Company Quick10K Filing
GB Sciences
Price0.09 EPS-0
Shares255 P/E-1
MCap23 P/FCF-4
Net Debt0 EBIT-13
TEV23 TEV/EBIT-2
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-02-16
10-Q 2020-09-30 Filed 2020-11-13
10-Q 2020-06-30 Filed 2020-09-02
10-K 2020-03-31 Filed 2020-08-28
10-Q 2019-12-31 Filed 2020-02-18
10-Q 2019-09-30 Filed 2019-11-15
10-Q 2019-06-30 Filed 2019-08-15
S-1 2019-05-03 Public Filing
10-K 2019-03-31 Filed 2019-07-15
S-1 2019-03-12 Public Filing
10-Q 2018-12-31 Filed 2019-02-19
10-Q 2018-09-30 Filed 2018-11-14
S-1 2018-09-20 Public Filing
10-Q 2018-06-30 Filed 2018-08-14
10-K 2018-03-31 Filed 2018-06-29
10-Q 2017-12-31 Filed 2018-02-14
10-Q 2017-09-30 Filed 2017-11-20
10-Q 2017-06-30 Filed 2017-08-14
10-K 2017-03-31 Filed 2017-07-12
10-Q 2016-12-31 Filed 2017-02-14
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-15
10-K 2016-03-31 Filed 2016-07-14
10-Q 2015-12-31 Filed 2016-02-16
10-Q 2015-09-30 Filed 2015-11-18
10-K 2015-03-31 Filed 2015-06-29
10-Q 2014-12-31 Filed 2015-02-17
10-Q 2014-06-30 Filed 2014-08-14
10-K 2014-03-31 Filed 2014-06-27
10-Q 2013-10-01 Filed 2013-11-14
10-Q 2013-06-30 Filed 2013-08-19
10-K 2013-03-31 Filed 2013-07-15
10-Q 2012-12-31 Filed 2013-02-19
10-Q 2012-09-30 Filed 2012-12-13
10-Q 2012-06-30 Filed 2012-08-20
10-K 2012-03-31 Filed 2012-07-16
10-Q 2011-12-31 Filed 2012-02-14
10-Q 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-22
10-K 2011-03-31 Filed 2011-07-11
10-Q 2010-12-31 Filed 2011-02-14
10-Q 2010-09-30 Filed 2010-11-15
10-Q 2010-06-30 Filed 2010-08-16
10-K 2010-03-31 Filed 2010-07-14
10-Q 2009-12-31 Filed 2010-02-22
8-K 2020-12-16 Leave Agreement, M&A
8-K 2020-11-23
8-K 2020-11-20
8-K 2020-10-15
8-K 2020-10-14
8-K 2020-10-14
8-K 2020-08-18
8-K 2020-06-29
8-K 2020-05-12
8-K 2020-04-23
8-K 2020-04-09
8-K 2020-03-24
8-K 2019-11-27
8-K 2019-11-19
8-K 2019-11-07
8-K 2019-10-23
8-K 2019-09-12
8-K 2019-09-01
8-K 2019-08-15
8-K 2019-08-10
8-K 2019-07-26
8-K 2019-06-17
8-K 2018-09-21
8-K 2018-09-21
8-K 2018-04-06
8-K 2018-03-07
8-K 2018-02-23

GBLX 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Note 1 - Background and Significant Accounting Policies
Note 2 - Going Concern
Note 4 - Leases (Continuing Operations)
Note 5 - Notes Payable and Line of Credit
Note 6 - Convertible Notes
Note 7 - Capital Transactions
Note 8 - Commitments and Contingencies
Note 9 - Related Party Transactions
Note 10 - Sale of Membership Interests in Gb Sciences Louisiana, Llc
Note 11 - Sale of Membership Interests in Nevada Subsidiaries
Note 12 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 ex_225314.htm
EX-31.1 ex_219802.htm
EX-31.2 ex_219803.htm
EX-32.1 ex_219804.htm
EX-32.2 ex_219805.htm

GB Sciences Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
352720135-12012201420172020
Assets, Equity
1.4-0.9-3.2-5.4-7.7-10.02012201420172020
Rev, G Profit, Net Income
1511730-42012201420172020
Ops, Inv, Fin

10-Q 1 gblx20201231_10q.htm FORM 10-Q gblx20200630_10q.htm
 

 

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

________________________

 

FORM 10-Q

__________________________

 

(Mark One)

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

 

For the quarterly period ended December 31, 2020

 

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)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each Class Trading Symbol(s) Name of exchange on which registered
None N/A N/A

 

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.  ☒  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).   ☒  Yes     ☐  No

 

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

 

Large accelerated filer ☐   

Accelerated filer ☐       

Non-accelerated filer ☐

Smaller reporting company  ☒

Emerging growth company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

There were 293,521,444 shares of common stock, par value $0.0001 per share, outstanding as of February 13, 2021. 

