumers on the reasons for using futures as their pricing medium
to bring credibility to these markets. He has served as Vice Chairman of the Commodity Exchange (COMEX), Vice Chairman of the
New York Mercantile Exchange (NYMEX), a member of the Board of Directors Futures Industrial Association, and a member of the Board
of International Precious Metals Institute. Mr. Suskind was elected as an inaugural member to the Futures Industry Association’s
Hall of Fame in 2005.Suskind was elected to hold a Town Council seat in the Town of Southampton, New York. He has also served
as President of the Board of Directors of the Arthur Ashe Institute for Urban Health, as a member of the President’s Council
of the Peconic Land Trust, a founding member of Mt. Sinai’s Hospital Associates, a board member of the Nature Conservancy,
and a board member of the Collegiate School and Marymount Schools in New York. In 2005 the Preservation League of New York State
presented Mr. Suskind with its Pillar of New York Award.
Salvador
Villanueva (34)
Mr.
Villanueva was appointed as President of Driven Deliveries, Inc. effective February 28, 2020 and Interim Chief Executive Officer
and a director of Driven Deliveries, Inc. on October 4, 2020. Mr. Villanueva is an accomplished entrepreneur with a proven track
record of successfully creating and building sustainable businesses. The sale of Budee to Driven Deliveries, Inc., is Mr. Villanueva’s
fourth successful and largest exit, with a transaction value of over $10.9M. Mr. Villanueva started Budee Inc., in 2015. Under
his leadership, the enterprise grew to an $8M+ sales run rate with over 150 employees and multiple delivery hubs throughout the
state. In an effort to differentiate himself and his enterprises, Mr. Villanueva has always heavily focused on developing and
customizing proprietary technology. He oversaw the development of the infrastructure that powers Driven’s 200,000+ annual
deliveries. Mr. Villanueva’s experience spans multiple industries to include the heavy equipment, transportation, and gold
industries. Mr. Villanueva holds a B.S. in Economics from the University of California Santa Barbara and currently serves as President.
The
Board has concluded that Mr. Villanueva’s experience as a founder and principal executive of several start-up companies and
skills associated therewith led to the conclusion that he should serve as an executive and director of the Company
Brian
Hayek (36)
Mr.
Hayek is Chief Compliance Officer of the Company. Previously, he was appointed President, Chief Financial Officer, Treasurer,
Secretary and a member of the Board of Directors of Driven Deliveries, Inc. effective August 29, 2018. Effective February
28, 2020, Mr. Hayek stepped down as President and assumed the role of Chief Financial Officer. Mr. Hayek is a co-founder of the Company’s
subsidiary Driven Deliveries, Inc. and has served in various capacities for Driven Deliveries, Inc. since November, 2017. Prior thereto,
Mr. Hayek joined ResMed in 2017 creating new services for ResMed’s Software as a Service (SaaS) Business Unit. Prior to ResMed,
Mr. Hayek spent 5 years at Qualcomm holding roles in Qualcomm’s security division. Before joining the private sector, Mr. Hayek
spent 11 years on active duty with the United States Marine Corps commanding scout snipers in Afghanistan, serving as an Intelligence
Officer in the Middle East, and holding various roles in communications and information technology. Mr. Hayek holds a B.S. in Electrical
Engineering from San Diego State University and has an M.B.A. from USC’s Marshall School of Business.
Mr. Hayek’s his experience as
a founder and principal executive and skills associated therewith led to the conclusion that he should serve as an executive and director
of the Company.
Robert
L. B. Diener (73)
Mr.
Diener has been the principal of the Law Offices of Robert Diener for over twenty years. He has nearly 50 years of experience
as an attorney, senior corporate executive and director, counsel and advisor. The focus of his legal practice is corporate and
securities law, mergers and acquisitions, finance and real estate. He has an extensive background and experience in corporate
governance, public accounting and finance and strategic planning.
Mr.
Diener currently serves as counsel to public and private companies, investors and companies which are focused on formation or
acquisition of public companies in the United States. His principal focus is on “going public” transactions and as
“virtual general counsel” to smaller publicly-reporting companies. His experience runs the full gamut from corporate
finance, mergers and acquisitions, investment activities, corporate governance, state and federal securities law compliance and
major contract negotiations.
During
his career, Mr. Diener has served as President, CEO and a member of the board of American Health Properties, Inc. (NYSE), then
one of the largest real estate investment trusts in the country (now part of Healthpeak Properties Inc. with $15 billion in assets);
a senior executive of American Medical International, Inc. (NYSE), one of the country’s largest health care services providers;
Chairman of the Board and CEO of a publicly traded (NASDAQ) telecommunications company and a partner in a boutique investment
banking group. He also has extensive experience in international business, having had direct responsibility for transactions and
development projects in the United Kingdom, Spain, Germany, Switzerland, Greece, Egypt, Singapore, Australia, Israel, Hong Kong,
Japan, Korea, Malaysia, Mexico, Brazil, Venezuela, Bolivia and Ecuador
Mr.
Diener has served as a member or advisor to the boards of many public and private companies, including over 20 individual for-profit
and not-for-profit hospitals and health care facilities. He has previously served as a director of the Federation of American
Hospital Systems and the National Association of Real Estate Investment Trusts. He is currently a director of Prime Healthcare
Services, Inc.
Mr.
