Item 1.01 Entry Into a Material Definitive Agreement.
On October 8, 2018, Stem Holdings Oregon, Inc., a wholly-owned subsidiary of
Stem Holdings, Inc., a Nevada corporation ("Stem") and Yerba Oregon, LLC, an
Oregon limited liability company ("Yerba") entered into an Asset Purchase
Agreement (the "Agreement") which provided for Stem to purchase certain assets
and assume certain liabilities of Yerba for a total purchase price comprising
(a) the greater of $1,930,581 and 90% of Yerba's 2018 EBITDA multiplied by 5;
plus (b) the greater of $2,862,431 and 75% of Yerba's 2019 EBITDA multiplied by
2.5. Yerba is a wholesale producer of recreational marijuana flower, by-product
and pre-roll product in the state of Oregon.
The transaction is subject to a number of conditions, including approval of the
transfer of Yerba's license by the Oregon Liquor Control Commission, which have
yet to be satisfied. Notwithstanding, Stem believes that the consummation of the
transaction is probable as defined in Regulation S-X Rule 3-05 and is treating
the transaction accordingly. Financial Statements of Yerba and Pro Forma
Financial Information related to the transaction are included under Item 9.01,
below. A copy of the Asset Purchase Agreement is attached as Exhibit 2.1 hereto.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The financial statements required by this Item are attached to this Report as
(b) Pro Forma Financial Information.
The pro forma financial information required by this Item is attached to this
Report as Exhibit 99.2.
Exhibit No. Description
2.1 Asset Purchase Agreement dated as of October 8, 2018 by and
between Stem Holdings Oregon, Inc. and Yerba Oregon, LLC, an Oregon
limited liability company
99.1 Audited financial statements of Yerba Oregon, LLC for the years
ended December 31, 2017 and 2016
99.2 Unaudited pro forma condensed combined financials statements of
Yerba Oregon, LLC and Stem Holdings, Inc. as of September 30, 2018
and September 30, 2017
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