Mr. Dave McMillan reports

STEM 7 CAPITAL ANNOUNCES SIGNING OF LETTER OF INTENT TO ACQUIRE 100% OF GETCARBIDS INC.

Stem 7 Capital Inc. has entered into a letter of intent dated May 21, 2016, with Get-Carbids Inc., a private Nevada incorporated corporation, and its majority shareholder, Daniel Langley, of Seattle, Wash., to acquire 100 per cent of Get-Carbids.

Pursuant to the terms of the letter of intent, the company and Get-Carbids and Mr. Langley will negotiate and enter into a definitive agreement incorporating the principal terms of the contemplated transaction set forth herein and, in addition, such other terms and provisions of a more detailed nature as the parties may agree upon. It is intended that the proposed transaction will constitute a reverse takeover of Stem 7 Capital as such term is defined under TSX Venture Exchange Policy 5.2 (changes of business and reverse takeovers).

About Get-Carbids

The primary business of Get-Carbids, to date, has been the market development of a reverse-auction automobile-buying solution, targeting the U.S. multibillion-dollar, new and used automobile market. Initially started as a private venture in 2014, Mr. Langley incorporated Get-Carbids in March, 2015, with the objective of signing on potential subscriber organizations to create a qualified car-buying customer base, initially in the Pacific Northwest, with which to design and implement a platform that would facilitate the reverse-auction buying solution.

An existing, comparable operation in the United Kingdom (Carwow Ltd.) has found that consumers are utilizing on-line comparison sites to familiarize themselves with product reviews and pricing information and to obtain the best deal. However, the ability to purchase on-line was lacking until the U.K. operation went commercial, resulting in significant savings to their subscribers. The U.K. dealerships have embraced the platform as it provides them with qualified leads resulting in increased sales volumes. In almost three years, since its inception in May, 2013, and to January, 2016, Carwow has generated approximately one million website users, resulting in approximately $800-million (U.S.) in new car sales.

With the motto, "Now everyone wins," Get-Carbids has entered into agreements with Microsoft Corp., Nike Inc., Boeing Corp. and the Boeing Employees Credit Union to provide its unique car-buying experience to its combined 2.38 million employees and members. In addition, Get-Carbids has support from over 150 automobile dealerships anxious to participate in this program. With a substantial, qualified subscriber base, Get-Carbids has recently contracted with a qualified software development company to complete the build-out of its proprietary operating platform, targeting a fully operational start-up date of Jan. 1, 2017. This website platform, designed to also be available as an app for smart phones, will allow the subscriber to select a desired car, receive bids from nearby dealerships, which will be automatically restricted to the best five bids, and then compare based on price, location and stock availability. The platform will allow subscribers to communicate with the dealers while remaining anonymous until they decide to purchase the vehicle on-line.

The Get-Carbids initial base revenue model is derived from annual subscriber and dealer fees, starting in year two, plus a dealer fee on each individual sales transaction, starting on commercialization.

Currently, Get-Carbids is debt-free, with the continuing monthly platform development expense budgeted at $55,000 (U.S.) per month. No executive salaries or other employee fees are contemplated until the platform has been commercialized, which is planned for Jan. 1, 2017.

Terms of acquisition

Stem 7 Capital will issue 55 million common shares, at a deemed value of eight cents per share, to the shareholders of Get-Carbids to acquire 100 per cent of the issued and outstanding shares of Get-Carbids. On closing, these shares will be subject to a 36-month escrow resale restriction, as further defined under TSX Venture Exchange Policy 5.4 (escrow, vendor consideration and resale restrictions (Section 5.2 (surplus securities)). A finder's fee comprising a total of 1.1 million common shares are payable, subject to regulatory approval, and these shares will be subject to a modified release of one-third on closing of the transaction and one-third on each of the sixth-month and 12-month anniversaries.

The current share structure of Stem 7 consists of approximately 6,921,000 common shares, with 1.2 million warrants exercisable at 10 cents for 12 months, and there are no options outstanding. With the 55 million shares being issued for the transaction, plus 1.1 million shares issued for finders' fees, there will be total of 64,221,000 shares issued. In addition, this transaction proposes a $1,125,000 financing to issue up to 7.5 million units at 15 cents per unit, as more described below, which will result in an additional 11.25 million shares issued (fully diluted). This will result in Stem 7 Capital having issued 75,471,000 shares fully diluted, with these shares split as to 55 million or 72.9 per cent to the original Get-Carbids shareholders, with the original Stem 7 shareholders as to 8,121,000 or 10.8 per cent, and the new financing shareholders at 11.25 million shares or 14.9 per cent (all figures fully diluted). Fully diluted, the financing and exercising of warrants would generate approximately $2,182,500 (gross).

On closing, the proposed board of directors will consist of five shareholders of Get-Carbids and two directors from Stem 7 Capital for a total of seven directors.

