GB SCIENCES INC - Quarter Report: 2019 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 10-Q

__________________________

(Mark One)

ý	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission file number: 000-55462

GB SCIENCES, INC.

(Exact name of registrant as specified in its charter)

Nevada

(State or other Jurisdiction of Incorporation or organization)

59-3733133

(IRS Employer I.D. No.)

3550 W. Teco Avenue

Las Vegas, Nevada 89118

Phone: (866) 721-0297

(Address and telephone number of

principal executive offices)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ý Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

(Do not check if a smaller Reporting Company)

Smaller reporting company ý

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). ¨ Yes ý No

There were 262,795,019 shares of common stock, par value $0.0001 per share, outstanding as of November 15, 2019.

GB SCIENCES, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019

INDEX

Page

PART I. FINANCIAL INFORMATION3

ITEM 1. Financial Statements3

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations28

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk36

ITEM 4. Controls and Procedures36

PART II – OTHER INFORMATION38

ITEM 1. Legal Proceedings38

ITEM 1A. Risk Factors38

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds38

ITEM 3. Defaults Upon Senior Securities38

ITEM 4. Mine Safety Disclosures39

ITEM 5. Other Information39

ITEM 6. Exhibits39

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Table of Contents

GB SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
	September 30,	March 31,
	2019	2019
	(unaudited)
CURRENT ASSETS:
Cash and cash equivalents	`$84,799`	`$182,055`
Accounts receivable, net of allowance for doubtful accounts of $134,828 and $66,748 at September 30, 2019 and March 31, 2019, respectively	`187,179`	`488,329`
Inventory	`1,541,676`	`1,533,792`
Prepaid expenses and other current assets	`60,066`	`262,208`
Current assets from discontinued operations	`1,476,678`	`1,000,387`
TOTAL CURRENT ASSETS	`3,350,398`	`3,466,771`
Property and equipment, net	`10,265,138`	`10,481,706`
Intangible assets, net of accumulated amortization of $3,745 at September 30, 2019 and March 31, 2019	`1,977,672`	`1,818,802`
Deposits and other noncurrent assets	`221,889`	`230,651`
Operating lease right-of-use assets, net	`156,972`	`-`
Non-current assets from discontinued operations	`13,868,180`	`14,025,372`
TOTAL ASSETS	`$29,840,249`	`$30,023,302`
CURRENT LIABILITIES:
Accounts payable	`$1,621,424`	`$1,374,771`
Accrued interest	`310,415`	`142,112`
Accrued liabilities	`393,120`	`244,931`
Notes and convertible notes payable, net of unamortized discount of $777,321 and $799,410 at September 30, 2019 and March 31, 2019, respectively	`4,917,653`	`2,229,812`
Income tax payable	`506,145`	`506,145`
Finance lease obligations, current	`106,488`	`80,132`
Operating lease obligations, current	`44,571`	`-`
Current liabilities from discontinued operations	`1,525,506`	`2,134,277`
TOTAL CURRENT LIABILITIES	`9,425,322`	`6,712,180`
Note payable, net of unamortized discount of $1,919 and $13,929 at September 30, 2019 and March 31, 2019, respectively	`56,414`	`161,072`
Operating lease obligations, long term	`126,967`	`-`
Finance lease obligations, long term	`3,593,372`	`3,646,540`
Long term liabilities from discontinued operations	`2,322,511`	`2,347,511`
TOTAL LIABILITIES	`15,524,586`	`12,867,303`
Commitments and contingencies (Note 8)
STOCKHOLDERS' EQUITY:
Common Stock, $0.0001 par value, 600,000,000 shares authorized, 255,345,019 and 240,627,102 shares issued and outstanding at September 30, 2019 and March 31, 2019, respectively	`25,535`	`24,063`
Additional paid-in capital	`95,333,271`	`93,020,015`
Accumulated deficit	`(90,071,120)`	`(84,743,836)`
TOTAL GB SCIENCES, INC. STOCKHOLDERS' EQUITY	`5,287,686`	`8,300,242`
Non-controlling interest in discontinued operations	`9,027,977`	`8,855,757`
TOTAL EQUITY	`14,315,663`	`17,155,999`
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	`$29,840,249`	`$30,023,302`
The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements

Table of Contents

GB SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	For the Three Months Ended September 30,		For the Six Months Ended September 30,
	2019	2018	2019	2018

Sales revenue	`$1,171,698`	`$717,229`	`$2,082,374`	`$2,032,513`
Cost of goods sold	`(1,857,150)`	`(302,744)`	`(2,481,519)`	`(883,309)`
Gross profit (loss)	`(685,452)`	`414,485`	`(399,145)`	`1,149,204`
General and administrative expenses	`1,403,314`	`3,806,320`	`3,468,863`	`7,623,356`
LOSS FROM OPERATIONS	`(2,088,766)`	`(3,391,835)`	`(3,868,008)`	`(6,474,152)`
OTHER INCOME (EXPENSE)
Interest expense	`(475,558)`	`(2,765,866)`	`(913,374)`	`(4,422,714)`
Other income/(expense)	`69,457`	`(3,047,667)`	`69,457`	`(2,949,806)`
Total other expense	`(406,101)`	`(5,813,533)`	`(843,917)`	`(7,372,520)`
NET LOSS BEFORE INCOME TAXES	`(2,494,867)`	`(9,205,368)`	`(4,711,925)`	`(13,846,672)`
Income tax benefit	`57,392`	`-`	`-`	`-`
LOSS FROM CONTINUING OPERATIONS	`(2,437,475)`	`(9,205,368)`	`(4,711,925)`	`(13,846,672)`
Loss on discontinued operations	`(491,131)`	`(825,697)`	`(755,565)`	`(1,535,876)`
NET LOSS	`(2,928,606)`	`(10,031,065)`	`(5,467,490)`	`(15,382,548)`
Net loss attributable to non-controlling interest	`(245,565)`	`(291,416)`	`(377,781)`	`(475,559)`
NET LOSS ATTRIBUTABLE TO GB SCIENCES, INC.	`$(2,683,041)`	`$(9,739,649)`	`$(5,089,709)`	`$(14,906,989)`

Net loss attributable to common stockholders of GB Sciences, Inc.
Continuing operations	$ (2,437,475)	$ (9,205,368)	$ (4,711,925)	$ (13,846,672)
Discontinued operations	(245,566)	(534,281)	(377,784)	(1,060,317)
Net loss	(2,683,041)	(9,739,649)	(5,089,709)	(14,906,989)

Net loss per common share – basic and diluted
Continuing operations	$ (0.01)	$ (0.05)	$ (0.02)	$ (0.07)
Discontinued operations	(0.00)	(0.00)	(0.00)	(0.01)
Net loss	(0.01)	(0.05)	(0.02)	(0.08)

Weighted average common shares outstanding - basic and diluted	`252,700,538`	`204,143,491`	`248,392,203`	`189,787,747`

The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements

Table of Contents

GB SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
	For the Six Months Ended September 30,
	2019	2018
OPERATING ACTIVITIES:
Net loss	`$(5,467,490)`	`$(15,382,548)`
Loss from discontinued operations	`$(755,565)`	`$(1,535,876)`
Net loss from continuing operations	`$(4,711,925)`	`$(13,846,672)`
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	`147,428`	`399,194`
Stock-based compensation	`341,724`	`1,995,332`
Bad debt expense	`107,814`	`20,740`
Amortization of debt discount and beneficial conversion feature	`434,750`	`582,809`
Interest expense on conversion of notes payable	`26,804`	`3,464,187`
Noncash expense recorded for settlement of royalty agreement (Note 5)	`-`	`2,045,925`
Loss on extinguishment of debt and disposal of assets	`131,293`	`-`
Changes in operating assets and liabilities:
Accounts receivable	`202,098`	`(145,996)`
Prepaid expenses and other current assets	`202,142`	`1,024,924`
Inventory	`265,206`	`(658,043)`
Accounts payable	`196,509`	`(248,985)`
Accrued expenses	`363,551`	`162,717`
Net cash used in operating activities of continuing operations	`(2,292,606)`	`(5,203,868)`
Net cash used in operating activities of discontinued operations	`(1,253,851)`	`(1,180,054)`
Net cash used in operating activities	`(3,546,457)`	`(6,383,922)`
INVESTING ACTIVITIES:
Purchase of property and equipment	`(202,297)`	`(354,158)`
Acquisition of intangible assets	`(91,862)`	`(233,508)`
Net cash used in investing activities of continuing operations	`(294,159)`	`(587,666)`
Net cash used in investing activities of discontinued operations	`(260,623)`	`(7,619,934)`
Net cash used in investing activities	`(554,782)`	`(8,207,600)`
FINANCING ACTIVITIES:
Proceeds from issuance of common stock and warrant exercises	`1,495,200`	`8,370,720`
Proceeds from convertible note payable	`2,600,000`	`-`
Brokerage fees for issuance of common stock and warrants	`(166,027)`	`-`
Fees for issuance of convertible note	`(175,000)`	`-`
Principal payments on debt and finance lease obligations	`(106,229)`	`(144,739)`
Cash paid to settle royalty agreement	`-`	`(1,000,000)`
Net cash provided by financing activities of continuing operations	`3,647,944`	`7,225,981`
Net cash provided by financing activities of discontinued operations	`319,854`	`6,714,856`
Net cash provided by financing activities	`3,967,798`	`13,940,837`
Net change in cash and cash equivalents	`(133,441)`	`(650,685)`
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	`227,758`	`3,579,700`
CASH AND CASH EQUIVALENTS AT END OF PERIOD	`94,317`	`2,929,015`
Less: cash and cash equivalents classified as discontinued operations	`(9,518)`	`(168,537)`
CASH AND CASH EQUIVALENTS AT END OF PERIOD FROM CONTINUING OPERATIONS	`$84,799`	`$2,760,478`

The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements

Table of Contents

	For the Six Months Ended September 30,
Supplemental Disclosure of Cash Flow Information	2019	2018
Cash paid for interest	$ 332,167	$ 391,324
Cash paid for income tax	$ -	$ -

Non-cash transactions:
Stock issued upon conversion of long-term note payable	`$280,000`	`$4,640,971`
Stock issued to settle royalty agreement	`$-`	`$36,000`
Depreciation capitalized in inventory	`$273,090`	`$-`
Induced dividend from warrant exercises	`$230,025`	`$2,861,436`
Beneficial conversion feature on notes payable	$ 133,806	$ -
Property capitalized under operating leases	$ 182,624	$ -
Cumulative effect of the new lease standard	$ 7,550	$ -

The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements

Table of Contents

GB SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three Months Ended September 30, 2019 and 2018

(unaudited)

Shares

Amount

Additional Paid-In Capital

Accumulated Deficit

Non-Controlling Interest

Total

Balance at June 30, 2018

186,051,491

$18,605

$79,540,062

$(66,169,341)