Diener has been an active member of the State Bar of California since 1973. He received a Bachelor of Arts degree in Social Sciences
and Communications from the University of Southern California in 1969 and a Juris Doctor degree (Magna Cum Laude) from
the University of Santa Clara School of Law in 1973, where he was the Business Editor of the Law Review. He has a strong working
knowledge of U.S. generally accepted accounting principles (GAAP). Mr. Diener served in the United States Marine Corps Reserve
from 1969 through 1975.
RECOMMENDATION
OF THE BOARD OF DIRECTORS:
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES LISTED ABOVE.
PROPOSAL
NO. 2
INCREASE
THE COMPANY’S AUTHORIZED CAPITAL
The
Company’s Board of Directors has proposed to amend the Company’s Certificate of Incorporation to increase the number
of authorized Company Common Shares from 300,000,000 to 750,000,000.
ADVANTAGES
AND RISK FACTORS RESULTING FROM INCREASING AUTHORIZED COMMON STOCK
The
Company believes that this increased number of authorized but unissued Common Shares has the following advantages:
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To
provide authorized capital to honor contractual commitments which arise on the conversion
of currently outstanding convertible debentures and Preferred Stock (see below);
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The
ability to raise capital by issuing capital stock under future financing transactions, if any, and compliance with the applicable
covenants of existing financing;
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To
have shares of common stock available to pursue business expansion opportunities, if any;
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The
issuance of authorized but unissued stock could be used to deter a potential takeover
of the Company that may otherwise be beneficial to shareholders by diluting the shares
held by a potential suitor or issuing shares to a shareholder that will vote in accordance
with the desires of the Company’s Board of Directors, at that time. Notwithstanding,
a takeover may be beneficial to independent shareholders because, among other reasons,
a potential suitor may offer Company shareholders a premium for their shares of stock
compared to the then-existing market price. The Company does not have any plans or Proposal
to adopt such provisions or enter into agreements that may have material anti-takeover
consequences.
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The
principal disadvantage of increasing the authorized capital is the possibility of increased dilution if the newly authorized shares
are issued in a manner which does not result in incremental earnings.
The
Board of Directors reserves its right to elect not to proceed, and abandon, the increase in authorized capital if it determines,
in its sole discretion, that this proposal is no longer in the best interests of the Company’s shareholders.
RECOMMENDATION
OF THE BOARD OF DIRECTORS:
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” AUTHORIZATION OF THE INCREASE IN THE COMPANY’S AUTHORIZED
CAPITAL
PROPOSAL
NO. 3
REVERSE
SPLIT OF COMMON STOCK
The
Board of Directors believes that the proposed reverse stock split is beneficial to the Company because it provides the Company
with the opportunity to become listed on the NASDAQ Global Market consistent with the listing standards for such market and provides
it with the flexibility it needs to raise additional capital consistent with its Business Plan.
The
Board of Directors reserves its right to determine the exchange ratio of the reverse split and to elect not to proceed, and abandon,
the reverse stock split if it determines, in its sole discretion, that this proposal is no longer in the best interests of the
Company’s shareholders.
ADVANTAGES
AND CERTAIN RISK FACTORS ASSOCIATED WITH THE REVERSE STOCK SPLIT
There
can be no assurance that the total market capitalization of the Company’s Common Stock (the aggregate value of all Company’s
Common Stock at the then market price) after the proposed reverse stock split will be equal to or greater than the total market
capitalization before the proposed reverse stock split or that the per share market price of the Company’s Common Stock
following the reverse stock split will increase in proportion to the reduction in the number of shares of the Company’s
Common Stock outstanding before the reverse stock split.
While
the Company believes that the net result of the reverse split will be that the per share price of the Company’s Common Stock
will be sufficient to meet the NASDAQ Global Markets listing standards, if the reverse stock split is effected, there is no guarantee
that the resulting per-share stock price will, in fact, be sufficient to meet the then NASDAQ Global Markets listing standards
and there is no guarantee that the Company will, in fact, become listed on the NASDAQ Global Market.
A
decline in the market price of the Company’s Common Stock after the reverse stock split may result in a greater percentage
decline than would occur in the absence of a reverse stock split, and the liquidity of the Company’s Common Stock could
be adversely affected following such a reverse stock split.
IMPACT
OF THE PROPOSED REVERSE STOCK SPLIT IF IMPLEMENTED
If
approved and effected, the reverse stock split will be realized simultaneously for all of the Company’s Common Stock and
the ratio will be the same for all of the Company’s Common Stock. All fractional interests resulting from the reverse split
will be rounded up to the nearest whole share (see EFFECT ON FRACTIONAL SHAREHOLDERS, below). The reverse stock split will affect
all of the Company’s stockholders uniformly, however, the rounding of fractional shares may affect certain stockholders’
percentage ownership interests and proportionate voting power in the Company. Because the number of authorized shares of the Company’s
Common Stock will not be reduced, the reverse stock split will increase the Board of Directors’ ability to issue authorized
and unissued shares without further stockholder action.