 

 

 
 

 

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. Financial Statements (Unaudited)

 

 

 

GB SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   

As of December 31,

   

As of March 31,

 
   

2020

   

2020

 

CURRENT ASSETS:

    (unaudited)          

Cash and cash equivalents

  $ 771,064     $ 2,406  

Prepaid expenses and other current assets

    40,225       18,776  

Note receivable

    -       5,224,423  

Current assets from discontinued operations

    2,084,877       1,755,275  

TOTAL CURRENT ASSETS

    2,896,166       7,000,880  

Property and equipment, net

    28,150       37,821  

Intangible assets, net of accumulated amortization of $28,968 and $12,287 at December 31, 2020 and March 31, 2020, respectively

    1,647,376       1,128,702  

Long term assets from discontinued operations

    5,677,156       6,185,465  

TOTAL ASSETS

  $ 10,248,848     $ 14,352,868  

CURRENT LIABILITIES:

               

Accounts payable

  $ 1,456,695     $ 1,913,049  

Accrued interest

    462,930       366,865  

Accrued liabilities

    1,110,525       813,618  

Notes and convertible notes payable and line of credit, net of unamortized discount of $0 and $608,580 at December 31, 2020 and March 31, 2020, respectively

    3,726,308       5,054,728  

Indebtedness to related parties

    331,895       586,512  

Note payable to related party

    -       151,923  

Income tax payable

    827,546       592,982  

Current liabilities from discontinued operations

    1,115,379       1,406,080  

TOTAL CURRENT LIABILITIES

    9,031,278       10,885,757  
Convertible notes payable, net of unamortized discount of $63,058 and $0 at December 31, 2020 and March 31, 2020, respectively     283,942       -  

Long term liabilities from discontinued operations

    3,429,704       3,555,605  

TOTAL LIABILITIES

    12,744,924       14,441,362  

Commitments and contingencies (Note 8)

               

STOCKHOLDERS' DEFICIT:

               

Common Stock, $0.0001 par value, 600,000,000 shares authorized, 283,819,453 and 275,541,602 outstanding at December 31, 2020 and March 31, 2020, respectively

    28,382       27,554  

Additional paid-in capital

    98,126,152       97,271,157  

Accumulated deficit

    (100,650,610 )     (97,387,205 )

TOTAL STOCKHOLDERS' DEFICIT

    (2,496,076 )     (88,494 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

  $ 10,248,848     $ 14,352,868  

 

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

 

 

 

GB SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

   

For the Three Months Ended December 31,

   

For the Nine Months Ended December 31,

 
                                 
   

2020

   

2019

   

2020

   

2019

 
                                 
Sales revenue   $ -     $ -     $ -     $ -  
Cost of goods sold     -       -       -       -  
Gross profit     -       -       -       -  

General and administrative expenses

    670,311       1,472,937       1,677,482       4,555,633  

LOSS FROM OPERATIONS

    (670,311 )     (1,472,937 )     (1,677,482 )     (4,555,633 )

OTHER INCOME/(EXPENSE)

                               

Interest expense

    (167,120 )     (277,813 )     (1,249,994 )     (942,750 )
Loss on amendment to line of credit     (650,000 )     -       (650,000 )     -  
Gain/(loss) on extinguishment     467,872       (92,796 )     467,872       (216,954 )
Gain on settlement of accounts payable     372,415       -       372,415       -  
Gain on deconsolidation     -       4,502,058       -       4,502,058  
Debt default penalty     -       -       (286,059 )     -  

Other income/(expense)

    17,523       (127,059 )     14,149       89,806  

Total other income/(expense)

    40,690       4,004,390       (1,331,617 )     3,432,160  

INCOME/(LOSS) BEFORE INCOME TAXES

    (629,621 )     2,531,453       (3,009,099 )     (1,123,473 )

Income tax expense

    (206,690 )     -       (234,564 )     -  

INCOME/(LOSS) FROM CONTINUING OPERATIONS

    (836,311 )     2,531,453       (3,243,663 )     (1,123,473 )

Gain/(loss) from discontinued operations

    242,327       (1,547,306 )     (2,479 )     (3,359,868 )

NET INCOME/(LOSS)

    (593,984 )     984,147       (3,246,142 )     (4,483,341 )

Net loss attributable to non-controlling interest

    -       (360,327 )     -       (738,107 )

NET INCOME/(LOSS) ATTRIBUTABLE TO GB SCIENCES, INC.