$6,498,846

$19,888,172

Issuance of stock for debt conversion

13,184,087

1,318

3,294,703

-

3,296,021

Exercise of warrants for stock

1,656,125

166

424,886

-

425,052

Share based compensation expense

490,756

49

435,328

-

435,377

Issuance of stock for cash, net of issuance costs

20,277,778

2,028

4,447,972

-

4,450,000

Contributions from non-controlling interest

-

2,914,857

Stock issued to settle royalty agreement

100,000

10

35,990

-

36,000

Compensation Warrants

-

592,638

-

592,638

Inducement dividend from warrant exercises

-

88,670

(88,670)

-

Net Loss

-

(9,739,649)

(291,416)

(10,031,065)

Balance at September 30, 2018

221,760,237

$22,176

$88,860,249

$(75,997,660)

$9,122,287

$22,007,052

Shares

Amount

Additional Paid-In Capital

Accumulated Deficit

Non-Controlling Interest

Total

Balance at June 30, 2019

246,852,769

$24,686

$94,095,065

$(87,232,454)

$8,723,541

$15,610,838

Issuance of stock for debt conversion

1,000,000

100

109,900

-

110,000

Exercise of warrants for stock

7,492,250

749

673,553

-

674,302

Share based compensation expense

-

32,408

-

32,408

Beneficial conversion feature on notes payable

-

133,806

-

133,806

Contributions from non-controlling interest

-

550,001

Compensation Warrants

-

132,914

-

132,914

Inducement dividend from warrant exercises

-

155,625

(155,625)

-

Net Loss

-

(2,683,041)

(245,565)

(2,928,606)

Balance at September 30, 2019

255,345,019

$25,535

$95,333,271

$(90,071,120)

$9,027,977

$14,315,663

The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements

Table of Contents

GB SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Six Months Ended September 30, 2019 and 2018

(unaudited)

Shares

Amount

Additional Paid-In Capital

Accumulated Deficit

Non-Controlling Interest

Total

Balance at March 31, 2018

168,616,855

$16,862

$70,961,104

$(58,229,235)

$2,882,990

$15,631,721

Issuance of stock for debt conversion

18,563,885

1,856

4,639,115

-

4,640,971

Exercise of warrants for stock

12,657,875

1,266

3,919,454

-

3,920,720

Issuance of stock for services

1,543,844

154

741,535

-

741,689

Share based compensation expense

-

661,005

-

661,005

Issuance of stock for cash, net of issuance costs

20,277,778

2,028

4,447,972

-

4,450,000

Contributions from non-controlling interest

-

6,714,856

Stock issued to settle royalty agreement

100,000

10

35,990

-

36,000

Compensation Warrants

-

592,638

-

592,638

Inducement dividend from warrant exercises

-

2,861,436

(2,861,436)

-

Net Loss

-

(14,906,989)

(475,559)

(15,382,548)

Balance at September 30, 2018

221,760,237

$22,176

$88,860,249

$(75,997,660)

$9,122,287

$22,007,052

Shares

Amount

Additional Paid-In Capital

Accumulated Deficit

Non-Controlling Interest

Total

Balance at March 31, 2019

240,627,102

$24,063

$93,020,015

$(84,743,836)

$8,855,757

$17,155,999

Issuance of stock for debt conversion

2,000,000

200

279,800

-

280,000

Exercise of warrants for stock

9,449,750

945

849,533

-

850,478

Share based compensation expense

-

208,809

-

208,809

Issuance of stock for cash, net of issuance costs

3,668,167

367

478,329

-

478,696

Beneficial conversion feature on notes payable

-

133,806

-

133,806

Contributions from non-controlling interest

-

550,001

Compensation Warrants

-

132,914

-

132,914

Cancellation of shares issued to consultant

(400,000)

(40)

40

-

Inducement dividend from warrant exercises

-

230,025

(230,025)

-

Cumulative effect of the new lease standard

-

(7,550)

-

(7,550)

Net Loss

-

(5,089,709)

(377,781)

(5,467,490)

Balance at September 30, 2019

255,345,019

$25,535

$95,333,271

$(90,071,120)

$9,027,977

$14,315,663

The accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Note 1 – Background and Significant Accounting Policies

GB Sciences, Inc. (“the Company”, “GB Sciences”, “we”, “us”, or “our”) seeks to be an innovative technology and solution company that converts the cannabis plant into medicines, therapies and treatments for a variety of ailments. The Company is developing and utilizing state of the art technologies in plant biology, cultivation and extraction techniques, combined with biotechnology, and plans to produce consistent and measurable medical-grade cannabis, cannabis concentrates and cannabinoid therapies.

We seek to become a trusted producer of consistent and efficacious medicinal strains and products, combining both cannabinoids and terpenes, which we intend to market in those states within the United States and in other countries where the sale of medical cannabis products are permitted. In addition, subject to obtaining Food and Drug Administrative (FDA) certification, we intend to market our cannabinoid-based drug discoveries on a world-wide basis.

GB Sciences intends to operate as an intellectual property company that will conduct its business through its subsidiaries. In addition, the Company owns and will seek to own majority interests in each of its existing and future operating subsidiaries.

Through its wholly owned Canadian subsidiary, GBS Global Biopharma, Inc. (“GBSGB”), the Company conducts research and develops intellectual property related to the medicinal uses of the cannabis plant. GBSGB runs a lean drug development program and minimizes expenses, including personnel, overhead, and fixed capital expenses (such as lab and diagnostic equipment), through strategic partnerships with Universities and Contract Research Organizations (“CROs”). GBSGB’s intellectual property portfolio includes four USPTO & WIPO patent applications, two provisional USPTO patent applications, three patent applications that we anticipate filing during the fiscal year ended March 31, 2020, and licenses for three additional patents.

Although we believe that maximum shareholder value will ultimately be achieved through the development, production and marketing of certified cannabinoid medicines, therapies and treatments, in order to generate near-term cash flow, we cultivate and produce cannabis extracts and products for medical and recreational purposes in Nevada and Louisiana. We currently operate cultivation and extraction facilities in Nevada under our subsidiaries GB Sciences Nevada, LLC and GB Sciences Las Vegas, LLC. As of the date of this report, we also have a presence in Louisiana through our controlling interest in GB Sciences Louisiana, LLC, which has partnered with Louisiana State University to operate a cultivation and extraction facility to produce products for the medical cannabis market. We recently agreed to terms to sell our interest in GB Sciences Louisiana, LLC for $8 million cash and up to an additional $8 million in earnout payments, with closing anticipated on or before November 30, 2019. The Company may retain its research relationship with Louisiana State University after the sale is completed and negotiations are in process as of the date of this report.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of GB Sciences, Inc. (the “Company,” “We” or “Us”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulations S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending March 31, 2020. The balance sheet at March 31, 2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended March 31, 2019.

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Principles of Consolidation

We prepare our consolidated financial statements in accordance with generally accepted accounting principles (GAAP) for the United States of America. Our consolidated financial statements include all operating divisions and majority-owned subsidiaries, reported as a single operating segment, for which we maintain controlling interests. Intercompany accounts and transactions have been eliminated in consolidation. The ownership interest of noncontrolling participants in subsidiaries that are not wholly owned is included as a separate component of equity. The noncontrolling participants’ share of the net loss is included as “Net loss attributable to noncontrolling interest” on the unaudited consolidated statements of operations.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowances for doubtful accounts, inventory valuation, valuation of initial right-of-use assets and corresponding lease liabilities, valuation of beneficial conversion features in convertible debt, stock-based compensation expense, purchased intangible asset valuations, deferred income tax asset valuation allowances, uncertain tax positions, litigation and other loss contingencies. These estimates and assumptions are based on current facts, historical experience and various other factors that the Company believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of costs and expenses that are not readily apparent from other sources. The actual results the Company experiences may differ materially and adversely from these estimates.

Reclassifications

Certain reclassifications have been made to the comparative period amounts in order to conform to the current period presentation. The current and long-term capital lease obligations recorded in the consolidated balance sheet as of March 31, 2019 have been reclassified to conform to the current period presentation as finance lease obligations, current, and finance lease obligations, long term. In addition, the assets, liabilities, income, and cash flows of GB Sciences Louisiana, LLC have been separated from the comparative period amounts to confirm to the current period presentation as discontinued operations as the result of the agreement to pursue the sale of the Company’s interest in GB Sciences Louisiana, LLC (Note 10). The reclassifications had no effect on the reported financial position, results of operations or cash flows of the Company.

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Discontinued Operations

Discontinued operations comprise those activities that were disposed of during the period or which were classified as held for sale at the end of the period and represent a separate major line of business or geographical area that can be clearly distinguished for operational and financial reporting purposes.

The assets and liabilities associated with discontinued operations included in our condensed consolidated balance sheets are as follows:

*Discontinued Operations – (continued)*	September 30, 2019			March 31, 2019
	Continuing	Discontinued	Total	Continuing	Discontinued	Total
ASSETS
CURRENT ASSETS
Cash	$ 84,799	$ 9,519	$ 94,318	$ 182,055	$ 45,703	$ 227,758
Accounts receivable, net	187,179	-	187,179	488,329	-	488,329
Inventory, net	1,541,676	1,450,985	2,992,661	1,533,792	602,714	2,136,506
Prepaid and other current assets	60,066	16,174	76,240	262,208	351,970	614,178
TOTAL CURRENT ASSETS	1,873,720	1,476,678	3,350,398	2,466,384	1,000,387	3,466,771

Property and equipment, net	10,265,138	12,857,404	23,122,542	10,481,706	13,022,996	23,504,702
Intangible assets, net	1,977,672	-	1,977,672	1,818,802	-	1,818,802
Deposits and other noncurrent assets	221,889	1,002,376	1,224,265	230,651	1,002,376	1,233,027
Operating lease right-of-use assets, net	156,972	8,400	165,372	-	-	-

TOTAL ASSETS	$ 14,495,391	$ 15,344,858	$ 29,840,249	$ 14,997,543	$ 15,025,759	$ 30,023,302

LIABILITIES
CURRENT LIABILITIES
Accounts payable	$ 1,621,424	$ 1,303,079	$ 2,924,503	$ 1,374,771	$ 1,695,985	$ 3,070,756
Accrued interest	310,415	-	310,415	142,112	-	142,112
Accrued expenses	393,120	57,296	450,416	244,931	76,415	321,346
Notes payable, net	4,917,653	100,000	5,017,653	2,229,812	300,000	2,529,812
Income tax payable	506,145	-	506,145	506,145	-	506,145
Finance lease obligations, current	106,488	65,131	171,619	80,132	61,877	142,009
Operating lease obligations, current	44,571	-	44,571	-	-	-
TOTAL CURRENT LIABILITIES	7,899,816	1,525,506	9,425,322	4,577,903	2,134,277	6,712,180

Note payable, net	56,414	-	56,414	161,072		161,072
Operating lease obligations, long term	126,967	8,400	135,367	-		-
Finance lease obligations, long term	3,593,372	2,314,111	5,907,483	3,646,540	2,347,511	5,994,051

TOTAL LIABILITIES	$ 11,676,569	$ 3,848,017	$ 15,524,586	$ 8,385,515	$ 4,481,788	$ 12,867,303

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Discontinued Operations – (continued)

The revenues and expenses associated with discontinued operations included in our condensed consolidated statements of operations were as follows:

