Blüm Holdings Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

WARRANTS

WARRANTS

9 Months Ended

Sep. 30, 2014

The Company has the following shares of common stock reserved for the warrants outstanding as of September 30, 2014:

	September 30, 2014
	Shares			Weighted Average Exercise Price
Warrants outstanding beginning of year		19,550,817		$	0.17
Warrants exercised		(9,367,287	)		0.19
Warrants granted		11,491,227			0.30
Warrants expired		-			-

Warrants outstanding end of period		21,674,757		$	0.23

The weighted exercise price and weighted fair value of the warrants granted by the Company as of September 30, 2014, are as follows:

	September 30, 2014
	Weighted Average Exercise Price		Weighted Average Fair Value

Weighted average of warrants granted during the three months whose exercise price exceeded fair market value at the date of grant	$	0.30	$	0.45

Weighted average of warrants granted during the nine months whose exercise price was equal or lower than fair market value at the date of grant	$	-	$	-

The following table summarizes information about fixed-price warrants outstanding:

Range of Exercise Prices		Number Outstanding at September 30, 2014		Average Remaining Contractual Life		Weighted Average Exercise Price
$	0.33		5,540,400		10 Months	$	0.33
$	0.46		600,000		10 Months	$	0.46
$	0.46		150,000		4 Months	$	0.46
$	0.85		40,000		7 Months	$	0.85
$	0.40		333,333		11 Months	$	0.40
$	0.33		439,637		14 Months	$	0.33
$	0.16		750,000		18 Months	$	0.16
$	0.06		7,067,002		48 Months	$	0.06
$	0.30		964,912		44 Months	$	0.30
$	0.30		964,912		45 Months	$	0.30
$	0.30		4,824,561		46 Months	$	0.30
			21,674,757

For the warrants issued in February 2014, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.57, exercise price of $0.330, volatility of 122.84%, years 4, treasury bond rate 2.5% and dividend rate of 0%.

For the warrants issued in March 2014, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.50, exercise price of $0.30, volatility of 122.61%, years 4, treasury bond rate 2.5% and dividend rate of 0%.

For the warrants issued in April 2014, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.80, exercise price of $0.30, volatility of 125.88%, years 4, treasury bond rate 2.5% and dividend rate of 0%.

For the warrants issued in May 2014, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.59, exercise price of $0.30, volatility of 127.68%, years 4, treasury bond rate 2.5% and dividend rate of 0%.

For the warrants issued in June 2014, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.68, exercise price of $0.30, volatility of 130.55%, years 4, treasury bond rate 2.5% and dividend rate of 0%.

For the warrants issued in July 2014, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.55, exercise price of $0.30, volatility of 130.71%, years 4, treasury bond rate 2.5% and dividend rate of 0%.

For the warrants issued in July 2014, the Company valued the warrants utilizing the black schools method with the following inputs: stock price of $0.40, exercise price of $0.30, volatility of 131.05%, years 4, treasury bond rate 2.5% and dividend rate of 0%.

The warrant expense of $5,038,986 was based on the Black Scholes calculation which was expensed during the nine months ended September 30, 2014.