  $ (593,984 )   $ 1,344,474     $ (3,246,142 )   $ (3,745,234 )
                                 

Net income/(loss) attributable to common stockholders of GB Sciences, Inc. - basic

                               

Continuing operations

  $ (836,311 )   $ 2,531,453     $ (3,243,663 )   $ (1,123,473 )

Discontinued operations, net of non-controlling interest

    242,327       (1,186,979 )     (2,479 )     (2,621,761 )

Net income/(loss)

  $ (593,984 )   $ 1,344,474     $ (3,246,142 )   $ (3,745,234 )
                                 
Net income/(loss) attributable to common stockholders of GB Sciences, Inc. - diluted                                

Continuing operations

  $ (836,311 )   $ 2,583,061     $ (3,243,663 )   $ (1,123,473 )

Discontinued operations, net of non-controlling interest

    242,327       (1,186,979 )     (2,479 )     (2,621,761 )

Net income/(loss)

  $ (593,984 )   $ 1,396,082     $ (3,246,142 )   $ (3,745,234 )
                                 
Net income/(loss) per common share – basic                                
Continuing operations   $ (0.00 )   $ 0.01     $ (0.01 )   $ (0.00 )
Discontinued operations, net of non-controlling interest     0.00       (0.00 )     (0.00 )     (0.01 )
Net income/(loss)   $ (0.00 )   $ 0.01     $ (0.01 )   $ (0.01 )
                                 

Net income/(loss) per common share – diluted

                               
Continuing operations   $ (0.00 )   $ 0.00     $ (0.01 )   $ (0.00 )
Discontinued operations, net of non-controlling interest     0.00       (0.00 )     (0.00 )     (0.01 )
Net income/(loss)   $ (0.00 )   $ 0.00     $ (0.01 )   $ (0.01 )
                                 
Weighted average common shares outstanding - basic     280,967,623       263,055,254       280,119,116       253,297,660  

Weighted average common shares outstanding - diluted

    280,967,623       325,790,554       280,119,116       253,297,660  

 

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

 

 

 

GB SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

   

Nine Months Ended December 31,

 
   

2020

   

2019

 

OPERATING ACTIVITIES:

               

Net loss

  $ (3,246,142 )   $ (4,483,341 )

Loss from discontinued operations

    (2,479 )     (3,359,868 )

Net loss from continuing operations

    (3,243,663 )     (1,123,473 )

Adjustments to reconcile net loss to net cash used in operating activities:

               

Depreciation and amortization

    30,097       100,877  

Stock-based compensation and modification expense

    248,850       455,242  
Compensation warrants issued     -       132,914  

Amortization of debt discount and beneficial conversion feature

    776,908       698,615  

Interest expense on conversion of notes payable

    -       93,931  
Loss on induced conversion     -       127,059  
Amortization of discount on note receivable     -       (120,583 )
Accrued interest income     -       (50,411 )
ASC 842 Adjustment     -       (1,227 )
Loss on amendment to line of credit     650,000       -  

Loss/(gain) on extinguishment

    (467,872 )     216,954  
Gain on settlement of accounts payable     (372,415 )     -  
Gain on deconsolidation     -       (4,502,058 )

Debt default penalty

    286,059       -  

Changes in operating assets and liabilities:

               

Prepaid expenses and other current assets

    (21,449 )     204,699  

Accounts payable

    20,961       485,774  

Accrued expenses

    319,407       169,096  

Accrued interest

    518,892       291,256  
Deposits and other noncurrent assets     -       106,385  

Income tax payable

    234,564       -  

Indebtedness to related parties

    (254,617 )     -  

Net cash used in operating activities of continuing operations

    (1,274,278 )     (2,714,950 )

Net cash provided by/(used in) operating activities of discontinued operations

    21,098       (1,533,341 )

Net cash used in operating activities

    (1,253,180 )     (4,248,291 )

INVESTING ACTIVITIES:

               

Proceeds from note receivable

    5,051,923       -  

Acquisition of intangible assets

    (326,000 )     (91,862 )

Net cash provided by/(used in) investing activities of continuing operations

    4,725,923       (91,862 )

Net cash used in investing activities of discontinued operations

    (131,302 )     (446,922 )