	For the Three Months Ended September 30,
	2019			2018
	Continuing	Discontinued	Total	Continuing	Discontinued	Total
Sales revenue	$ 1,171,698	$ 377,007	$ 1,548,705	$ 717,229	$ -	$ 717,229
Cost of goods sold	(1,857,150)	(380,629)	(2,237,779)	(302,744)	-	(302,744)
Gross profit (loss)	(685,452)	(3,622)	(689,074)	414,485	-	414,485
General and administrative expenses	1,403,314	424,732	1,828,046	3,806,320	762,712	4,569,032
LOSS FROM OPERATIONS	(2,088,766)	(428,354)	(2,517,120)	(3,391,835)	(762,712)	(4,154,547)
OTHER INCOME/(EXPENSE)
Interest expense	(475,558)	(62,777)	(538,335)	(2,765,866)	(62,985)	(2,828,851)
Other income/(expense)	69,457	-	69,457	(3,047,667)	-	(3,047,667)
Total other expense	(406,101)	(62,777)	(468,878)	(5,813,533)	(62,985)	(5,876,518)
NET LOSS BEFORE INCOME TAXES	(2,494,867)	(491,131)	(2,985,998)	(9,205,368)	(825,697)	(10,031,065)
Income tax benefit	57,392	-	57,392	-	-	-
NET LOSS	$ (2,437,475)	$ (491,131)	$ (2,928,606)	$ (9,205,368)	$ (825,697)	$ (10,031,065)

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Discontinued Operations – (continued)

	For the Six Months Ended September 30,
	2019			2018
	Continuing	Discontinued	Total	Continuing	Discontinued	Total
Sales revenue	$ 2,082,374	$ 377,007	$ 2,459,381	$ 2,032,513	$ -	$ 2,032,513
Cost of goods sold	(2,481,519)	(380,629)	(2,862,148)	(883,309)	-	(883,309)
Gross profit (loss)	(399,145)	(3,622)	(402,767)	1,149,204	-	1,149,204
General and administrative expenses	3,468,863	626,571	4,095,434	7,623,356	1,409,557	9,032,913
LOSS FROM OPERATIONS	(3,868,008)	(630,193)	(4,498,201)	(6,474,152)	(1,409,557)	(7,883,709)
OTHER INCOME/(EXPENSE)
Interest expense	(913,374)	(125,372)	(1,038,746)	(4,422,714)	(126,319)	(4,549,033)
Other income/(expense)	69,457	-	69,457	(2,949,806)	-	(2,949,806)
Total other expense	(843,917)	(125,372)	(969,289)	(7,372,520)	(126,319)	(7,498,839)
NET LOSS BEFORE INCOME TAXES	(4,711,925)	(755,565)	(5,467,490)	(13,846,672)	(1,535,876)	(15,382,548)
Income tax benefit	-	-	-	-	-	-
NET LOSS	$ (4,711,925)	$ (755,565)	$ (5,467,490)	$ (13,846,672)	$ (1,535,876)	$ (15,382,548)

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Long-Lived Assets

Property and equipment comprise a significant portion of our total assets. We evaluate the carrying value of property and equipment if impairment indicators are present or if other circumstances indicate that impairment may exist under authoritative guidance. The annual testing date is March 31. When management believes impairment indicators may exist, projections of the undiscounted future cash flows associated with the use of and eventual disposition of property and equipment are prepared. If the projections indicate that the carrying value of the property and equipment are not recoverable, we reduce the carrying values to fair value. These impairment tests are heavily influenced by assumptions and estimates that are subject to change as additional information becomes available. No indicators of impairment were identified by the Company as of March 31, 2019.

Inventory

We value our inventory at the lower of the actual cost of our inventory, as determined using the first-in, first-out method, or its current estimated net realizable value. We periodically review our physical inventory for excess, obsolete, and potentially impaired items and reserve accordingly. Our reserve estimate for excess and obsolete inventory is based on expected future use.

Beneficial Conversion Feature of Convertible Notes Payable

The Company accounts for convertible notes payable in accordance with the guidelines established by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 470-20, Debt with Conversion and Other Options and Emerging Issues Task Force (“EITF”) 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments”. A beneficial conversion feature (“BCF”) exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of any attached equity instruments, if any related equity instruments were granted with the debt. In accordance with this guidance, the BCF of a convertible note is measured by allocating a portion of the note's proceeds to the warrants, if applicable, and as a reduction of the carrying amount of the convertible note equal to the intrinsic value of the conversion feature, both of which are credited to additional paid-in-capital. The Company calculates the fair value of warrants issued with the convertible notes using the Black-Scholes valuation model and uses the same assumptions for valuing any employee options in accordance with ASC Topic 718 Compensation – Stock Compensation. The only difference is that the contractual life of the warrants is used.

The value of the proceeds received from a convertible note is then allocated between the conversion features and warrants on a relative fair value basis. The allocated fair value is recorded in the financial statements as a debt discount (premium) from the face amount of the note and such discount is amortized over the expected term of the convertible note (or to the conversion date of the note, if sooner) and is charged to interest expense.

Revenue Recognition

The FASB issued Accounting Standards Codification (“ASC”) 606 as guidance on the recognition of revenue from contracts with customers. Revenue recognition depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company adopted the guidance on April 1, 2018 and applied the cumulative catch-up transition method.

The Company’s only current revenue source is from sales of cannabis, a distinct physical good. Under ASC 606, the Company is required to separately identify each performance obligation resulting from its contracts from customers, which may be a good or a service. A contract may contain one or more performance obligations. All of the Company’s contracts with customers, past and present, contain only a single performance obligation, the delivery of

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

distinct physical goods. Because fulfillment of the company’s performance obligation to the customer under ASC 606 results in the same timing of revenue recognition as under the previous guidance (i.e. revenue is recognized upon delivery of physical goods), the Company did not record any material adjustment to report the cumulative effect of initial application of the guidance.

Loss per Share

The Company’s basic loss per share has been calculated using the weighted average number of common shares outstanding during the period. The Company had 136,230,024 and 73,579,521 potentially dilutive common shares at September 30, 2019 and 2018, respectively. However, such common stock equivalents were not included in the computation of diluted net loss per share as their inclusion would have been anti-dilutive.

Recent Accounting Pronouncements

Recently Adopted Standards

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842), (the "New Lease Standard"). This standard requires leases, other than short-term, to be recognized on the balance sheet as a lease liability and a corresponding right-of-use asset.

Lease payments include fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, and others as required by the standard. Lease payments do not include variable lease payments other than those that depend on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components. This standard is effective for interim and annual reporting periods beginning after December 15, 2018 and the Company adopted the standard as of April 1, 2019. The Company also elected the package of practical expedients, which among other things, does not require reassessment of lease classification.

The Company adopted the New Lease Standard using the modified retrospective transition approach as of the effective date as permitted by the amendments in ASU 2018-11, "Targeted Improvements - Leases (Topic 842)." Under this method, the cumulative effect adjustment to the opening balance of retained earnings is recognized at the adoption date. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption on April 1, 2019.

The Company's consolidated balance sheet was affected by this standard, but the consolidated statement of operations and consolidated statement of cash flows were not significantly impacted. The most significant change to the consolidated balance sheet upon adoption on April 1, 2019 relates to the recognition of new right-of-use (ROU) assets of $182,624, net of accumulated amortizations, and operating liabilities of $190,173 at the date of adoption. The Company's accounting for finance leases remains substantially unchanged.

In June 2018, the FASB issued ASU 2018-07, “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU No 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance also specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and is effective for the Company as of April 1, 2019. The Company determined that all share-based payments were settled as of the date of the adoption, so there was no impact on the Company's consolidated financial statements.

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Note 2 – Going Concern

The Company’s condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has sustained net losses since inception, which have caused an accumulated deficit of $90,071,120 at September 30, 2019. The Company had a working capital deficit of $6,074,924 including a deficit of $48,828 from discontinued operations at September 30, 2019, compared to $3,245,409 including a deficit of $1,133,890 from discontinued operations at March 31, 2019. In addition, the Company has consumed cash in its operating activities of $3,546,457 including $1,253,851 from discontinued operations for the six months ended September 30, 2019, compared to $6,383,922 including $1,180,054 from discontinued operations for the same period last year. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

Management has been able, thus far, to finance the losses through a public offering, private placements and obtaining operating funds from stockholders. The Company is continuing to seek sources of financing. There are no assurances that the Company will be successful in securing capital necessary to achieve its goals.

In view of these conditions, the Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing or capital sources, to meet its financing requirements, and ultimately to achieve profitable operations. Management believes that its current and future plans provide an opportunity to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that may be necessary in the event the Company is unable to continue as a going concern.

Note 3 – Inventory

Raw materials consist of supplies, materials, and consumables used in the cultivation and extraction processes. Work-in-progress includes live plants and cannabis in the drying, curing, and trimming processes. Finished goods includes completed cannabis flower, trim, extracts, and vapes in bulk and packaged forms.

	September 30, 2019	March 31, 2019

Raw materials	`$191,743`	`$440,414`
Work in progress	`566,686`	`676,341`
Finished goods	`783,247`	`417,037`

Total inventory	`$1,541,676`	`$1,533,792`

Note 4 – Leases

The Company determines if an arrangement is a lease at inception and has lease agreements for warehouses, office facilities, and equipment. These commitments have remaining non-cancelable lease terms, with lease expirations which range from 2021 to 2032.

As a result of the adoption of ASC 842, certain real estate and equipment operating leases have been recorded on the balance sheet with a lease liability and right-of-use asset ("ROU"). Application of this standard resulted in the recognition of ROU assets of $182,624, net of accumulated amortization, and a corresponding lease liability of $190,173 at the April 1, 2019, date of adoption. Accounting for finance leases is substantially unchanged.

Operating leases are included in operating lease ROU assets, operating lease obligations, current, and operating lease obligations, long term on the condensed consolidated balance sheets. Finance leases are included in property

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

and equipment, finance lease obligations, short term, and finance lease obligations, long term, on the condensed consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make scheduled lease payments. ROU assets and liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term. The present value of lease payments is calculated using the incremental borrowing rate at lease commencement, which takes into consideration recent debt issuances as well as other applicable market data available. The rates used to discount finance leases previously recorded as capital leases range from 10.2% to 11.5%. Operating leases were discounted at a rate of 17.0%.

Lease terms include options to extend when it is reasonably certain that the option will be exercised. Leases with a term of 12 months or less are not recorded on the consolidated balance sheet.

During the six months ended September 30, 2019, finance lease costs recorded in the consolidated financial statements were $340,880, of which $214,394 represents interest expense and $126,486 represents amortization of the right-of-use assets. Operating lease costs were $41,174, of which $15,522 represents interest expense and $25,652 represents amortization of the right-of-use assets.

Discontinued operations includes $222,824 in finance lease costs, of which $123,382 represents interest expense and $84,167 represents amortization of right-of-use assets.