The
principal effect of the reverse stock split will be that:
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the
number of shares of the Company’s Common Stock issued and outstanding will be reduced from approximately 206,970,326
shares (a) to approximately 103,485,116 shares if the ratio of the reverse split is one for two (b) to approximately 68,990,109
shares if the ratio of the reverse split is one for three and (c) to approximately 20,697,033 shares if the ratio of the reverse
split is one for ten;
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the
number of shares that may be issued upon the exercise of conversion rights by holders of securities convertible into the Company’s
Common Stock will be reduced proportionately; and
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proportionate
adjustments will be made to the per-share exercise price and the number of shares issuable upon the exercise of all outstanding options
and warrants entitling the holders to purchase shares of the Company’s Common Stock, which will result in approximately the same
aggregate price being required to be paid for such options upon exercise immediately preceding the reverse stock split.
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In
addition, the reverse stock split may increase the number of stockholders who own odd lots (less than 100 shares). Stockholders
who hold odd lots typically may experience an increase in the cost of selling their shares and may have greater difficulty in
effecting sales.
EFFECT
ON FRACTIONAL STOCKHOLDERS
All
fractional interests resulting from the reverse split will be rounded up to the nearest whole share.
EFFECT
ON REGISTERED AND BENEFICIAL STOCKHOLDERS
Upon
a reverse stock split, we intend to treat stockholders holding the Company’s Common Stock in “street name”,
through a bank, broker or other nominee, in the same manner as registered stockholders whose shares are registered in their names.
Banks, brokers or other nominees will be instructed to effect the reverse stock split for their beneficial holders holding the
Company’s Common Stock in “street name.” However, these banks, brokers or other nominees may have different
procedures than registered stockholders for processing the reverse stock split. If you hold your shares with a bank, broker or
other nominee and if you have any questions in this regard, we encourage you to contact your nominee.
EFFECT
ON REGISTERED CERTIFICATED SHARES
Some
of our registered stockholders hold all their shares in certificate form. If any of your shares are held in certificate form,
you will receive a transmittal letter from our transfer agent, Odyssey Stock Transfer, Inc., as soon as practicable after the
effective date of the reverse stock split. The letter of transmittal will contain instructions on how to surrender your certificate(s)
representing your pre-reverse stock split shares to the transfer agent. Upon receipt of your stock certificate, you will be issued
the appropriate number of shares electronically in book-entry form under the direct registration system.
STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
AUTHORIZED
SHARES
The
reverse stock split would affect all issued and outstanding shares of the Company’s Common Stock and outstanding rights
to acquire the Company’s Common Stock. Upon the effectiveness of the reverse stock split, the number of authorized shares
of the Company’s Common Stock that are not issued or outstanding would increase due to the reduction in the number of shares
of the Company’s Common Stock issued and outstanding based on the reverse stock split ratio. As of April 29, 2021, we had
300,000,000 shares of authorized Common Stock and 206,970,326 shares of Common Stock issued and outstanding together with 100,000,000
shares of Preferred Stock and no shares issued and outstanding. Authorized but unissued shares will be available for issuance,
and we may issue such shares in the future. If we issue additional shares, the ownership interest of holders of the Company’s
Common Stock will be diluted.
ACCOUNTING
MATTERS
The
stated capital attributable to the Company’s Common Stock on its balance sheet will be unchanged. The per-share net income
or loss and net book value of the Company’s Common Stock will be restated because there will be fewer shares of the Company’s
Common Stock outstanding.
PROCEDURE
FOR EFFECTING REVERSE STOCK SPLIT
If
the Board of Directors decides to implement the reverse stock split, the Company will promptly file a Certificate of Amendment
with the Secretary of State of the State of Nevada to amend our existing Articles of Incorporation. The reverse stock split will
become effective on the date of filing the Certificate of Amendment, which is referred to as the “effective date.”
Beginning on the effective date, each certificate representing pre-reverse stock split shares will be deemed for all corporate
purposes to evidence ownership of post-reverse stock split shares. The text of the Certificate of Amendment is set forth in Exhibit
A to this information statement. The text of the Certificate of Amendment is subject to modification to include such changes as
may be required by the office of the Secretary of State of the State of Nevada and as the Board of Directors deems necessary and
advisable to effect the reverse stock split.
NO
APPRAISAL RIGHTS
Under
applicable Nevada law, the Company’s stockholders are not entitled to appraisal rights with respect to the reverse stock
split, and we will not independently provide stockholders with any such right.
FEDERAL
INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The
following is a summary of certain material United States federal income tax consequences of the reverse stock split, does not
purport to be a complete discussion of all of the possible federal income tax consequences of the reverse stock split and is included
for general information only. Further, it does not address any state, local or foreign income or other tax consequences. Also,
it does not address the tax consequences to holders that are subject to special tax rules, such as banks, insurance companies,
regulated investment companies, personal holding companies, foreign entities, nonresident alien individuals, broker-dealers and
tax-exempt entities. The discussion is based on the provisions of the United States federal income tax law as of the date hereof,
which is subject to change retroactively as well as prospectively. This summary also assumes that the pre-reverse stock split
shares were, and the post-reverse stock split shares will be, held as a “capital asset,” as defined in the Internal
Revenue Code of 1986, as amended (i.e., generally, property held for investment). The tax treatment of a stockholder may vary
depending upon the particular facts and circumstances of such stockholder. Each stockholder is urged to consult with such stockholder’s
own tax advisor with respect to the tax consequences of the reverse stock split. As used herein, the term United States holder
means a stockholder that is, for federal income tax purposes: a citizen or resident of the United States; a corporation or other
entity taxed as a corporation created or organized in or under the laws of the United States, any State of the United States or
the District of Columbia; an estate the income of which is subject to federal income tax regardless of its source; or a trust
if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have
the authority to control all substantial decisions of the trust.