Net cash provided by/(used in) investing activities

    4,594,621       (538,784 )

FINANCING ACTIVITIES:

               

Proceeds from issuance of common stock

    -       790,225  

Gross proceeds from warrant exercises

    249,807       1,069,975  

Gross proceeds from convertible notes payable

    300,000       2,630,000  
Proceeds from Line of Credit     375,000       -  
Principal payment of notes and convertible notes payable     (3,156,014 )     (26,664 )
Principal payment of note payable to related party     (151,923 )     -  

Fees for issuance of note payable and convertible note payable

    (34,500 )     (175,000 )

Brokerage fees for issuance of common stock and warrants

    (24,983 )     (175,628 )

Net cash provided by/(used in) financing activities of continuing operations

    (2,442,613 )     4,112,908  

Net cash provided by/(used in) financing activities of discontinued operations

    (129,237 )     529,412  

Net cash provided by/(used in) financing activities

    (2,571,850 )     4,642,320  

Net change in cash and cash equivalents

    769,591       (144,755 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

    151,766       182,055  

CASH AND CASH EQUIVALENTS AT END OF PERIOD

    921,357       37,300  

Less: cash and cash equivalents classified as discontinued operations

    (150,293 )     (17,782 )

CASH AND CASH EQUIVALENTS AT END OF PERIOD FROM CONTINUING OPERATIONS

  $ 771,064     $ 19,518  

 

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

 

 

GB SCIENCES, INC.

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

For the Nine Months Ended December 31, 2020 and 2019

(unaudited)

 

   

Nine Months Ended December 31,

 
   

2020

   

2019

 
Cash paid for interest   $ 241,014     $ 451,040  
Cash paid for income tax   $ -     $ -  
                 

Non-cash transactions:

               
Accrued liabilities forgiven in connection with Wellcana Note settlement   $ 172,500     $ -  

Depreciation capitalized in inventory (discontinued operations)

  $ 417,616     $ 370,167  
Accrued interest capitalized in convertible note principal   $ 223,094     $ -  

Property capitalized under operating leases

  $ -     $ 182,624  
Patent acquisition costs capitalized in intangible assets   $ 45,100     $ 163,174  
Stock options issued for services   $ 168,000     $ -  
Stock issued upon conversion of notes payable   $ -     $ 525,000  

Induced dividend from warrant exercises

  $ 17,263     $ 267,525  
Beneficial conversion feature on notes payable   $ 196,886     $ 829,736  

Cumulative effect of the new lease standard

  $ -     $ 7,550  

 

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

 

 

 

GB SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY/(DEFICIT)

 For the Three Months Ended December 31, 2020 and 2019

(unaudited)

 

 

   

Shares

   

Amount

   

Additional Paid-In Capital

   

Accumulated Deficit

   

Non-Controlling Interest

   

Total

 

Balance at September 30, 2020

    280,532,686     $ 28,054     $ 97,679,001     $ (100,056,626 )   $ -     $ (2,349,571 )
                                                 
Exercise of warrants for stock     3,286,767       328       88,415       -       -       88,743  
Share based compensation expense     -       -       191,500       -       -       191,500  
Modification of employee options and warrants     -       -       57,350       -       -       57,350  
Beneficial conversion feature on notes payable                     46,886       -       -       46,886  
Stock options issued for services                     63,000       -       -       63,000  

Net loss

    -       -       -       (593,984 )     -       (593,984 )

Balance at December 31, 2020

    283,819,453     $ 28,382     $ 98,126,152     $ (100,650,610 )   $ -     $ (2,496,076 )

 

 

   

Shares

   

Amount

   

Additional Paid-In Capital

   

Accumulated Deficit

   

Non-Controlling Interest

   

Total

 

Balance at September 30, 2019

    255,345,019     $ 25,535     $ 95,333,271     $ (90,071,120 )   $ 9,027,977     $ 14,315,663  
                                                 

Issuance of stock for debt conversion

    5,583,333       558       244,442       -       -       245,000  

Exercise of warrants for stock

    3,125,000       313       115,088       -       -       115,401  
Issuance of stock for services     2,500,000       250       213,750       -       -       214,000  

Share based compensation expense

    -       -       32,431       -       -       32,431  
Issuance of stock for cash, net of issuance costs     4,000,000       400       239,600       -       -       240,000  

Beneficial conversion feature on notes payable

    -       -       695,932       -       -       695,932  

Contributions from non-controlling interest

    -       -       -       -       40,000       40,000  

Inducement dividend from warrant exercises

    -       -       37,499       (37,499 )     -       -  

Induced note conversions

    -       -       127,059       -       -       127,059  
Deconsolidation of subsidiary     -       -       -       -       (8,707,650 )     (8,707,650 )