Amortization of lease assets is included in general and administrative expenses. The future minimum lease payments of lease liabilities as of September 30, 2019, from continuing operations are as follows:

	Year Ending March 31,	Finance Leases	Operating Leases

	2020 (6 months)	`$300,871`	`$35,093`
	2021	`528,443`	`71,548`
	2022	`544,296`	`73,939`
	2023	`560,625`	`38,101`
	2024	`577,444`	`3,927`
	Thereafter	`4,375,869`	`-`
Total undiscounted lease payments		`6,887,548`	`222,608`
Less: Amount representing interest		`(3,187,688)`	`(51,070)`
Present value of minimum lease payments		`3,699,860`	`171,538`
Less: Current maturities of lease obligations		`(106,488)`	`(44,571)`
Long-term lease obligations		`$3,593,372`	`$126,967`

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Note 5 – Notes Payable

6% Note Payable due November 30, 2018

On July 28, 2018, the Company entered into the Amendment and Termination Agreement (“Amendment and Termination Agreement”) with Pacific Leaf Ventures, L.P (“Pacific Leaf”). Pursuant to that agreement, the Pacific Leaf Royalty Agreement and all other agreements with Pacific Leaf were terminated in their entirety, and the Company would make payments totaling $1 million of the $1.5 million balance due to Pacific Leaf by August 31, 2018. Contemporaneously with the Amendment and Termination Agreement, the Company issued a Promissory Note (“Promissory Note”) for the remaining $0.5 million due to Pacific Leaf. The Promissory Note accrued interest at a rate of 6% per annum and matured on November 30, 2018. The Company recorded interest expense of $5,425 related to the Promissory Note for the three months ended September 30, 2018.

In consideration for deferring the payment of the amounts due to Pacific Leaf, the Company issued 100,000 shares of its common stock to Pacific Leaf on July 31, 2018 having a fair market value of $36,000. The Company made cash payments totaling $1.0 million to Pacific Leaf in August 2018 related to the Amendment and Termination Agreement. Both the $36,000 fair value of shares issued to Pacific Leaf and the $1,000,000 in cash payments made to Pacific Leaf in August 2018 are recorded in the Company’s Condensed Consolidated Statement of Operations for the Three and Six Months Ended September 31, 2018, under the other expense caption.

On December 21, 2018, the company made a $100,000 payment on the promissory note. The payment was applied to interest accrued to date of $12,164 and the remaining $87,836 was applied to the principal balance of the Note.

On December 21, 2018, the Company also issued 500,000 shares of its common stock to Pacific Leaf in consideration for further deferral of repayment of the Note. The Company recognized $95,000 in expense related to the shares issued, which is recorded in the Company’s Consolidated Statement of Operations for the year ended March 31, 2019, under the other expense caption.

The Company made additional payments on the promissory note of $100,000 on January 16, 2019, $100,000 on February 6, 2019, and a final payment of $210,000 on March 4, 2019 which paid the note off in full.

Because the Amendment and Termination Agreement irrevocably terminated the Pacific Leaf Royalty Agreement Royalty Agreement, the Company recorded an expense of $1,530,000 in the quarter ended September 30, 2018 related to the prepaid royalties previously recorded on the Condensed Consolidated Balance Sheet in connection with the February 2018 Agreement. The expense is included in the Other Expense caption of the Company’s Condensed Consolidated Statement of Operations for the three and six months ended September 30, 2018. In total, the Company recorded $3.0 million in Other Expense in its Condensed Consolidated Statement of Operations for the three and six months ended September 30, 2018, as summarized in the table below:

Amounts Recorded in Other Expense		For the Three and Six Months Ended September 30, 2018

Prepaid royalties expensed during the quarter		$ 1,530,000
Promissory note issued to Pacific Leaf, due on or before November 30, 2018		500,000
100,000 shares common stock issued to Pacific Leaf		36,000
Long-term note payable and accrued interest terminated		(20,075)
Total non-cash expense		2,045,925
Cash payments made in August 2018		1,000,000
Total		$ 2,045,925

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

0% Note Payable dated October 23, 2017

On October 23, 2017, the Company amended the existing Nevada Medical Marijuana Production License Agreement (“Amended Production License Agreement”). Per the terms of the Amended Production License Agreement, GB Sciences purchased the remaining percentage of the production license resulting in the 100% ownership of the license. GB Sciences also received 100% ownership of the cultivation license included in the original Nevada Medical Marijuana Production License Agreement. In exchange, GB Sciences made a one-time payment of $500,000 and issued a 0% Promissory Note in the amount of $700,000 payable in equal monthly payments over a three-year period commencing on January 1, 2018.

The present value of the note was $521,067 on the date of its issuance based on an imputed interest rate of 20.3% and the Company recorded a discount on notes payable of $178,933. During the six months ended September 30, 2019, the Company recorded $31,092 in interest expense related to amortization of the note discount.

As of the date of this report, five monthly payments on the note totaling $97,222 are unpaid. The terms of the note provide the Company ten days to cure any breach upon written notification of default received from the lender. To date, 483 Management has not provided the Company with written notification of default and we are in the process of negotiating a forbearance agreement. If the Company is unable to cure the default within ten days of receiving a written notice, 483 Management will have the option to accelerate the remaining balance owed of $369,444 and impose a penalty interest rate of 10%, but must notify the Company in writing should it choose to do so.

Note payable to BCM MED, LLC

On December 20, 2018, GB Sciences Louisiana, LLC (“GBSLA") entered into a $300,000 Loan Agreement with BCM MED, LLC (“BCM MED”). BCM MED is a related party to Wellcana Group, LLC, the minority member in GBSLA. The purpose of the financing is to fund operating expenses incurred by or on behalf of medical marijuana operations of GBSLA.

Pursuant to the Loan Agreement, GBSLA will began making eight (8) monthly installment payments in the amount of $33,333 on or before the 10^th business day of each month commencing in April 2019. GBSLA will make the 9^th and final installment payment in the amount of $33,333 on or before the 10^th business day of December 2019. The aggregate amount of the installment payments from GBSLA to BCM MED are equal to the loan amount. During the six months ended September 30, 2019, GBSLA made $100,000 in payments towards the loan and reduced the loan balance to $100,000. The balance is included in current liabilities from discontinued operations on the Company’s September 30, 2019 unaudited condensed consolidated balance sheet.

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Summary of Notes Payable

As of September 30, 2019, the following notes payable were recorded in the Company’s consolidated balance sheet:

	As of September 30, 2019
Short-Term Notes Payable	Face Value	Discount	Carrying Value
6% Convertible promissory notes payable (Note 6)	`$1,257,000`	`$(360,134)`	`$896,866`
8% Convertible Secured Promissory Note dated February 28, 2019, as amended (Note 6)	`$1,361,863`	`$(101,611)`	`$1,260,252`
8% Convertible Promissory Note dated April 23, 2019	`$2,765,000`	`$(261,760)`	`$2,503,240`
0% Note Payable dated October 23, 2017, current portion	`$311,111`	`$(53,816)`	`$257,295`
Total Short-Term Notes Payable	`$5,694,974`	`$(777,321)`	`$4,917,653`

Long-Term Notes Payable
0% Note Payable dated October 23, 2017	`$58,333`	`$(1,919)`	`$56,414`
Total Long-Term Notes Payable	`$58,333`	`$(1,919)`	`$56,414`

Discontinued Operations
0% Note Payable dated December 20, 2018	`$100,000`	`$-`	`$100,000`

Note 6 – Convertible Notes

March 2017 Convertible Note Offering

In March 2017, the Company issued short-term Promissory Notes (“Notes”) to various holders with combined face value of $965,500. The Notes are payable within three years of issuance and are convertible into 3,862,000 shares of the Company’s common stock. The Company also issued 3,862,000 common stock warrants to the Note holders. The warrants are exercisable at any time and from time to time before maturity at the option of the holder. Each warrant gives the Noteholder the right to purchase one share of common stock of the Company at an exercise price of $0.60 per share for a period of three years. The beneficial conversion feature resulting from the discounted conversion price compared to the market price was calculated based on the date of issuance to be $416,733 after adjusting the effective conversion price for the relative fair value of the note proceeds compared to the fair value of the attached warrants and note. In addition to this discount related to the beneficial conversion feature, an additional discount of $548,767 was recorded based on the fair value of the warrants attached to the note. This value was derived using the Black-Scholes valuation model.

During the three months ended June 30, 2017, the Company issued short-term Promissory Notes (“Notes”) to various holders with combined face value of $1,034,500. The Notes are payable within three years of issuance and are convertible into 4,138,000 shares of the Company’s common stock. The Company also issued 4,138,000 common stock warrants to the Note holders. The warrants are exercisable at any time and from time to time before maturity at the option of the holder. Each warrant gives the Noteholder the right to purchase one share of common stock of the Company at an exercise price of $0.60 per share for a period of three years. The beneficial conversion feature resulting from the discounted conversion price compared to the market price was calculated based on the date of issuance to be $487,957 after adjusting the effective conversion price for the relative fair value of the note proceeds compared to the fair value of the attached warrants and note. In addition to this discount related to the beneficial conversion feature, an additional discount of $480,236 was recorded based on the fair value of the warrants attached to the note. This value was derived using the Black-Scholes valuation model.

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

July 2017 Convertible Note Offering

In July 2017, the Company entered into a Placement Agent’s Agreement with a third-party brokerage firm to offer units consisting of a $1,000 6% promissory note convertible into 4,000 shares of the Company’s common stock at $0.25 per share and 4,000 warrants to purchase shares of the Company’s’ common stock at an exercise price of $0.65 per share for the period of three years.

During the three months ended September 30, 2017, the Company issued short-term Promissory Notes (“Notes”) to various holders with combined face value of $3,085,000. The Notes are payable within three years of issuance and are convertible into 12,340,000 shares of the Company’s common stock. The Company also issued 12,340,000 common stock warrants to the Note holders. The warrants are exercisable at any time and from time to time before maturity at the option of the holder. Each warrant gives the Noteholder the right to purchase one share of common stock of the Company at an exercise price of $0.65 per share for a period of three years. The beneficial conversion feature resulting from the discounted conversion price compared to the market price was calculated based on the date of issuance to be $1,541,797 after adjusting the effective conversion price for the relative fair value of the note proceeds compared to the fair value of the attached warrants and note. In addition to this discount related to the beneficial conversion feature, an additional discount of $1,532,335 recorded based on the fair value of the warrants attached to the note. This value was derived using the Black-Scholes valuation model.

During the three months ended December 31, 2017, the Company issued short-term Promissory Notes (“Notes”) to various holders with combined face value of $4,116,000. The Notes are payable within three years of issuance and are convertible into 16,464,000 shares of the Company’s common stock. The Company also issued 16,464,000 common stock warrants to the Note holders. The warrants are exercisable at any time and from time to time before maturity at the option of the holder. Each warrant gives the Noteholder the right to purchase one share of common stock of the Company at an exercise price of $0.65 per share for a period of three years. The beneficial conversion feature resulting from the discounted conversion price compared to the market price was calculated based on the date of issuance to be $1,600,808 after adjusting the effective conversion price for the relative fair value of the note proceeds compared to the fair value of the attached warrants and note. In addition to this discount related to the beneficial conversion feature, an additional discount of $2,417,856 was recorded based on the fair value of the warrants attached to the note. This value was derived using the Black-Scholes valuation model.