No
gain or loss should be recognized by a stockholder upon such stockholder’s exchange of pre-reverse stock split shares for
post-reverse stock split shares pursuant to the reverse stock split. The aggregate tax basis of the post-reverse stock split shares
received in the reverse stock split will be the same as the stockholder’s aggregate tax basis in the pre-reverse stock split
shares exchanged therefor. The stockholder’s holding period for the post-reverse stock split shares will include the period
during which the stockholder held the pre-reverse stock split shares surrendered in the reverse stock split.
Our
view regarding the tax consequences of the reverse stock split is not binding on the Internal Revenue Service or the courts. ACCORDINGLY,
EACH STOCKHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO ALL OF THE POTENTIAL TAX CONSEQUENCES TO HIM OR
HER OF THE REVERSE STOCK SPLIT.
RECOMMENDATION
OF THE BOARD OF DIRECTORS:
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” AUTHORIZATION OF THE REVERSE SPLIT DETAILED ABOVE.
PROPOSAL
NO. 4
CHANGE
OF THE COMPANY’S NAME TO DRIVEN BY STEM, INC.
On
December 29, 2020, the Company completed its merger with Driven Deliveries, Inc., which is now a wholly-owned subsidiary of the
Company. In order to reflect the impact of this merger and the strategy of the combined companies, the Board of Directors has
approved a resolution to change the name of the Company from “Stem Holdings, Inc.” to “Driven by Stem, Inc.”.
This change would be effective upon approval by the shareholders of the Company and the filing of a Certificate of Amendment to
the Company’s Articles of Incorporation with the Secretary of State of the State of Nevada.
The
change of the Company’s name will not affect any of the Company’s ongoing operations. The affirmative vote of the
holders of a majority of the Company’s common stock represented and voting at the Annual Meeting either in person or by
proxy will be required for approval of this proposal. Neither abstentions nor broker non-votes shall have any effect on the outcome
of this vote.
RECOMMENDATION
OF THE BOARD OF DIRECTORS:
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE CHANGE OF THE COMPANY’S NAME FROM STEM HOLDINGS,
INC. TO DRIVEN BY STEM, INC.
PROPOSAL
NO. 5
RATIFICATION
OF APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLICACCOUNTING FIRM
The
Board of Directors has appointed L J Soldinger Associates, LLC (“Soldinger”), independent registered public accounting
firm, as our independent registered public accounting firm for the fiscal year ending September 30, 2021 to examine the consolidated
financial statements of the Company for fiscal year ending September 30, 2021. The Board of Directors seeks an indication from
shareholders of their approval or disapproval of the appointment.
The
Board of Directors initially approved the engagement of Soldinger as the Company’s independent registered public accounting
firm in 2017. Soldinger will audit our consolidated financial statements for the fiscal year ended September 30, 2021. Representatives
of Soldinger are expected to attend the Annual Meeting, will have the opportunity to make a statement if they so desire, and are
expected to be available to respond to appropriate questions.
Our
consolidated financial statements for the fiscal years ended September 30, 2020 and 2019 were audited by Soldinger.
In
the event shareholders fail to ratify the appointment of Soldinger, the Board of Directors will reconsider this appointment. Even
if the appointment is ratified, the Board of Directors, in its discretion, may direct the appointment of a different independent
registered public accounting firm at any time during the year if the Board of Directors determines that such a change would be
in the interests of the Company and its shareholders.
The
affirmative vote of the holders of a majority of the Company’s common stock represented and voting at the Annual Meeting
either in person or by proxy will be required for approval of this proposal. Neither abstentions nor broker non-votes shall have
any effect on the outcome of this vote.
RECOMMENDATION
OF THE BOARD OF DIRECTORS:
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF L J SOLDINGER ASSOCIATES, LLC AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Set
forth below is certain biographical information concerning our current executive officers and directors.
Name
|
|
Age
|
|
Position
with the Company
|
|
|
|
|
|
Adam
Berk
|
|
43
|
|
Chief
Executive Officer, President and Director
|
Steven
Hubbard
|
|
73
|
|
Chief
Financial Officer, Secretary and Director
|
Ellen
B. Deutsch
|
|
59
|
|
Chief
Operating Officer
|
Garrett
M. Bender
|
|
60
|
|
Director
|
Lindy
Snider
|
|
60
|
|
Director
|
Dennis
Suskind
|
|
75
|
|
Director
|
Biographies
of our directors and officers are included in Proposal No. 1.
Board
Meetings and Annual Meeting Attendance
The
Board of Directors met four (4) times during fiscal year ended September 30, 2020. No director attended less than 80% of the meetings.
Audit
Committee
The
Audit Committee is currently composed of Steve Hubbard, Chairman, and Lindy Snider. The Board intends to nominate Robert Diener
to the Audit Committee upon his election to the Board. Lindy Snider and Robert Diener are considered independent directors and
all members of the Audit Committee are considered financially literate. The Company is currently in the process of adding additional
independent board members who will also be members of the Audit Committee. The relevant education and experience of the members
of the Audit Committee is detailed above. The Board has yet to make appointments to the other Board committees, neither of which
has met as of the date of this report. The Board
of Directors ratified the formation of its Audit Committee effective April 26, 2017.