Net loss

    -       -       -       1,344,474       (360,327 )     984,147  

Balance at December 31, 2019

    270,553,352     $ 27,056     $ 97,039,072     $ (88,764,145 )   $ -     $ 8,301,983  

 

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

 

 

GB SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY/(DEFICIT)

For the Nine Months Ended December 31, 2020 and 2019

(unaudited)

 

 

 

   

Shares

   

Amount

   

Additional Paid-In Capital

   

Accumulated Deficit

   

Non-Controlling Interest

   

Total

 

Balance at March 31, 2020

    275,541,602     $ 27,554     $ 97,271,157     $ (97,387,205 )   $ -     $ (88,494 )
                                                 

Exercise of warrants for stock, net of issuance costs

    8,277,851       828       223,996       -       -       224,824  
Share based compensation expense     -       -       191,500                       191,500  
Modification of employee options and warrants     -       -       57,350       -       -       57,350  

Beneficial conversion feature on notes payable

    -       -       196,886       -       -       196,886  
Stock options issued for services     -       -       168,000       -       -       168,000  

Inducement dividend from warrant exercises

    -       -       17,263       (17,263 )     -       -  

Net loss

    -       -       -       (3,246,142 )     -       (3,246,142 )

Balance at December 31, 2020

    283,819,453     $ 28,382     $ 98,126,152     $ (100,650,610 )   $ -     $ (2,496,076 )

 

   

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

    7,583,333       758       524,242       -       -       525,000  

Exercise of warrants for stock

    12,574,750       1,257       964,620       -       -       965,877  
Issuance of stock for services     2,500,000       250       213,750       -       -       214,000  

Share based compensation expense

    -       -       241,242       -       -       241,242  

Issuance of stock for cash, net of issuance costs

    7,668,167       768       717,929       -       -       718,697  

Beneficial conversion feature on notes payable

    -       -       829,736       -       -       829,736  

Contributions from non-controlling interest

    -       -       -       -       590,000       590,000  

Compensation warrants

    -       -       132,914       -       -       132,914  
Cancelled shares issued to consultant     (400,000 )     (40 )     40       -       -       -  

Inducement dividend from warrant exercises

    -       -       267,525       (267,525 )     -       -  
Induced note conversions     -       -       127,059       -       -       127,059  

Cumulative effect of the new lease standard

    -       -       -       (7,550 )     -       (7,550 )
Deconsolidation of subsidiary     -       -       -       -       (8,707,650 )     (8,707,650 )

Net loss

    -       -       -       (3,745,234 )     (738,107 )     (4,483,341 )

Balance at December 31, 2019

    270,553,352     $ 27,056     $ 97,039,072     $ (88,764,145 )   $ -     $ 8,301,983  

 

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

 

9

GB SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

 

 

Note 1 – Background and Significant Accounting Policies 

 

GB Sciences, Inc. (“the Company”, “GB Sciences”, “we”, “us”, or “our”) seeks to be a biopharmaceutical research and cannabinoid-based drug development company whose goal is to create patented formulations for safe, standardized, cannabinoid therapies that target a variety of medical conditions in both the pharmaceutical and wellness markets. The Company is engaged in the research and development of cannabinoid medicines and plans to produce cannabinoid therapies for the wellness markets based on its portfolio of intellectual property.

 

Through its wholly owned Canadian subsidiary, GBS Global Biopharma, Inc. (“GBSGB”), the Company is engaged in the research and development of plant-based medicines, primarily cannabinoid medicines, with virtual operations in North America and Europe. GBSGB’s assets include a portfolio of cannabinoid medicine intellectual property, critical research contracts, and key supplier arrangements. GBSGB’s intellectual property covers a range of conditions and several programs are in the pre-clinical animal stage of development including Parkinson’s disease, neuropathic pain, and cardiovascular therapeutic programs. GBSGB runs a lean drug development program and takes effort to minimize expenses, including personnel, overhead, and fixed capital expenses through strategic partnerships with Universities and Contract Research Organizations (“CROs”). GBSGB’s intellectual property portfolio includes five USPTO issued patents, seven USPTO nonprovisional patent applications pending in the US, and three provisional patent applications in the US. In addition to the USPTO patents and patent applications, the company has filed 29 patent applications internationally to protect its proprietary technology.

 

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, 2021. The balance sheet at March 31, 2020 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. The unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended March 31, 2020.