As of September 30, 2019, convertible notes having a carrying value of $896,866, net of unamortized discount of $360,134 remained outstanding from the March 2017 and July 2017 note offerings, and accrued interest on the notes was $159,371. Interest expense for the six months ended September 30, 2019, was $242,608, of which $204,795 was amortization of the note discount.

8% Senior Secured Convertible Promissory Note dated February 28, 2019

On February 28, 2019, the Company issued a $1,500,000 8% Senior Secured Convertible Promissory Note and entered into the Note Purchase Agreement and Security Agreement with CSW Ventures, LP (together, “CSW Note”). The note matures on August 28, 2020 and is convertible at any time until maturity into 8,823,529 shares of the Company’s common stock at $0.17 per share. Collateral pledged as security for the note includes all of the Company’s 100% membership interests in GB Sciences, Nevada, LLC and GB Sciences Las Vegas, LLC, which together represent substantially all of the Company’s cannabis cultivation and production operations and assets located at its Teco facility in Las Vegas, Nevada.

The intrinsic value of the beneficial conversion feature resulting from the market price of the Company’s common stock in excess of the conversion price was $176,471 on the date of issuance, and the Company recorded a discount on the CSW Note in that amount. During the six months ended September 30, 2019, the Company recorded accrued interest on the CSW Note of $32,186 and recorded an additional $61,286 in interest expense as the result of amortization of the note discount.

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Company issued 1,000,000 shares of its common stock based on a $0.17 per share conversion price. In connection with the conversions, $17,225 in unamortized discount was recorded as interest expense and the Company has reduced the carrying amount of convertible notes payable by $152,775. After conversion, the remaining balance outstanding was $1,330,000 at September 30, 2019.

On July 12, 2019, the Company entered into the Amendment to Note Documents and the Amended and Restated 8% Senior Secured Promissory Note (together, “CSW Amendment”). The CSW Amendment increased the balance of the CSW Note by $100,000 to reflect an additional $100,000 advanced to the Company on July 12, 2019, and by $41,863 to add accrued interest to date to the principal balance. The CSW Amendment also decreased the conversion price to $0.11 per share, with the remaining terms unchanged from the original CSW Note.

We evaluated the modification under the guidance in ASC 470-50 and determined that the amendment represents an extinguishment because the change in the fair value of the conversion feature exceeded 10% of the carrying value of the CSW Note on the amendment date. The carrying value of the amended note on the date of extinguishment was $1,338,057, net of a beneficial conversion feature discount of $133,806, and we recorded a loss on extinguishment of $124,158.

During the six months ended September 30, 2019, we recorded interest expense of $46,953 related to the amended CSW Note consisting of $24,338 in accrued interest and $22,615 related to amortization of the note discount.

On August 1, 2019, the Company received notice from CSW Ventures, L.P. of the conversion of a total of $110,000 of the principal balance of the Amended CSW Note at $0.11 per share. Accordingly, the Company issued 1,000,000 shares of its common stock. In connection with the conversions, $9,579 in unamortized discount was recorded as interest expense and the Company has reduced the carrying amount of convertible notes payable by $100,421. After conversion, the remaining balance outstanding was $1,361,863.

As of the date of this report, the Company is in default on the amended CSW Note due to non-payment of the quarterly interest payment that was due on October 1, 2019 and nonpayment of an income tax liability related to the March 31, 2018 tax year. The terms of the note provide that the Company has 5 days to cure a default caused by nonpayment of interest and ten days to cure a default caused by noncompliance with affirmative or negative debt covenants. As of the date of this report, the lender has not provided formal notice of the default and the Company is negotiating a forbearance agreement with the lender. Upon written notice of default to the Company, the lender may accelerate the payment of principal and interest and enforce its remedies under the Security Agreement.

On October 23, 2019, as an inducement to entering into a forbearance agreement, the Company entered into an additional Amendment to Promissory Note with CSW Ventures, L.P., which reduced the conversion price of the CSW Note from $0.11 to $0.08. The final terms of the forbearance agreement have not been negotiated and executed as of the date of this report (see Note 11 Subsequent Events).

8% Convertible Promissory Note dated April 23, 2019

On April 23, 2019, the Company entered into the Note Purchase Agreement with Iliad Research and Trading, L.P. and issued an 8% Convertible Promissory Note with a face value of $2,765,000. The Note was issued with original issue discount of $265,000 and is convertible into shares of the Company’s common stock at a price of $0.17 per share at the option of the note holder at any time until the Note is repaid. The Note matures on April 22, 2020.

A total discount of $440,000 was recorded on the note, which includes $265,000 of original issue discount and $175,000 in fees paid to brokers. During the six months ended September 30, 2019, interest expense related to the note was $274,599, of which $178,240 was amortization of the note discount.

The note includes cross-default and cross-acceleration clauses that may be triggered by the defaults on the Company’s other debts described above in Note 5 and Note 6.

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Note 7 – Capital Transactions

Increase in Authorized Capital

Effective April 8, 2018, Shareholders of the Company approved the change in corporate domicile from the State of Delaware to the State of Nevada and an increase in the number of authorized capital shares from 250,000,000 to 400,000,000. On August 15, 2019, Shareholders of the Company approved an increase in authorized capital shares from 400,000,000 to 600,000,000.

Sale of Common Stock and Exercise of Warrants

Debt Conversions

On May 28, 2019, the Company received notice from CSW Ventures, L.P. of the conversion of a total of $170,000 of the principal balance of the 8% Senior Secured Promissory Note dated February 28, 2019 (See Note 6). Accordingly, the Company issued 1,000,000 shares of its common stock based on a $0.17 per share conversion price. In connection with the conversions, $17,225 in unamortized discount was recorded as interest expense and the Company has reduced the carrying amount of convertible notes payable by $152,775.

Exercise of Warrants for Stock

In order to encourage the exercise of approximately 70.5 million warrants issued to investors in private placements of convertible notes and common stock having exercise prices ranging between $0.65 and $0.30, the Company effected a temporary decrease in the exercise price of the warrants to $0.10 per share until July 11, 2019. On July 12, 2019, the Company extended the repricing of the warrants through August 30, 2019, and on July 31, 2019, the Company extended the repricing of the warrants to September 30, 2019. As a result of the price reduction, the Company received notice of the exercise of 9,449,750 warrants and received proceeds of $850,478, net of brokerage fees of $94,498. In connection with the induced exercise of the warrants, the Company recorded an inducement dividend of $230,025.

Stock Issued in Private Placement

On December 4, 2018, the Company entered into a Placement Agent’s Agreement to offer a total of 15,000,000 units at the price of $0.20 per unit up to a total of $3 million. Each unit consisted of one share of the Company’s common stock and one warrant to purchase one share of the Company’s common stock at the price of $0.60 for a period of five years. On January 15, 2019, the Placement Agent’s Agreement was amended to decrease the unit price from $0.20 per unit to $0.15 per unit for a total of 20,000,000 units and decrease the exercise price of the warrants included in each unit from $0.60 to $0.30, applied retroactively to funds raised prior to the date of the amendment, with no other changes to the agreement. During the six months ended September 30, 2019, the Company received a total of $478,696 in proceeds from the private placement, net of $71,529 in brokerage fees and issued 3,668,167 shares of its common stock and 3,668,167 warrants to purchase one share of its common stock at $0.30 per share.

Cancellation of Shares Issued to Consultant

During the six months ended September 30, 2019, the Company cancelled 400,000 shares of common stock issued to a consultant as compensation for services rendered during the year ended March 31, 2019, that were initially issued

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

as part of the consulting agreement. During the quarter ended June 30, 2019, the Company agreed to amend the consulting agreement to issue options instead of the shares. The amendment has not yet been executed nor has the option agreement as of September 30, 2019.

Options and Warrants

At the conclusion of the December 2018 private placement on September 30, 2019, the Company issued 1,954,613 compensation warrants to the broker participating in the private placement. The warrants are exercisable at $0.30 per share until expiration on June 15, 2024 and are eligible for cashless exercise. The Company recorded a $132,914 expense related to the issuance of the warrants.

For the six months ended September 30, 2019, the Company recorded $208,809 in share-based compensation expense relating to options granted to employees and consultants in prior periods.

Note 8 – Commitments and Contingencies

On September 18, 2017 GB Sciences finalized its agreement with Louisiana State University (“LSU”) AgCenter to be the sole operator of the LSU’s medical marijuana program. The LSU Board of Supervisors entered into a five-year agreement that has an option to renew for two additional five-year terms with GB Sciences.

The contract includes the Company’s commitment to make a minimum financial contribution to the LSU AgCenter in the amount of $3.4 million, or a 10% commission of gross receipts, in addition to annual research investments of $500,000 to the LSU AgCenter. The $500,000 annual research investment is prepaid annually in September and amortized over a one-year period. The 10% commission on gross receipts is accrued and paid as the sales are made. The Company’s first sales in Louisiana were made on August 6, 2019 and total expense related to the 10% commission was $37,701 for the three months ended September 30, 2019 and that amount is accrued in current liabilities from discontinued operations.

The monetary contributions will be used to conduct research on plant varieties, compounds, extraction techniques and delivery methods that could generate additional revenue through discoveries that are subject to intellectual property rights, which AgCenter would retain 50% of those rights with the other 50% retained by the Company. As of September 30, 2019, GB Sciences has made payments totaling $1,600,000 toward its obligations under the agreement. For the six months ended September 30, 2019, the Company recorded $250,000 in expense related to the agreement.

On December 6, 2018, the Company entered into an agreement with SylvaCap Media for business advisory and consulting services. In consideration for the services, the Company issued warrants to purchase 2 million shares of the Company’s common stock at $0.1125 per share. The Company valued the warrants at $244,000 using the Black-Scholes valuation model. The fair value of the warrants was recognized as consulting expense over the term of the agreement. The company recorded $162,667 in expense related to the warrants for the six months ended September 30, 2019. The Company also agreed to pay the consultant a $10,000 monthly fee for 12 months and to issue 4 million restricted shares of the Company’s common stock. The Company issued 2 million shares on the date of the contract, with the remaining 2 million due six months after the date of the agreement.

On June 6, 2019, the Company entered into a Cancellation and Settlement with SylvaCap Media and terminated the December 6, 2018 agreement. In consideration for terminating the agreement, the Company will pay $135,000 as a one-time cancellation fee and will not issue the remaining two million shares due under the agreement. This amount is accrued in accounts payable as of September 30, 2019.

During the year ended March 31, 2019, the Company recorded a $200,000 charge related to seizure of cash by local law enforcement during a routine traffic stop while transporting the cash to one of our subsidiaries. The charge was recorded in other expense as the Company believed it was more likely than not that the cash would not be returned. After appealing the seizure of the cash through the proper channels, the cash was returned to the Company on September 6, 2019, and the Company recorded other income on that date.