The
function of the Audit Committee, as detailed in the Audit Committee Charter, is to provide assistance to the Board in fulfilling
its responsibility to the shareholders, potential shareholders, and investment community relating to corporate accounting, management
practices, reporting practices, and the quality and integrity of the financial reports of the Company. In so doing, it is the
responsibility of the Audit Committee to maintain free and open means of communication between the directors, the independent
auditors and Company management.
The
independent directors meet the independence standards of the NASDAQ Stock Exchange, and the SEC.
The
Board of Directors pre-approved all services provided by our independent auditors for the fiscal year ended September 30, 2020.
Compensation
Committee
The
Compensation Committee’s responsibilities include, but are not limited to, the responsibilities which are required under
the corporate governance rules of NASDAQ, including the responsibility to determine compensation of the Chairman of the Board,
the Chief Executive Officer (“CEO”), the President and all other executive officers. The Compensation Committee’s
actions shall generally be related to overall considerations, policies and strategies.
The
Board of Directors ratified the formation of its Compensation Committee effective April 26, 2017. At this time, the Board has
designated Lindy Snider and Dennis Suskind to serve on the Compensation Committee, each of whom are independent directors.
The
Compensation Committee sets the overall compensation principles for the Company, subject to annual review. The Compensation Committee
may not delegate its authority. However, the Compensation Committee may retain counsel or consultants as necessary.
The
independent directors meet the independence standards of the NASDAQ Stock Exchange, the New York Stock Exchange and the SEC.
The
Compensation Committee establishes the Company’s general compensation policy and, except as prohibited by law, may take
any and all actions that the Board could take relating to compensation of directors, executive officers, employees and other parties.
The Compensation Committee’s role is to (i) evaluate the performance of the Company’s executive officers, (ii) set
compensation for directors and executive officers, (iii) make recommendations to the Board on adoption of compensation plans and
(iv) administer Company compensation plans. When evaluating potential compensation adjustments, the Compensation Committee solicits
and considers input provided by the Chief Executive Officer relating to the performance and/or contribution to the Company’s
overall performance by executive officers and other key employees.
Nominating/Corporate
Governance Committee
The
Nominating/Corporate Governance Committee’s responsibilities include, but are not limited to, the responsibilities which
are required under the corporate governance rules of NASDAQ, including the responsibilities to identify individuals who are qualified
to become directors of the Company, consistent with criteria approved by the Board, and make recommendations to the Board of nominees,
including Stockholder Nominees (nominees whether by appointment or election at the Annual Meeting of Stockholders) to serve as
a directors of the Company. At this time, the Board has designated Garrett Bender, Dennis Suskind and Brian Hayek to serve on
the Nominating/Corporate Governance Committee. Garrett Bender and Dennis Suskind are considered independent directors.
To
fulfill its purpose, the responsibilities and duties of the Nominating/Corporate Governance Committee are as follows:
|
●
|
Evaluate,
in consultation with the Chairman of the Board and Chief Executive Officer (“CEO”), the current Composition, size,
role and functions of the Board and its committees to oversee successfully the business and affairs of the Company in a manner
consistent with the Company’s Corporate Governance Guidelines and make recommendations to the Board for approval.
|
|
|
|
|
●
|
Determine,
in consultation with the Chairman of the Board and CEO, director selection criteria consistent with the Company’s Corporate
Governance Guidelines and conduct searches for prospective directors whose skills and attributes reflect these criteria.
|
|
|
|
|
●
|
Assist
in identifying, interviewing and recruiting candidates for the Board.
|
|
|
|
|
●
|
Evaluate,
in consultation with the Chairman of the Board and CEO, nominees, including nominees nominated by stockholders in accordance
with the provisions of the Company’s Bylaws, and recommend nominees for election to the Board or to fill vacancies on
the Board.
|
|
|
|
|
●
|
Before
recommending an incumbent, replacement or additional director, review his or her qualifications, including capability, availability
to serve, conflicts of interest, and other relevant factors.
|
|
|
|
|
●
|
Evaluate,
in consultation with the Chairman of the Board and CEO and make recommendations to the Board concerning the appointment of
directors to Board committees and the selection of the Chairman of the Board and the Board committee chairs consistent with
the Company’s Corporate Governance Guidelines.
|
|
|
|
|
●
|
Determine
the methods and execution of the annual evaluations of the Board’s and each Board committee’s effectiveness and
support the annual performance evaluation process.
|
|
|
|
|
●
|
Evaluate
and make recommendations to the Board regarding director retirements, director re-nominations and directors’ changes in
circumstances in accordance with the Company’s Corporate Governance Guidelines.
|
|
|
|
|
●
|
Review
and make recommendations to the Board regarding policies relating to directors’ compensation, consistent with the
Company’s Corporate Governance Guidelines.
|
|
|
|
|
●
|
As
set forth herein, monitor compliance with, and at least annually evaluate and make recommendations to the Board regarding,
the Company’s Corporate Governance Guidelines and overall corporate governance of the Company.
|
|
|
|
|
●
|
Assist
the Board and the Company’s officers in ensuring compliance with an implementation of the Company’s Corporate
Governance Guidelines.
|
|
|
|
|
●
|
Develop
and implement continuing education programs for all directors, including orientation and training programs for new
directors.