 

10

 

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 non-controlling participants in subsidiaries that are not wholly owned is included as a separate component of equity. The non-controlling participants’ share of the net loss is included as “Net loss attributable to non-controlling 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 and standard cost allocations, valuation of initial right-of-use assets and corresponding lease liabilities, valuation of beneficial conversion features in convertible debt, valuation of the assets and liabilities of discontinued operations, 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 to conform to the current period presentation. Certain items on the unaudited balance sheets and statements of operations and cash flows have been reclassified to conform with current period presentation. The assets, liabilities, income/(loss), and cash flows of GB Sciences Louisiana, LLC, GB Sciences Nevada, LLC, GB Sciences Las Vegas, LLC, and GB Sciences Nopah, LLC have been reclassified to discontinued operations due to the sale of the Company's Louisiana cultivation and extraction facility (Note 10) and the pending sale of the Company's Nevada cultivation and extraction facilities (Note 11).

 

Discontinued Operations

 

Refer to Note 3.

 

11

 

Long-Lived 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 December 31, 2020.

 

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 (classified as discontinued operations) 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 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.

 

12

GB SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

 

Earnings/(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 131,886,787 and 158,728,095 potentially dilutive common shares at December 31, 2020 and March 31, 2020, respectively. However, such common stock equivalents were not included in the computation of diluted net loss per share for the three and nine months ended December 31, 2020, and the nine months ended December 31, 2019, as their inclusion would have been anti-dilutive. The computation of diluted earnings per share for the three months ended December 31, 2019, is as follows:

 

 

   

For the Three Months Ended December 31, 2019

 

Diluted EPS Computation

 

Income (Numerator)

   

Shares (Denominator)

   

Per-Share Amount

 
                         

Net income from continuing operations available to common stockholders

  $ 2,531,453                  

Plus: Income impact of assumed conversions

                       

Interest expense on convertible notes payable

    51,608                  

Effect of assumed conversions

    51,608                  

Income from continuing operations plus assumed conversions

    2,583,061                  

Net loss from discontinued operations available to common stockholders

    (1,186,979 )                

Net income available to common stockholders

  $ 1,396,082                  
                         

Weighted-average common shares outstanding

            263,055,254          

Plus: incremental shares from assumed conversions

                       

Warrants

            26,648,530          

Convertible notes payable

            36,086,770          

Dilutive potential common shares

            62,735,300          

Adjusted weighted-average shares

            325,790,554          
                         

Diluted EPS

                       

Net income from continuing operations

  $ 2,583,061       325,790,554     $ 0.00  

Net loss from discontinued operations

  $ (1,186,979 )     325,790,554     $ (0.00 )

Net income

  $ 1,396,082       325,790,554     $ 0.00  

 

 

13

 

Recent Accounting Pronouncements

 

Recently Adopted Standards

 

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13").  Financial Instruments—Credit Losses (Topic 326) amends guideline on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities.  For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses.  The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected.  For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down.  ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income.  The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.  The amendments in this ASU are effective for smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance on its financial statements.

 

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted the standard on April 1, 2020. The adoption of this guidance did not have a material impact on the Company’s financial statements.

 

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

 

14

 

 

Note 2 – Going Concern

 

The Company’s 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 $(100,650,610) at December 31, 2020. The Company had a working capital deficit of $(6,135,112) at December 31, 2020, net of working capital of $969,498 classified as discontinued operations, compared to $(3,884,877) at March 31, 2020, net of working capital of $349,195 classified as discontinued operations. In addition, the Company has consumed cash in its operating activities of $(1,253,180) for the nine months ended December 31, 2020, including $21,098 provided by discontinued operations, compared to $(4,248,291) including $(1,533,341) used in discontinued operations for the nine months ended December 31, 2019. 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 achieving its goals.

 

Furthermore, Management believes the COVID-19 pandemic may have a significant impact on the Company's business. The pandemic presents a risk to the global economy, and it is possible that it could have an impact on the operations of the Company in the near term that could materially impact the Company’s financials and ability to continue as a going concern. Management has not been able to measure the potential financial impact on the Company and continues to monitor the impact of the pandemic closely, although the extent to which the COVID-19 outbreak will impact our operations, financing ability or future financial results is uncertain.

 

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 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.

 

15

 

 

Note 3 – 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 Company has included its subsidiaries GB Sciences Louisiana, LLC, GB Sciences Nevada, LLC, GB Sciences Las Vegas, LLC, and GB Sciences Nopah, LLC in discontinued operations due to the sale of the Company's Louisiana cultivation and extraction facility (Note 10) and the pending sale of the Company's Nevada cultivation and extraction facilities (Note 11).