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

From time to time, the Company may become involved in certain legal proceedings and claims which arise in the ordinary course of business. In management’s opinion, based on consultations with outside counsel, the results of any of these ordinary course matters, individually and in the aggregate, are not expected to have a material effect on our results of operations, financial condition, or cash flows. As more information becomes available, if management should determine that an unfavorable outcome is probable on such a claim and that the amount of such probable loss that it will incur on that claim is reasonably estimable, the Company would record a reserve for the claim in question. If and when the Company records such a reserve, it could be material and could adversely impact its results of operations, financial condition, and cash flows.

Note 9 – Related Party Transactions

During the six months ended September 30, 2019, the Company made payments totaling $200,000 on the 0% Note Payable to BCM MED, LLC. BCM MED, LLC shares common ownership with Wellcana Group, LLC, who hold the noncontrolling interest in GB Sciences Louisiana, LLC.

Note 10 – Non-Controlling Interest

On February 12, 2018, the Company’s wholly-owned subsidiary, GB Sciences Louisiana, LLC (“GBLA"), issued members’ equity interests equal to 15% in GBLA to Wellcana Group, LLC (“Wellcana”) for $3 million. Under the GBLA operating agreement, Wellcana had an option to make additional capital contributions for the purchase of up to an additional 35% membership interest in GBLA, at the rate of 5% membership interest per $1 million contributed. To date, Wellcana has made additional cash contributions of $7.0 million and its non-controlling interest in GBLA increased to 49.99%. The capital contributions have been used to fund the buildout of the Petroleum Drive facility and to pay for the operating costs of GBLA.

On September 12, 2019, we signed a term sheet under which an entity affiliated with Wellcana will pursue the purchase of the Company’s controlling interest in GBLA in exchange for $8 million cash with the potential for up to an additional $8 million over time through earn out provisions. The parties would negotiate and draft a Purchase and Sale Agreement with the intent to close the transaction by October 31, 2019. On October 31, 2019, we signed an agreement extending the date of closing to November 30, 2019. Because of the plan to sell the Company’s interest in GBLA, we determined that GB Sciences Louisiana, LLC qualifies as a discontinued operation under the relevant accounting guidance, and accordingly the assets, liabilities, income, and cash flows of GB Sciences Louisiana, LLC are separated from continuing operations for all periods presented.

The net loss attributable to the non-controlling interest in GBLA was $377,781 for the six months ended September 30, 2019.

GB SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(unaudited)

Table of Contents

Note 11 – Subsequent Events

Capital Transactions

Subsequent to September 30, 2019, the Company issued 7,450,000 shares of its common stock as the result of the following transactions:

On October 9, 2019, the Company issued 2,000,000 shares to a consultant as prepayment for consulting services.

On October 10, 2019, the Company issued 200,000 shares of its common stock to the landlord of its Teco facility in Nevada in as consideration for deferment of lease payments until November 15, 2019.

On October 16, 2019, the Company issued 4,000,000 shares of its common stock and 2,000,000 warrants to purchase one share of common stock at $0.08 per share for three years to an investor in exchange for $240,000 cash.

On October 30, 2019, the Company agreed to a limited one-time reduction to the conversion price of the $2,765,000 8% Convertible Promissory Note dated April 23, 2019 and received notice of the conversion of $75,000 principal balance at $0.06 per share. As the result of that conversion, we issued 1,250,000 shares of common stock and reduced the principal balance of the note by $75,000.

Amendment to 8% Senior Secured Convertible Promissory Note dated February 12, 2019

On October 23, 2019, as an inducement to entering into a forbearance agreement, the Company entered into an additional Amendment to Promissory Note with CSW Ventures, L.P., which reduced the conversion price of the CSW Note from $0.11 to $0.08. The Company evaluated the modification under the guidance in ASC 470-50 and determined that the price reduction may represent terms that are substantially different from the pre-modification note and we anticipate recording a loss on extinguishment of $92,796.

Table of Contents

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts” or “continue” , which list is not meant to be all-inclusive and other such negative terms and comparable technology. These forward-looking statements, include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include among other things: (1)product demand, market and customer acceptance of GB Sciences products, equipment and other goods, (ii) ability to obtain financing to expand its operations, (iii) ability to attract qualified personnel, (iv)competition pricing and development difficulties, (v) general industry and market conditions and growth rates, unexpected natural disasters, and other factors, which we have little or no control: and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”). The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.

The following discussion highlights the Company’s results of operations and the principal factors that have affected our financial condition, as well as our liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis is based on the Company’s unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read this discussion and analysis together with such financial statements and the related notes thereto.

Overview

The Company seeks to be an innovative technology and solution company that converts the cannabis plant into medicines, therapies and treatments for a variety of ailments. The Company is developing and utilizing state of the art technologies in plant biology, cultivation and extraction techniques, combined with biotechnology, and plans to produce consistent and measurable medical-grade cannabis, cannabis concentrates and cannabinoid therapies.

We were incorporated in the State of Delaware on April 4, 2001, under the name “Flagstick Venture, Inc.” On March 28, 2008, stockholders owning a majority of our outstanding common stock approved changing our then name “Signature Exploration and Production Corp.” as our business model had changed.

On March 13, 2014, we entered into a definitive assets purchase agreement for the acquisition of assets, including the Growblox™ cultivation technology which resulted in a change in our corporate name on April 4, 2014, from Signature Exploration and Production Corporation to Growblox Sciences, Inc.

Effective December 12, 2016, the Company amended its Certificate of Corporation pursuant to shareholder approval as reported in the Form 8-K filed on October 14, 2016. Pursuant to the amendment the Company’s name was changed from Growblox Sciences, Inc. to GB Sciences, Inc.

Effective April 8, 2018, Shareholders of the Company approved the change in corporate domicile from the State of Delaware to the State of Nevada and increase in the number of authorized capital shares from 250,000,000 to

Table of Contents

400,000,000. Effective August 15, 2019, Shareholders of the Company approved an increase in authorized capital shares from 400,000,000 to 600,000,000.

Our wholly owned subsidiary GB Sciences Nevada, LLC (“GBSN”) leases a warehouse facility at 3550 W. Teco Avenue, Las Vegas Nevada. On January 4, 2017, GBSN received a State Registration Certificate (“Certificate”) for its 28,000-sq. ft. cannabis cultivation facility located in Las Vegas, NV. The receipt of the Certificate allows the Company to cultivate medical cannabis. Phase 1 of the GBSN cultivation facility opened with 200 grow lights. When all phases of construction are completed, the facility is expected to generate revenues of $10 million. Completion of all Phases of this facility is dependent upon the availability of capital to complete construction.

We also hold a Nevada Medical and Recreational Marijuana Production License through the Company’s wholly owned subsidiary, GB Sciences Las Vegas, LLC. A production license enables us to convert cannabis plants into to oils and extracts that are suitable for creating medical compounds as well as consumer products. This license is critical and essential to our plan of producing cannabis-based medicines. We began full production operations in our Teco facility in December 2018.

The monetary contributions would be used to conduct research on plant varieties, compounds, extraction techniques and delivery methods that could generate additional revenue through discoveries that are subject to intellectual property rights, which AgCenter would retain 50% of those rights. As of March 31, 2019, GB Sciences has made payments totaling $1,600,000 toward its obligations under the agreement.

On September 12, 2019, we signed a term sheet under which an entity affiliated with Wellcana will pursue the purchase of the Company’s controlling interest in GB Sciences Louisiana, LLC in exchange for $8 million cash with the potential for up to an additional $8 million over time through earn out provisions. On October 31, 2019, we signed an agreement extending the date of closing to November 30, 2019.

On September 21, 2018, the Company formed a wholly owned subsidiary, GBS Global Biopharma, Inc., in the province of Ontario, Canada with plans to license and/or transfer some of Growblox Life Sciences LLC’s intellectual property to the newly formed entity. On March 15, 2019, the Company entered into the Asset Purchase Agreement with GBS Global Biopharma, Inc., whereby all of the assets and certain liabilities held by Growblox Life Sciences, LLC, a wholly-owned subsidiary of GB Sciences, Inc., were transferred to GBS Global Biopharma, Inc. in exchange for a promissory note in the amount of $1,435,700. The assets transferred include all intellectual property and intangible assets owned by the Company, consisting primarily of patents in process and research contracts with universities and researchers. GBS Global Biopharma Inc. is currently pursuing clinical development of the intellectual property, including clinical trials.

Table of Contents

Plan of Operation

Drug Discovery and Development of Novel Cannabis-Based Therapies

Through its wholly-owned, Canadian subsidiary, GBS Global Biopharma, Inc. (GBSGB), the Company has conducted ground-breaking research embracing the complexity of the whole plant led by Dr. Andrea Small-Howard, the Company’s Chief Science Officer, and Dr. Helen Turner, Vice President of Innovation and Dean of the Science and Technology Department at Chaminade University. Small-Howard and Turner posited that complex mixtures of cannabinoids and terpenes that are derived from native mixtures in the cannabis plant, but with precise optimizations, would provide more targeted and effective treatments for specific disease conditions than either single cannabinoids or whole plant formulations. They developed a rapid screening and assaying system which tested thousands of combinations of cannabinoids and terpenes in vitro against cell-based models of disease. This process identified precise mixtures of cannabinoids and terpenes, many of which contained no THC, to treat categories of disease conditions, including neurological disorders, inflammation, heart disease, metabolic syndrome, chronic and neuropathic pain.

GBSGB’s drug discovery process combines: 1) HTS: high throughput screening of tens of thousands of combinations of compounds derived from specific chemovars of the cannabis plant in well-established cellular models of diseases, and 2) NPP: a proprietary Network Pharmacology Platform algorithm for the prediction of complex therapeutic mixtures that the Company spent two-and-a-half-years training and testing against cell assay data. This combined approach to drug discovery increases research efficiency and accuracy reducing the time from ideation to patenting from 7 years to 1.5 years. Screening of cannabis-based mixtures for drug discovery involves the testing of specific combinations of plant chemicals from many naturally occurring cannabis chemovars and the use of live models for these diseases that have been well established by other researchers. First, the Company finds chemovars that show some therapeutic activity, and then refines these natural mixtures to optimize their effectiveness in cellular assays by removing compounds that do not act synergistically with the others in the mixtures. The Company also use its internally-validated Network Pharmacology Platform to prioritize and eliminate some potential combinations, which reduces the time in the discovery period.

The U.S. Patent and Trademark Office allows complex mixtures to be claimed as Active Pharmaceutical Ingredients, and GBSGB has a series of patents containing cannabis-derived complex mixtures that act as therapeutic agents for specific disease categories, as described below. GBSGB’s patents are protected whether the individual compounds are derived from the cannabis plant, another plant, synthetically produced, or derived from a combination of sources for the individual chemical compounds in these mixtures.

