BLUM HOLDINGS, INC. 8-K

What Happened Blüm Holdings, Inc. (Blüm) announced on its Form 8-K that on December 31, 2025 it converted $3,050,000 of outstanding unsecured promissory notes (principal plus accrued interest) into common stock and issued additional shares to a related-party advisor. The company issued 3,248,547 shares to satisfy the debt conversion and agreed to issue 2,551,020 shares to Adnant, LLC (a related party controlled by CEO Sabas Carrillo) under a performance-based equity award ratified by the Board. The company also executed a new Senior Secured Promissory Note for $525,000 on December 31, 2025.

Key Details

• Debt conversion: $3,050,000 of notes (principal + accrued interest) converted at $0.98 per share (3,248,547 shares). Conversion price equals 85% of a $20.9M pre-money valuation on a fully diluted basis.
• Related-party equity: 2,551,020 shares issued to Adnant, LLC in satisfaction of a Board-ratified performance award, at an implied $0.98 per share.
• New note and terms: Senior Secured Promissory Note for $525,000 (replaces two prior notes), maturing December 31, 2027, 8.0% annual interest, prepayable without penalty; convertible at the same $0.98 per-share basis.
• Warrant cancellation: Warrants to purchase 198,114 shares at $0.53 per share issued with the prior notes were mutually cancelled.
• Regulatory: Shares were issued relying on Section 4(a)(2) exemptions (unregistered). The investor in the conversion is identified as a related person under Regulation S-K.

Why It Matters For investors, the transactions materially reduce Blüm’s outstanding unsecured debt by about $3.05M and formalize $525k in debt under a secured, interest-bearing note. However, the company issued a total of approximately 5.8 million new shares (3,248,547 + 2,551,020), which increases share count and dilutes existing shareholders. The new note’s convertibility creates potential additional dilution if converted. The issuance to Adnant is a related-party transaction ratified by the Board, which is important to note when assessing governance and insider-related dilution.