 

There were no assets and liabilities from discontinued operations attributable to GB Sciences Louisiana, LLC at December 31, 2020 and March 31, 2020. The assets and liabilities associated with discontinued operations included in our condensed consolidated balance sheets as of December 31, 2020 and March 31, 2020 were as follows:

 

 

   

December 31, 2020

   

March 31, 2020

 
   

Continuing

   

Discontinued Nevada Subsidiaries

   

Total

   

Continuing

   

Discontinued Nevada Subsidiaries

   

Total

 

ASSETS

                                               

CURRENT ASSETS

                                               

Cash

  $ 771,064     $ 150,293     $ 921,357     $ 2,406     $ 149,360     $ 151,766  

Accounts receivable, net

    -       233,039       233,039       -       117,967       117,967  

Inventory, net

    -       1,662,473       1,662,473       -       1,445,839       1,445,839  

Prepaid and other current assets

    40,225       39,072       79,297       18,776       42,109       60,885  

Note receivable

    -       -       -       5,224,423       -       5,224,423  

TOTAL CURRENT ASSETS

    811,289       2,084,877       2,896,166       5,245,605       1,755,275       7,000,880  
                                                 

Property and equipment, net

    28,150       5,022,987       5,051,137       37,821       5,496,012       5,533,833  

Intangible assets, net

    1,647,376       571,265       2,218,641       1,128,702       571,264       1,699,966  

Deposits and other noncurrent assets

    -       82,904       82,904       -       91,504       91,504  

Operating lease right-of-use assets, net

    -       -       -       -       26,685       26,685  
                                                 

TOTAL ASSETS

  $ 2,486,815     $ 7,762,033     $ 10,248,848     $ 6,412,128     $ 7,940,740     $ 14,352,868  
                                                 

LIABILITIES

                                               

CURRENT LIABILITIES

                                               

Accounts payable

  $ 1,456,695     $ 351,258     $ 1,807,953     $ 1,913,049     $ 646,865     $ 2,559,914  

Accrued interest

    462,930       39,644       502,574       366,865       30,787       397,652  

Accrued expenses

    1,110,525       103,559       1,214,084       813,618       74,394       888,012  

Notes payable, net

    3,726,308       485,000       4,211,308       5,054,728       480,000       5,534,728  

Indebtedness to related parties

    331,895       -       331,895       586,512       -       586,512  

Note payable to related party

    -       -       -       151,923       -       151,923  

Income tax payable

    827,546       -       827,546       592,982       -       592,982  

Finance lease obligations, current

    -       135,918       135,918       -       166,769       166,769  

Operating lease obligations, current

    -       -       -       -       7,265       7,265  

TOTAL CURRENT LIABILITIES

    7,915,899       1,115,379       9,031,278       9,479,677       1,406,080       10,885,757  
                                                 
Convertible notes payable     283,942       -       283,942       -       -       -  

Operating lease obligations, long term

    -       -       -       -       22,515       22,515  

Finance lease obligations, long term

    -       3,429,704       3,429,704       -       3,533,090       3,533,090  
                                                 

TOTAL LIABILITIES

  $ 8,199,841     $ 4,545,083     $ 12,744,924     $ 9,479,677     $ 4,961,685     $ 14,441,362  

 

16

 

Discontinued Operations - Revenues and Expenses

 

The revenues and expenses associated with discontinued operations included in our condensed consolidated statements of operations for the three and nine months ended December 31, 2020 and 2019 were as follows:

 

   

For the Three Months Ended December 31,

 
   

2020

   

2019

 
   

Continuing

   

Discontinued

   

Total

   

Continuing

   

Discontinued

   

Total

 

Sales revenue

  $ -     $ 1,015,464     $ 1,015,464     $ -     $ 446,201     $ 446,201  

Cost of goods sold

    -       (596,362 )     (596,362 )     -       (869,848 )     (869,848 )

Gross profit/(loss)

    -       419,102       419,102       -       (423,647 )     (423,647 )

General and administrative expenses

    670,311       77,064       747,375       1,472,937       937,804       2,410,741  

INCOME/(LOSS) FROM OPERATIONS

    (670,311 )     342,038       (328,273 )     (1,472,937 )     (1,361,451 )     (2,834,388 )

OTHER INCOME/(EXPENSE)

                                               