GBS Global Biopharma, Inc. has made significant strides in the past year with respect to both discovery research and product development programs. Both lead Rx programs in Parkinson’s disease and chronic neuropathic pain are now in preclinical animal studies with Dr. Lee Ellis of the NRC in Halifax. For chronic neuropathic pain, GBSGB is testing its Myrcene-Containing Complex Mixtures (MCCM) both as encapsulated, time-released nanoparticles, as well as in non-encapsulated forms of these therapeutic mixtures. For Parkinson’s disease, the initial clinical prototypes of GBSGB Cannabinoid-Containing Complex Mixtures (CCCM) are being formulated by Catalent Pharma using Catalent’s Zydis® Orally Disintegrating Tablet technology. Catalent has reported that the prototypes passed the initial Feasibility Testing Phase, and Catalent is now working on the Proof of Concept Study with our GBS101.PD, GBS102.PD, and GBS103.PD formulations. Three new patent applications were filed, two new patent applications are being prepared for filings, and we have licensed another patented delivery method, oral thin films. We are also raising awareness of our work through six peer-reviewed journal articles and a dozen presentations at national and international meetings. Favorable Research Updates from our university collaborators reveal the promise in our discovery programs with Michigan State University (HIV-Associated Neurodegenerative Disorder), Chaminade University (Neuropathic Pain, Metabolic Syndrome), the University of Athens, Greece (Cannabis Metabolomics), and the University of Seville, Spain (Time-Released Nanoparticles). The University of Seville has

Table of Contents

completed functional testing on nanoparticles containing myrcene, nerolidol, and beta-caryophyllene. In these cell-based assays, the effectiveness and kinetics of the nanoparticle-forms of these terpenes were compared with the “naked” terpenes both individually and in mixtures. In all cases, the effectiveness of the nanoparticles were superior to the naked terpenes, however, the mixtures were dramatically more effective than the individuals. These results from Seville are very promising as these nanoparticles are now entering the animal testing phase at the NRC in Halifax.

Intellectual Property Portfolio

The Company has filed four USPTO & WIPO patent applications, four provisional USPTO patent applications, and anticipates filing two additional patent applications during the fiscal year ended March 31, 2020. We have licensed three more patents for our intellectual property portfolio. Refer to the Company’s 10-K for the year ended March 31, 2019, for a complete list of patent filings and licensed patents in our intellectual property portfolio.

Partnering Strategy

GBSGB runs a lean drug development program and minimizes expenses, including personnel, overhead, and fixed capital expenses (such as lab and diagnostic equipment), through strategic partnerships with Universities and Contract Research Organizations (“CROs”). Through these research and development agreements, GBSGB has created a virtual pipeline for the further development of novel medicines extracted from the cannabis plant. The partners bring both expertise and infrastructure at a reasonable cost to the life sciences program. GBSGB has also negotiated with these partners to keep 100% of the ownership of the IP within GBSGB for original patent filings.

GBSGB currently has active and on-going research agreements with the following institutions covering the indicated areas of research:

· Chaminade University: Broad-based research program to support the drug discovery platform that has yielded most of GBSGB’s original patents to date in the areas of neurodegenerative diseases, heart disease, inflammatory diseases, neuropathic pain and chronic pain.

· Michigan State University: Discovery work using a cutting-edge, multi-cellular model of the human immune system and a multi-cell model of the brain to explore CCCM™s for use as an adjunctive therapy to anti-retroviral cocktails for HIV/AIDS patients and to define CCCM™s for use in the prevention of HIV-Associated Neurocognitive Disorders (HAND). The initial screens are producing positive results.

· University of Athens: Broad-based metabolomics analysis of over 100 cannabis genotypes including both hemp and THC-producing cannabis varieties, in combination with GBSGB’s bioassay data linking genotypes and potential disease-remediations. This project has the potential to define active ingredients from plant-derived mixtures beyond the standard cannabinoids and terpenoids. The discovery potential is huge.

· The National Research Center (NRC) of Canada, Halifax, Nova Scotia: Two animal-phase studies are being performed by Dr. Lee Ellis’ group at the NRC. An animal safety and efficacy study was initiated in Q4 of 2018 for GBSGB’s Parkinson’s disease therapies, and a safety and efficacy study in animals for GBSGB’s Chronic Neuropathic Pain (NP) formulas was initiated in Q1 of 2019.

· The University of Seville: Development and functional testing of time-released and disease-targeted nanoparticles of cannabis-based complex mixtures for oral administration.

· The University of Cadiz: Testing the safety and efficacy of the above-mentioned polymeric nanoparticles in rodent models.

· University of Hawaii: Validating the efficacy of a complex cannabis-based mixture for the treatment of cardiac hypertrophy and cardiac disease in a rodent model.

The Company also has consulting agreements with the following subject matter experts:

Table of Contents

· Dr. Zoltan Mari, Section Head, Nevada Movement Disorders Program & Lee Pascal Parkinson's Disease Scholar at Cleveland Clinic, who will oversee the phase 0 human Parkinson’s disease trial and protocols.

· Dr. Ziva Cooper, UCLA, Research Director, UCLA Cannabis Research Initiative, will design GBSGB’s human neuropathic and chronic pain trials and provide strategic guidance on clinical development of these products. For nearly a decade, Dr. Cooper has been building on her training in preclinical models of drug dependence and developing an expertise in human laboratory studies on cannabis, cannabinoids, opioids, and cocaine while maintaining research projects in animal models of substance use. Her current research investigates the direct neurobiological effects of emerging drugs of abuse, including synthetic cannabinoids in laboratory animals and the direct physiological and behavioral effects of cannabinoids as they pertain to both their abuse potential and potential therapeutic effects in double-blind, placebo controlled human laboratory studies. Dr. Cooper’s research is funded by the National Institute on Drug Abuse.

Path to Market: Drug Development Stages and Proposed Clinical Trials

GBSGB has cannabis-based therapeutic products in the following stages of drug development: Discovery, Pre-Clinical, and entering the Clinical Phase. It has also licensed therapeutic products that the Company intends to develop through partners, labeled Partner Programs.

The completion of pre-clinical studies, clinical trials, and obtaining FDA-approvals for pharmaceutical products is traditionally a long and expensive process. However, GBSGB asserts that its drug development program, novel regulatory strategy, experienced development partners, and aggressive licensing of these products at early clinical stages can mitigate some of the risks. The Company uses a combination of in silico discovery methods and automated screening of cellular models of disease to decrease the time in Discovery prior to filing novel patent applications for disease-specific therapeutics. GBSGB’s original patent applications cover new chemical entities (“NCE”) based on complex combinations of plant-derived compounds. Its Exploratory IND/Phase 0 Program gets the Company to First-in-Man sooner than traditional programs, which reduces translational risks, and includes preliminary efficacy measures for responsible development decisions. In contrast, a traditional phased-development path would not provide any efficacy measures until Phase II. After the completion of our Phase 0 study, which compares the efficacies of multiple related cannabis-based formulations, the Company plans to advance the lead drug candidate using an adaptive trial design that is more efficient than the traditional phased-development pathway. GBSGB has entered into research contracts, partnerships, and/or joint ventures with several respected, independent contract research organizations, medical schools, universities, and other scientific researchers to increase developmental efficiencies. If and when one or more of GBSGB’s drugs, therapies or treatments are approved by the FDA, GBSGB will seek to market them under licensing arrangements with major biotechnology or pharmaceutical companies.

GBSGB plans to use a combination of FDA-registered human clinical trials, as described in detail above, and pilot human studies in the development of its therapeutic product portfolio. Early in product development, human pilot studies that are fully-compliant with state medical cannabis programs will be used to gather early data on safety and efficacy that can later be referenced in the next phase of product development. GBSGB may be able to produce and sell the early products that prove efficacious, through licensing agreements with cannabis companies in other US states and countries that have legalized cannabis programs. GBSGB believes that these pilot studies will provide significant value by reducing the cost of commercialization, more rapidly putting effective drugs in the hands of patients, and accelerating by years the monetization of research. GBSGB’s goal is to be the perfect partner to those companies with greater resources and experience in the marketing and distribution of medications worldwide.

There can be no assurance that we will ever be able to enter into any joint ventures or other arrangements with third parties to finance our drug development program or that if we are able to do so, that any of our projected therapies will ever be approved by the FDA. Even if we obtain FDA approval for a therapy, there can be no assurance that it could be successfully marketed or would not be superseded by another cannabis-based therapy produced by one or more of our competitors. It also may be anticipated that even if we enter into a joint venture development with a financially stable pharmaceutical or institutional partner, we will still be required to raise significant additional capital in the future to achieve the strategic goals of GBSGB. There can be no assurance that we will be able to obtain such additional capital on reasonable terms, if at all. If GBSGB fails to achieve its goal of producing one or more cannabis-based pharmaceuticals or therapies, it would have a material adverse effect on our future financial condition and business prospects.

Table of Contents

RESULTS OF OPERATIONS

The following table sets forth certain of our Statements of Operations data:

	For the Three Months Ended		For the Six Months Ended
	September 30,		September 30,
	2019	2018	2019	2018

SALES REVENUE	`$1,171,698`	`$717,229`	`$2,082,374`	`$2,032,513`
COST OF GOODS SOLD	`(1,857,150)`	`(302,744)`	`(2,481,519)`	`(883,309)`
GROSS PROFIT	`(685,452)`	`414,485`	`(399,145)`	`1,149,204`
GENERAL AND ADMINISTRATIVE EXPENSES	`1,403,314`	`3,806,320`	`3,468,863`	`7,623,356`
LOSS FROM OPERATIONS	`(2,088,766)`	`(3,391,835)`	`(3,868,008)`	`(6,474,152)`
OTHER EXPENSE	`(406,101)`	`(5,813,533)`	`(843,917)`	`(7,372,520)`
NET LOSS BEFORE INCOME TAX EXPENSE	`(2,494,867)`	`(9,205,368)`	`(4,711,925)`	`(13,846,672)`
INCOME TAX EXPENSE	`57,392`	`-`	`-`	`-`
NET LOSS FROM CONTINUING OPERATIONS	`(2,437,475)`	`(9,205,368)`	`(4,711,925)`	`(13,846,672)`
DISCONTINUED OPERATIONS	`(491,131)`	`(825,697)`	`(755,565)`	`(1,535,876)`
NET LOSS	`(2,928,606)`	`(10,031,065)`	`(5,467,490)`	`(15,382,548)`
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST	`(245,565)`	`(291,416)`	`(377,781)`	`(475,559)`
NET LOSS ATTRIBUTABLE TO GB SCIENCES, INC.	`$(2,683,041)`	`$(9,739,649)`	`$(5,089,709)`	`$(14,906,989)`

Comparison of the Three and Six Months Ended September 30, 2019 and 2018

Sales revenue

The Company recorded sales revenue of approximately $1.2 million for the three months ended September 30, 2019, as compared to $0.7 million for the same period in the prior year. The increase in sales is due to the production facility beginning operations in December 2018 and the resulting sales of production products in the current year quarter.

Sales revenue was approximately $2.1 million for the six months ended September 30, 2019, as compared to sales revenue of $2.0 million for the same period in the prior year.