|
|
|
|
|
●
|
Annually
evaluate and make recommendations to the Board regarding the Committee’s performance and adequacy of this Charter.
|
|
|
|
|
●
|
Review
the Code of Ethics periodically and propose changes thereto to the Board, if appropriate.
|
|
●
|
Review
requests from outside the Committee for any waiver or amendment of the Company’s Code of Business Conduct and Ethics
and recommend to the Board whether a particular waiver should be granted or whether a particular amendment should be adopted.
|
|
|
|
|
●
|
Oversee
Committee membership and qualifications and the performance of members of the Board.
|
|
|
|
|
●
|
Make
recommendations annually to the Board as to the independence of directors under the Corporate Governance Guidelines.
|
|
|
|
|
●
|
Review
and make recommendations to the Board regarding the position the Company should take with respect to any proposals submitted by
stockholders for approval at any annual or special meeting of stockholders.
|
|
|
|
|
●
|
Regularly
report on Committee activities and recommendations to the Board.
|
|
|
|
|
●
|
Perform
any other activities consistent with this Charter, the Company’s Certificate of Incorporation And Bylaws, as amended from time
to time, the NASDAQ company guide, and any governing law, as the Board considers appropriate and delegates to the
Committee.
|
Code
of Ethics
The
Company has adopted a code of ethics that is applicable to our directors and officers.
Director’s
Compensation
Independent
members of the Board of Directors receive periodic stock option grants (see Grants of Plan-Based Awards, above). At this time,
there is no other board of director compensation plan in place.
Executive
Officer Compensation
The
following is a summary of the compensation we paid for each of the last two years ended September 30, 2020 and 2019, respectively
(i) to the persons who acted as our principal executive officer during our fiscal year ended September 30, 2020 and (ii) to the
person who acted as our next most highly compensated executive officer other than our principal executive officer who was serving
as an executive officer as of the end of our last fiscal year.
Name
and
Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards ($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
|
|
All
other
Compensation
($)
|
|
|
Total
($)
|
|
Adam Berk
|
|
|
2020
|
|
|
$
|
300,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
300,000
|
|
CEO
|
|
|
2019
|
|
|
$
|
300,000
|
|
|
$
|
-
|
|
|
$
|
3,032,000
|
|
|
$
|
1,407,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,739,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven Hubbard
|
|
|
2020
|
|
|
$
|
45,000
|
|
|
$
|
-
|
|
|
$
|
26,000
|
|
|
$
|
21,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
92,000
|
|
CFO
|
|
|
2019
|
|
|
$
|
60,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
527,200
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
587,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garrett M. Bender
|
|
|
2020
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Director
|
|
|
2019
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
555,170
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
555,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lindy Snider
|
|
|
2020
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Director
|
|
|
2019
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
136,200
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
136,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ellen B. Deutsch
|
|
|
2020
|
|
|
$
|
240,000
|
|
|
$
|
-
|
|
|
$
|
82,000
|
|
|
$
|
26,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
348,000
|
|
EVP & COO
|
|
|
2019
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis Suskind
|
|
|
2020
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
16,250
|
|
|
$
|
35,191
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
51,441
|
|
Director
|
|
|
2019
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
2020
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
STOCK
AWARDS
Grants
of Plan-Based Awards
Name
|
|
Grant
Date Number of Securities Underlying Unexercised Options (#) Exercisable
|
|
Option
Awards Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
|
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable (1)
|
|
|
Option
Exercise Price ($)
|
|
|
Option
Expiration Date
|
Steven Hubbard, CFO, Director
|
|
6/1/2019
|
|
|
-
|
|
|
|
100,000
|
|
|
|
1.4
|
|
|
5/31/2022
|
Steven Hubbard, CFO, Director
|
|
7/1/2020
|
|
|
-
|
|
|
|
100,000
|
|
|
|
0.52
|
|
|
5/31/2023
|
Ellen Deutsch, COO
|
|
9/15/2020
|
|
|
-
|
|
|
|
200,000
|
|
|
|
0.29
|
|
|
9/14/2023
|
Equity
Compensation Plan Information
|
Plan
category
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Number
of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights(a)
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Weighted-average
exercise price of
outstanding
options, warrants
and rights
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Number
of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a) (1)
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Equity compensation
plans approved by security holders
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-
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-
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-
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Equity
compensation plans not approved by security holders
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2,200,000
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2.08
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8,038,812
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Total
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2,200,000
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2.08
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8,038,812
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(1)
As of September 30, 2019
Warrants
Issued to Management
Name
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Grant
Date
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Number
of
Securities
Underlying
Unexercised
Exercisable
Warrants
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Number
of
Securities
Underlying
Unexercised
Exercisable
Warrants
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Warrant
Exercise
Price($)
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Warrant
Expiration
Date
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None
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Total
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Family
Relationships
None.
Involvement
in Certain Legal Proceedings
To
the best of our knowledge during the past five years, no director or officer of the Company has been involved in any of the following:
(1) Any bankruptcy petition filed by or against such person individually, or any business of which such person was a general partner
or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) Any conviction in a criminal
proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Being
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business,
securities or banking activities; and (4) Being found by a court of competent jurisdiction (in a civil action), the SEC or the
Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or vacated.