Interest expense

    (167,120 )     (113,241 )     (280,361 )     (277,813 )     (194,219 )     (472,032 )
Loss on amendment to line of credit     (650,000 )     -       (650,000 )     -       -       -  
Gain/(loss) on extinguishment     467,872       -       467,872       (92,796 )     -       (92,796 )
Gain on settlement of accounts payable     372,415       15,972       388,387       -       -       -  
Gain on deconsolidation     -       -       -       4,502,058       -       4,502,058  
Debt default penalty     -       -       -       -       -       -  

Other income/(expense)

    17,523       (2,442 )     15,081       (127,059 )     8,364       (118,695 )

Total other income/(expense)

    40,690       (99,711 )     (59,021 )     4,004,390       (185,855 )     3,818,535  

INCOME/(LOSS) BEFORE INCOME TAXES

    (629,621 )     242,327       (387,294 )     2,531,453       (1,547,306 )     984,147  

Income tax expense

    (206,690 )     -       (206,690 )     -       -       -  

NET INCOME/(LOSS)

  $ (836,311 )   $ 242,327     $ (593,984 )   $ 2,531,453     $ (1,547,306 )   $ 984,147  

 

 

   

For the Nine Months Ended December 31,

 
   

2020

   

2019

 
   

Continuing

   

Discontinued

   

Total

   

Continuing

   

Discontinued

   

Total

 

Sales revenue

  $ -     $ 2,830,932     $ 2,830,932     $ -     $ 2,905,582     $ 2,905,582  

Cost of goods sold

    -       (1,947,225 )     (1,947,225 )     -       (3,731,996 )     (3,731,996 )

Gross profit/(loss)

    -       883,707       883,707       -       (826,414 )     (826,414 )

General and administrative expenses

    1,677,482       447,885       2,125,367       4,555,633       1,950,541       6,506,174  

INCOME/(LOSS) FROM OPERATIONS

    (1,677,482 )     435,822       (1,241,660 )     (4,555,633 )     (2,776,955 )     (7,332,588 )

OTHER INCOME/(EXPENSE)

                                               

Interest expense

    (1,249,994 )     (374,383 )     (1,624,377 )     (942,750 )     (568,027 )     (1,510,777 )
Loss on amendment to line of credit     (650,000 )     -       (650,000 )     -       -       -  
Gain/(loss) on extinguishment     467,872       -       467,872       (216,954 )     -       (216,954 )
Gain on settlement of accounts payable     372,415       15,972       388,387       -       -       -  
Gain on deconsolidation     -       -       -       4,502,058       -       4,502,058  

Debt default penalty

    (286,059 )     -       (286,059 )     -       -       -  

Other income/(expense)

    14,149       (79,890 )     (65,741 )     89,806       (14,886 )     74,920  

Total other income/(expense)

    (1,331,617 )     (438,301 )     (1,769,918 )     3,432,160       (582,913 )     2,849,247  

INCOME/(LOSS) BEFORE INCOME TAXES

    (3,009,099 )     (2,479 )     (3,011,578 )     (1,123,473 )     (3,359,868 )     (4,483,341 )

Income tax expense

    (234,564 )     -       (234,564 )     -       -       -  

NET INCOME/(LOSS)

  $ (3,243,663 )   $ (2,479 )   $ (3,246,142 )   $ (1,123,473 )   $ (3,359,868 )   $ (4,483,341 )

 

17

 

Discontinued Operations - Revenues and Expenses (continued)

 

The components of revenues and expenses associated with discontinued operations included in our condensed consolidated statements of operations for the three and nine months ended December 31, 2020 and 2019 were as follows:

 

   

For the Three Months Ended December 31,

 
   

2020

   

2019

 
   

GB Sciences Louisiana, LLC

   

Nevada Subsidiaries

   

Total Discontinued Operations

   

GB Sciences Louisiana, LLC

   

Nevada Subsidiaries

   

Total Discontinued Operations

 

Sales revenue

  $ -     $ 1,015,464     $ 1,015,464     $ 192,070     $ 254,131     $ 446,201  

Cost of goods sold

    -       (596,362 )     (596,362 )     (193,915 )     (675,933 )     (869,848 )

Gross profit/(loss)

    -       419,102       419,102       (1,845 )     (421,802 )     (423,647 )

General and administrative expenses

    -       77,064       77,064       666,042       271,762       937,804  

INCOME/(LOSS) FROM OPERATIONS

    -       342,038       342,038       (667,887 )     (693,564 )     (1,361,451 )

OTHER EXPENSE

                                               

Interest expense

    -       (113,241 )