Blum Holdings Inc (BLMH)

[Art Vandeley]

That is why Dominion is able to exercise and sell on the cashless basis because the S1 and amendments haven't been approved yet.

Straight from the S1/A


page 35

The table includes the outstanding Warrants held by the Selling Stockholder, as well as warrants held by other parties. The Selling Stockholder has exercised some of the Warrants on a cashless basis and has sold some of the shares received pursuant to Rule 144. Accordingly, we are registering 6,271,930 shares of Common Stock underlying the Warrants. The Warrants have an exercise price equal to 90% of the-20 day VWAP of the Common Stock prior to February 5, 2014, which price the Company estimates to be approximately $0.30753 per share, subject to adjustment. The Warrants have a “cashless” exercise feature and a term of four years.

page 28

Warrants

Under the terms of the Purchase Agreement, the Company agreed to issue to Dominion Warrants to purchase up to a number of shares of our Common Stock equal to 50% of the principal amount of the Notes issuable divided by the conversion price, with an exercise price equal to 90% of the-20 day VWAP of our Common Stock prior to February 5, 2014, which price the Company estimates to be approximately $0.30753 per share, subject to adjustment. While the Warrants are outstanding, the exercise price is subject to a “full ratchet” anti-dilution adjustment if we issue or are deemed to have issued securities at a price lower than the then-applicable exercise price. The Warrants have a “cashless” exercise feature and a term of four years.

Aegis, and certain of its affiliates, elected to participate in the Debt Placement. In connection therewith, we issued Warrants to the Aegis Designees. The Warrants issued to Dominion and the Aegis Designees in the first four tranche closings were exercised on a cashless basis. All those shares of Common Stock issued to Dominion in connection with the exercise of these Warrants have been sold pursuant to Rule 144.

page 24

This Prospectus relates to shares of our Common Stock that may be offered and sold from time to time by the Selling Stockholder. We will receive no proceeds from the sale of shares of Common Stock by the Selling Stockholder in this offering. The proceeds from the sales will belong to the Selling Stockholder. However, we have received $6,550,000 under the Purchase Agreement with the Selling Stockholder in connection with the sale of the Notes. Also, we may receive gross proceeds of up to $1,881,579 from the exercise of the Warrants. However, the Selling Stockholder may exercise its Warrants on a cashless basis if, at any time, there is no effective registration statement or current prospectus available for the resale of the shares underlying the Warrants, in which case we will not receive any proceeds from such exercise.

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=10319639