Adverse
Proceedings
There
exists no material proceeding to which any director or officer is a party adverse to the Company or has a material interest adverse
to the Company.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more
of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in
beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and
regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a). To the
best of the Company’s knowledge, any reports required to be filed were timely filed.
REPORT
OF THE AUDIT COMMITTEE
The
Board of Directors, acting as the Company’s Audit Committee has reviewed and discussed the audited financial statements
for fiscal year ended September 30, 2020 with Stem management.
The
Audit Committee has discussed with the Company’s independent auditors the matters required to be discussed by the Statement
on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company
Accounting Oversight Board in Rule 3200T.
The
Audit Committee has received the written disclosures and the letter from the Company’s independent accountants required
by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees), 2 as adopted by the Public Company Accounting Oversight Board in Rule 3600T and has discussed with the independent
accountant the independent accountant’s independence.
Based
on the such review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements
be included in the company’s annual report on Form 10-K for the last fiscal year for filing with the SEC.
Respectfully
Submitted,
/s/
Adam Berk
Audit
Committee Chairman
May
7, 2021
The
preceding Report of the Audit Committee will be filed with the records of the Company.
FEES
TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit
Fees
The
aggregate fees billed by our principal accountant for the audit of our annual financial statements, review of financial statements
included in the quarterly reports and other fees that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for the fiscal years ended September 30, 2020 and September 30, 2019, respectively, were approximately
$398,668 and $406,865.
Tax
Fees
The
aggregate fees billed for professional services rendered by our principal accountant for tax compliance, tax advice and tax planning
for the fiscal years ended September 30, 2020 and 2019, respectively, were approximately $21,380 and $22,908.
All
Other Fees
The
other aggregate fees billed for professional services rendered by our principal accountant
Audit
Committee Pre-Approval Policies and Procedures
Effective
May 6, 2003, the SEC adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit
related service, the engagement be:
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approved
by our audit committee; or
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entered
into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures
are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures
do not include delegation of the audit committee’s responsibilities to management.
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Pursuant
to the Sarbanes-Oxley Act of 2002, 100% of the fees and services provided as noted above were authorized and approved by the Audit
Committee in compliance with the pre-approval policies and procedures described herein.
TRANSACTIONS
WITH RELATED PERSONS
There
were the following transactions since the beginning of the Company’s last fiscal year, in which the Company was a participant
and in which any related person had or will have a direct or indirect material interest:
As
of September 30, 2020, the Company had related party loans payable to two of its entities totaling $93,558 and $26,769 payable
to the Company’s officer. As of September 30, 2019, there were no amounts due to related parties.
Review,
Approval or Ratification of Transactions with Related Persons
The
Audit Committee of the Board of Directors, as stated in its charter, is responsible for the review, approval or ratification of
all “transactions with related persons” as that term refers to transactions required to be disclosed by Item 404 of
Regulation S-K promulgated by the SEC. In reviewing a proposed transaction, the Audit Committee must (i) satisfy itself that it
has been fully informed as to the related party’s relationship and interest and as to the material facts of the proposed
transaction and (ii) consider all of the relevant facts and circumstances available to the Audit Committee. After its review,
the Audit Committee will only approve or ratify transactions that are fair to the Company and not inconsistent with the best interests
of the Company and its stockholders.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The
following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) any person
or group owning more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and president
and (iv) all executive officers and directors as a group as of December 31, 2020. Unless noted, the address for the following
beneficial owners and management is 2201 NW Corporate Blvd., Suite 205, Boca Raton, FL 33431.
Title
of Class
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Name
and Address of Beneficial Owner
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Amount
and Nature of Beneficial
Owner (1)
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Percent
of Class
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Common Stock
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Adam Berk (2)
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7,223,174
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4.00
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%
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Common Stock
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Steven Hubbard (3)
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982,258
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0.54
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%
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Common Stock
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Garrett M. Bender (4)
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5,878,239
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3.12
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%
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Common Stock
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Lindy Snider (5)
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259,044
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0.14
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%
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Common Stock
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Dennis Suskind (6)
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262,500
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0.15
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%
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Common Stock
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Salvador Villanueva (7)
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8,445,960
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4.68
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%
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Common Stock
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Brian Hayek (8)
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5,948,581
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3.29
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%
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Common Stock
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Robert L. B. Diener (9)
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68,0000
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0.04
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%
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Common Stock
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Ellen B. Deutsch 10)
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300,000
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0.17
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%
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Common Stock
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All executive officers and directors
as a group
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29,121,404
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16.06
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%
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(1)
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In
determining beneficial ownership of our Common Stock, the number of shares shown includes shares which the beneficial owner
may acquire upon exercise of debentures, warrants and options which may be acquired within 60 days. In determining the percent
of Common Stock owned by a person or entity on December 31, 2020, (a) the numerator is the number of shares of the class beneficially
owned by such person or entity, including shares which the beneficial ownership may acquire within 60 days of exercise of
debentures, warrants and options; and (b) the denominator is the sum of (i) the total shares of that class outstanding on
December 31, 2020 (180,475,239 shares of Common Stock) and (ii) the total number of shares that the beneficial owner may acquire
upon exercise of the debentures, warrants and options. Unless otherwise stated, each beneficial owner has sole power to vote
and dispose of its shares.
