Blum Holdings Inc (BLMH)

[Magnum7419]

Selling, general and administrative expenses for the three months ended March 31, 2017 were approximately $6.39 million, compared to approximately $2.05 million for the three months ended March 31, 2016, an increase of approximately $4.34 million or approximately 212 percent. The increase was primarily due to: (i) an approximately $202,000 increase in advertising and promotion for the overall cannabis business; (ii) an approximately $419,000 increase in amortization expense due to intangible assets acquired in the Black Oak Gallery acquisition; (iii) an approximately $287,000 increase in depreciation incurred at Black Oak Gallery and the assets placed in service at the MediFarm dispensaries; (iv) an approximately $2,513,000 increase in salaries and wages for the staff hired at the Black Oak Gallery and MediFarm dispensaries; (v) an approximately $423,000 increase in consulting in connection with Black Oak Gallery, MediFarm’s, MediFarm I’s, and MediFarm II’s cannabis business; (vi) an approximately $278,000 increase in security incurred at the Black Oak Gallery and MediFarm dispensaries; (vi) an approximately $181,000 increase in rent incurred at the Black Oak Gallery and San Leandro dispensaries and the Hegenberger grow; (viii) an approximately $300,000 increase in accounting and compliance personnel costs as well as costs associated with implementation of accounting systems and processes; and (ix) an approximately $59,000 increase in computer systems, technical help incurred to build the infrastructure of systems and processes for the MediFarm dispensaries.