As a condition of the acquisition, Stem 7 Capital has agreed to lend Get-Carbids sufficient funds, on commercially acceptable terms, for the platform development costs, including trademark, patent filing and other ancillary costs, as they arise, on a monthly basis, until the contemplated transaction closes, which is expected between July 31 and Aug. 31, 2016.

Get-Carbids and its shareholders are at arm's length to the company. Upon completion of the transaction, the company will be a technology/marketing company.

Proposed financing

Stem 7 Capital is proposing a private placement unit financing of up to $1,125,000 consisting of up to 7.5 million units priced at 15 cents per unit. Each unit will consist of one share and one-half warrant, each full warrant will be exercisable at 25 cents for 12 months from closing. These funds will be used to pay existing Stem 7 trade payables, anticipated costs of the contemplated transaction, financing fees, Get-Carbids platform development costs and general working capital.

Proposed board of directors and officers

Mr. Langley, founder of Get-CarBids, has over 20 years of executive management experience in the auto industry. Having worked in management at various dealerships in the Pacific Northwest and having won high-customer-satisfaction ratings, he was awarded the manager of the year from Lexus. In 2006, he created the consulting firm, Auto Buyers Club, identifying and evaluating all aspects of dealer operations to identify problems and issues and create solutions, including building management frameworks, to produce long-term results. In 2011, he was brought in as the national director of operations for Touch of Black LLC, an automobile restoration service vendor, and during the next 3.5 years was directly responsible for increasing the number of dealers from 30 in Washington State to over 160 dealerships, including those in Oregon and Arizona. He is the proposed director, president and chief executive officer.

Douglas Durst, CPA, MBA, CGMA, has specialized in building and expanding high performance, disciplined organizations through the office of the chief financial officer, starting with business and finance strategies, capital management and people alignment, processes, and systems. Mr. Durst has significant CFO experience in private and public entities, including mergers and acquisitions, postmerger integration, venture financing, board relationships, risk mitigation, and financial analysis, along with internal controls and operations management. During his tenure as CFO/chief operating officer and consulting partner roles, the companies involved were acquired by larger public and private entities. Having worked for Microsoft as director of business development and then Chase Innovations, which provides interim CFO/COO and consulting services to Microsoft in addition to Delphi and Schneider Trucking, Mr. Durst was seconded as interim CFO/COO to Microsoft (finance). Mr. Durst continues to consult with various companies, including Microsoft, EMP, Amazon, and the Bill and Melinda Gates Foundation. He is a proposed independent director.

Charles Schrank, president and chief technology officer, Diamond Solutions Group (DSG). Privately held DSG has provided Internet-based, business intelligence and digital marketing solutions since 1995. DSG's global client base includes Fortune 500 companies, such as Microsoft, Toyota and Intel. DSG employs a team of project managers and graphic designers who continue to work with Microsoft on solutions involving Web management, surface technology, application design, development and testing, Web production, and project management. He is the proposed director and chief technology officer.

Kevin Iden, founder and president, Iden's Dealer Services. Started in 1989, Iden's Dealer Services (IDS) is the largest and leading provider of auto detailing, reconditioning and protection services in the Pacific Northwest. IDS currently has 22 locations with 180-plus employees and is still expanding. He is a proposed independent director.

Jim Aitkins, founder of the Jacob Group, a marketing, public relations and sales consulting company. Since becoming self-employed, Mr. Aitkins has consulted to numerous companies in various industries over the last 16 years, which included life insurance training materials, franchise marketing, financial and estate planning marketing strategies, and food marketing. He is the proposed marketing director.

Michele Calhoun, founder and chief executive officer of Touch of Black. Started in 1996, it has become one of the largest, multistate exterior trim restoration companies with 164 dealerships, combined, in Washington, Oregon and Arizona. Ms. Calhoun has direct experience in marketing, finance, cross-departmental networking, and customer and corporate relationship-building strategies. She is the proposed director and chief operating officer.

It is contemplated that Dave McMillan, currently chairman and chief executive officer of Stem 7 Capital, and Allan Fabbro, currently an independent director and chairman of the audit committee of Stem 7 Capital, will remain on the board of directors of Newco.

Conditions on closing

The contemplated transaction is subject to a definitive agreement being reached between the parties, in addition to the prospectus-level disclosure requirements for the management information circular and/or the filing statement. As this is a change of business and a change of control, a sponsor and a Stem 7 shareholder meeting may be required. Stem 7 Capital intends to seek a waiver of the shareholder approval and sponsorship requirements if such a waiver is available under exchange policies. The proposed financing must be completed prior to the transaction closing, and funds advanced on a monthly basis will finance the Get-Carbids platform development.

Completion of this transaction is subject to a number of conditions, including exchange acceptance and disinterested shareholder approval. The transaction cannot close until the required shareholder approval is obtained.