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(2)
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Includes
7,223,174 shares
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(3)
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Includes
853,007 shares and options to purchase 200,000 shares
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(4)
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Includes
5,631,887 shares
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(5)
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Includes
159,044 shares and options to purchase 100,000 shares
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(6)
(7)
(8)
(9)
(10)
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Includes
262,500 shares
Includes
4,000,000 shares held by Savador Villanueva and 4,445,960 shares held by Jeanette Villanueva
Includes
5,948,581 shares and options to purchase 150,000 shares
Includes
68,000 shares
Includes
100,000 shares granted under Employment Agreement together with 200,000 stock options.
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SHAREHOLDER
COMMUNICATIONS
The
Board of Directors of the Company has not adopted a formal procedure that shareholders must follow to send communications to it.
The Board of Directors does receive communications from shareholders, from time to time, and addresses those communications as
appropriate. Shareholders can send communication to the Board of Directors in writing, to Stem Holdings, Inc., 2201 NW Corporate
Blvd, Suite 205, Boca Raton, FL 33431, Attention: Board of Directors.
AVAILABILITY
OF ANNUAL REPORT ON FORM 10-K
A
copy of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 as filed with the SEC is available
upon written request and without charge to shareholders by writing to the Company c/o Secretary,
2201
NW Corporate Blvd, Suite 205, Boca Raton, FL 33431, or by calling telephone number (561) 948-5410.
In
certain cases, only one Proxy Statement may be delivered to multiple shareholders sharing an address unless the Company has received
contrary instructions from one or more of the stockholders at that address. The Company will undertake to deliver promptly upon
written or oral request a separate copy of the Proxy Statement, as applicable, to a stockholder at a shared address to which a
single copy of such documents was delivered. Such request should also be directed to Secretary, Stem Holdings, Inc., at the address
or telephone number indicated in the previous paragraph. In addition, shareholders sharing an address can request delivery of
a single copy of Proxy Statements if they are receiving multiple copies of Proxy Statements by directing such request to the same
mailing address.
OTHER
MATTERS
We
have not received notice of and do not expect any matters to be presented for vote at the Annual Meeting, other than the proposals
described in this Proxy Statement. If you grant a proxy, the person named as proxy holder, Adam berk, or their nominees or substitutes,
will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting. If
for any unforeseen reason, any of our nominees are not available as a candidate for director, the proxy holder will vote your
proxy for such other candidate or candidates nominated by our Board.
By
Order of the Board of Directors
/s/
Adam Berk
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Adam
Berk
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Chairman
of the Board
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Boca
Raton, Florida
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May
20, 2021
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PROXY
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF STEM HOLDINGS, INC.
The
undersigned hereby appoints Adam Berk as Proxy with full power of substitution to vote all the shares of common stock which the
undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders to be held on June 25, 2021
at 12 noon EDT by Zoom Meeting, or at any postponement or adjournment thereof, and upon any and all matters which may properly
be brought before the Annual Meeting or any postponement or adjournments thereof, hereby revoking all former proxies.
Election
of Directors
The
nominees for the Board of Directors are:
Adam
Berk [ ]
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Steven
Hubbard [ ]
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Garrett
M. Bender [ ]
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Lindy
Snider [ ]
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Dennis
Suskind [ ]
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Salvador
Villanueva [ ]
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Brian
Hayek. [ ]
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Robert L. B. Diener [ ]
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Instruction:
To withhold authority to vote for any individual nominee(s), write the nominee(s) name on the spaces provided below:
The
Board of Directors recommends a vote FOR Proposal No. 1 and a ratification of Proposal Nos. 2, 3, 4 and 5.
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1.
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To
elect eight (8) directors to hold office for a one-year term or until each of their successors are elected and qualified (except
as marked to the contrary above).
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[ ]
FOR [ ]AGAINST [ ]ABSTAINS [ ] WITHHOLDS
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2.
3.
4.
5.
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To
auhrize an increase in the Company’s authorized common shares from 300,000,000
to 750,000,000
[ ]
FOR [ ] AGAINST [ ]ABSTAINS [ ] WITHHOLDS
To
authorize a reverse stock split within a range of one (1) post-split common share for each two (2) pre-split common shares
outstanding on the record date and ten (10) pre-split common shares outstanding on the record date.
[ ]
FOR [ ] AGAINST [ ]ABSTAINS [ ] WITHHOLDS
To
change the name of the Company to Driven by Stem, Inc.
[ ]
FOR [ ] AGAINST [ ]ABSTAINS [ ] WITHHOLDS
To
ratify the appointment of L J Soldinger Associates, LLC as the independent registered public accounting firm of
the Company.
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[ ]
FOR [ ] AGAINST [ ]ABSTAINS [ ] WITHHOLDS
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6.
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To
withhold the proxy’s discretionary vote on your behalf with regards to any other matters that are properly presented
for a vote at the Annual Meeting, please mark the box below.
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This
Proxy, when properly executed, will be voted in the matter directed herein by the undersigned shareholder. If no direction is
made, this Proxy will be voted FOR each of the proposals.
Dated:
__, 2021
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Signature
of Shareholder
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Signature
of Shareholder
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Please
date and sign exactly as your name(s) appears hereon. If the shares are registered in more than one name, each joint owner or
fiduciary should sign personally. When signing as executor, administrator, trustee or guardian give full titles. Only authorized
officers should sign for a corporation.
Stem (CE) (USOTC:STMH)
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