Cost of goods sold

Cost of goods sold increased $1.5 million to $1.9 million for the three months ended September 30, 2019, compared to $0.3 million for the six months ended September 30, 2018. Cost of goods sold increased by $1.6 million to $2.5 million for the six months ended September 30, 2019, compared to $0.9 million for the six months ended September 30, 2018. The increase is attributable to an increase in the costs to cultivate cannabis from approximately $1.98 and $2.24 per gram for the three six months ended September 30, 2018, respectively, compared to approximately $3.64 and $5.60 per gram for the three and six months ended September 30, 2019, respectively. The increase in the cost of cultivation for the three and six months is largely attributable to an adjustment of $0.5 million to record inventory at its estimated net realizable value, which was lower than historical cost at September 30, 2019. Another factor affecting the increase in costs of cultivation was a decrease in yield per plant from 153 grams per plant in in the quarter ended June 30, 2018 to 105 grams per plant in the quarter ended June 30, 2019, and from 114 grams per

Table of Contents

plant in the quarter ended September 30, 2018, compared to 108 grams per plant in the quarter ended September 30, 2019.

General and administrative expenses

General and administrative expenses decreased $2.4 million to $1.4 million for the three months ended September 30, 2019, compared to $3.8 million for the three months ended September 30, 2018. The decrease in general and administrative expense is primarily the result of a Company-wide effort to cut administrative costs.

General and administrative expenses decreased $4.1 million for the six months ended September 30, 2019, compared to the six months ended September 30, 2018. The decrease in general and administrative expense is primarily related to Company-wide efforts to cut administrative costs along with a reduction in noncash charges of $0.5 million for share-based compensation expense, $0.5 million for compensation warrant expense, and $0.7 million of expense recognized upon the issuance of stock for services.

Interest expense

Total interest expense decreased by $2.3 million to $0.5 million for the three months ended September 30, 2019, compared to $2.8 million in the prior year quarter. The decrease is primarily due to $2.5 million of unamortized discount recorded as interest expense upon the conversion of convertible notes in the prior year quarter, offset by an increase in accrued interest and interest expense from amortization of discount on convertible notes outstanding.

Total interest expense decreased by $3.5 million to $0.9 million for the six months ended September 30, 2019, compared to $4.4 million for the six months ended September 30, 2018. The decrease is primarily due to $3.4 million of unamortized discount recorded as interest expense upon the conversion of convertible notes in the prior year quarter, offset by an increase in accrued interest and interest expense from amortization of discount on convertible notes outstanding.

Other income

Total other income was $69,457 for the three and six months ended September 30, 2019, compared to other expense of $3.0 million for the three months ended September 30, 2018, and $2.9 million for the six months ended September 30, 2018. The decrease is primarily driven by a $1.0 million payment to settle the Pacific Leaf Royalty Agreement and an additional noncash expense of $2.0 million related to that agreement, both recorded during the three months ended September 30, 2018.

Current year other income relates to $0.2 million recorded upon the return of cash to the company which previously had been recorded as other expense (Note 8), offset by a loss on extinguishment of debt of $0.1 million (Note 5).

LIQUIDITY AND CAPITAL RESOURCES

Current Liquidity

The Company will need additional capital to implement its strategies. There is no assurance that it will be able to raise the amount of capital needed for future growth plans. Even if financing is available, it may not be on terms that are acceptable. If unable to raise the necessary capital at the times required, the Company may have to materially change the business plan, including delaying implementation of aspects of the business plan or curtailing or abandoning the business plan. The Company represents a speculative investment and investors may lose all of their investment. In order to be able to achieve the strategic goals, the Company needs to further expand its business and financing activities. Based upon the cash position, it is necessary to raise additional capital by the end of the next quarter in order to continue to fund current operations. These factors raise substantial doubt about the ability to continue as a going concern. The Company is pursuing several alternatives to address this situation, including the raising of additional funding through equity or debt financings. In order to finance existing operations and pay current liabilities over the next twelve months, the Company will need to raise additional capital. No assurance can be given that the Company will be able to operate profitably on a consistent basis, or at all, in the future.

Table of Contents

The principal sources of liquidity to date have been cash generated from sales of debt and equity securities and loans.

At September 30, 2019, cash was $84,799, other current assets excluding cash were $3,265,599 including $1,476,678 from discontinued operations, and our working capital deficit was $6,074,924. At the same time, current liabilities were $9,425,322 million and consisted principally of $1,621,424 in accounts payable, $703,535 in accrued liabilities, $4,917,653 in notes payable, net of $777,321 in discounts, $151,059 of current lease obligations, $506,145 in income tax payable, and $1,525,506 of current liabilities from discontinued operations. At March 31, 2019, the Company had a cash balance of $182,055, other current assets excluding cash were $3,284,716 including $1,000,387 from discontinued operations, and our working capital deficit was $3,245,409. Current liabilities were $6,712,180, which consisted principally of $1,374,771 in accounts payable, $387,043 in accrued liabilities, $2,229,812 in notes payable, $506,145 in income taxes payable, and $2,134,277 of current liabilities from discontinued operations.

Sources and Uses of Cash

Operating Activities

Net cash used in operating activities was $3,546,457 for the six months ended September 30, 2019, as compared to net cash used of $6,383,922 for the six months ended September 30, 2018. We anticipate that cash flows from operations may be insufficient to fund business operations for the next twelve-month period. Accordingly, we will have to generate additional liquidity or cash flow to fund our current and anticipated operations. This will likely require the sale of additional common stock or other securities. There is no assurance that we will be able to realize any significant proceeds from such sales, if at all.

Investing Activities

During the six months ended September 30, 2019, the Company used $554,782 in investing activities compared to $8,207,600 during the six months ended September 30, 2018. The cash used in investing activities during the six months ended September 30, 2019 and 2018 was primarily for the purchase of property and equipment and the acquisition of intangible assets.

Financing Activities

During the six months ended September 30, 2019 and 2018, cash flows provided by financing activities totaled $3,967,798 and $13,940,837, respectively. Cash flows from financing activities for the six months ended September 30, 2019, related primarily to $2,600,000 in proceeds from the issuance of a convertible note, $1,495,200 in proceeds from the sale of common stock and warrant exercises, and $319,854 in net cash flows from discontinued operations, offset by $106,229 of principal payments on debt and finance lease obligations and $341,027 in brokerage fees. Cash flows from financing activities for the six months ended September 30, 2018 related primarily to $8,370,720 in proceeds from the sale of common stock and warrants in private placements and $6,714,856 of net cash flows provided by discontinued operations, offset by $1,000,000 paid to settle the Pacific Leaf Royalty Agreement and $144,739 of principal payments on debt and finance lease obligations.

GOING CONCERN

The Company’s condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has sustained net losses since inception, which have caused an accumulated deficit of $90,071,120 at September 30, 2019. The Company had a working capital deficit of $6,074,924 including a deficit of $48,828 from discontinued operations at September 30, 2019, compared to $3,245,409 including a deficit of $1,133,890 from discontinued operations at March 31, 2019. In addition, the Company has consumed cash in its operating activities of $3,546,456 including $1,253,851 from discontinued operations for the six months ended September 30, 2019, compared to $6,383,922 including $1,180,054 from discontinued operations for the same period last year. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

Table of Contents

VARIABLES AND TRENDS

In the event the Company is able to obtain the necessary financing to progress with its business plan, the Company expects expenses to increase significantly to grow the business. Accordingly, the comparison of the financial data for the periods presented may not be a meaningful indicator of future performance and must be considered in light of these circumstances.

CRITICAL ACCOUNTING POLICIES

A description of the Company's significant accounting policies is included in Note 3 of its Annual Report on Form 10–K for the fiscal year ended March 31, 2019.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that material information required to be disclosed in the periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. At the end of the quarter ended September 30, 2019, the Company carried out an evaluation, under the supervision and with the participation of management, including the principal executive officer and the principal financial officer, of the effectiveness of the design and operation of disclosure controls and procedures, as defined in Rule 13(a)-15(e) and Rule 15d-15(e) under the 1934 Act. Based on this evaluation, management concluded that as of September 30, 2019, the disclosure controls and procedures were not effective due to material weaknesses as no member of our board of directors qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act.

Limitations on Effectiveness of Controls and Procedures

Management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), does not expect that disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some

Table of Contents

persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Controls

During the fiscal quarter ended September 30, 2019, there have been no changes in the internal controls over financial reporting that have materially affected or are reasonably likely to materially affect the internal controls over financial reporting.

Table of Contents

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

On October 8, 2019, the Company’s subsidiary GB Sciences, Louisiana, LLC received service of a lawsuit filed by a consultant for $105,210 in unpaid fees. The $105,210 in fees are accrued in current liabilities from discontinued operations as of September 30, 2019.

From time to time, the Company also becomes involved in certain legal proceedings and claims which arise in the ordinary course of business. In our opinion, based on consultations with outside counsel, the results of any of these ordinary course matters, individually and in the aggregate, are not expected to have a material effect on our results of operations, financial condition, or cash flows. As more information becomes available, if management should determine that an unfavorable outcome is probable on such a claim and that the amount of such probable loss that it will incur on that claim is reasonably estimable, we will record a reserve for the claim in question. If and when we record such a reserve is recorded, it could be material and could adversely impact our results of operations, financial condition, and cash flows.

ITEM 1A. Risk Factors

There are no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019, as filed with the SEC.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 3. Defaults Upon Senior Securities

As of the date of this report, the Company is in default on the 8% Senior Secured Convertible Promissory Note dated February 28, 2019 due to CSW Ventures, L.P. due to nonpayment of the quarterly interest payment that was due on October 1, 2019 and nonpayment of an income tax liability related to the March 31, 2018 tax year. The terms of the note provide that the Company has 5 days to cure a default caused by nonpayment of interest and ten days to cure a default caused by noncompliance with affirmative or negative debt covenants. As of the date of this report, the lender has not provided formal notice of the default and the Company is negotiating a forbearance agreement with the lender. Upon written notice of default to the Company, the lender may accelerate the payment of principal and interest and enforce its remedies under the Security Agreement.

The Company may also be in default on the 8% Convertible Promissory Note dated April 23, 2019 payable to Iliad Research and Trading, L.P. through cross-default and cross-acceleration provisions but has not received formal notice of default from the lender.

Table of Contents

ITEM 4. Mine Safety Disclosures

Not Applicable.

ITEM 5. Other Information

None.

ITEM 6. Exhibits

In reviewing the agreements included as exhibits to this Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

Table of Contents

The following exhibits are included as part of this report:

Exhibit Number		Description of Exhibit
3.1		Articles of Incorporation (Incorporated by reference to an exhibit to Form SB-2 No. 333-82580 filed with the Commission on February 12, 2002)
3.2		Amendment to Articles of Incorporation (Incorporated by reference to Exhibit 3.2 to Form S-1/A No. 333-82580 filed with the Commission on October 6, 2014 and Exhibit 3.2 to Form 10-K No. 333-82580 filed with the Commission on June 27, 2014)
3.3		Bylaws (Incorporated by reference to an exhibit to Form SB-2 No. 333-82580 filed with the Commission on February 12, 2002)
31.1		Certification of Principal Executive Officer and Pursuant to Rule 13a-14
31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14
32.1*		CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
32.2*		CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

* This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

Table of Contents

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GB SCIENCES, INC.

November 15, 2019	By:	/s/ John Poss
	John Poss, Chief Executive Officer (Principal Executive Officer)

	GB SCIENCES, INC.

November 15, 2019	By:	/s/ Zach Swarts
	Zach Swarts, Chief Financial Officer (Principal Financial Officer)