Note 9 - Related Party Transactions

9 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

Note

9

– Related Party Transactions

As of

December 31, 2019

, the Company is indebted to its officers for a total of

$324,738,

consisting of

$142,637

in unpaid wages,

$75,747

in unpaid bonuses, and

$106,354

of reimbursements for business expenses.

In connection with the sale of membership interest in GB Sciences Louisiana, LLC, the Company issued a note payable in the amount of

$151,923

to John Davis, the Company's former General Counsel and President of GB Sciences Louisiana, LLC, for unpaid fees and bonuses. The note matures upon receipt of the

first

payment from the Wellcana Note Receivable (Note

10

).

During the fiscal year ended

March 31, 2017,

the Company entered into a consulting contract with Quantum Shop, a Company owned by a relative of

one

of the Company’s executives. Quantum Shop provided GB Sciences with research, design, development, fabrication, and production services. During the

nine

months ended

December 31, 2018,

the Company made payments totaling

$1.1

million to Quantum Shop primarily related to the build-out of the cultivation and production facility in Baton Rouge, Louisiana owned by GB Sciences Louisiana, LLC.

During the year ended

March 31, 2017,

the Company entered into an advisory agreement with Electrum Partners, LLC, a company whose President resides on GB Sciences’ Board of Directors and serves as a Chair of the Audit Committee. The agreement has a term of

one

year and was renewed for a successive

one

-year period on

March 31, 2018. 

During the

nine

months ended

December 31, 2018,

the Company made payments totaling

$73,904

to Electrum Partners, LLC and issued

285,412

shares of its restricted stock at an expense of

$99,596.

Subsequent to

December 31, 2018,

the Company terminated the advisory agreement.

On

November 1, 2017,

the Company entered into an Edibles Production Agreement (the “EPA”) with The Happy Confections, L.L.C. (“THCLLC”) through the Company’s wholly-owned subsidiary, GB Sciences Las Vegas, LLC (“GBLV”). A member of GB Science’s Board of Directors is a Co-Managing Member of THCLLC. Under the EPA, THCLLC was to produce cannabis-infused baked goods and other edibles in GBLV’s production facility. The Company will receive a royalty of between

20%

and

25%

on all sales of edibles produced by THCLLC.

Contemporaneously with the EPA, the Company entered into a Non-Revolving Credit Line Agreement and Non-Revolving Credit Line Promissory Note (together, the “THC Note” or “Note”) to advance up to

$300,000

to THCLLC for the purpose of expanding THCLLC’s operations. Beginning

90

days after the sale of its

first

product, THCLLC was to make repayment of its advances under the Note in an amount equal to

25%

of its gross sales revenue.

As of

December 31, 2018,

the Company had advanced

$253,034

under the THC Note. The Company terminated the Edibles Production Agreement and all other related agreements with THC LLC effective

October 19, 2018

and took possession of all tangible assets owned by THCLLC on

October 22, 2018,

as collateral for the balance owed under the Note. These assets included kitchen and production equipment, leasehold improvements, and inventory used in Company’s production operations at the Teco Facility.

The Company assessed the fair value of the machinery and equipment received at

$139,411

and capitalized that amount in fixed assets during the quarter ended

December 31, 2018.

All of the machinery and equipment received from THC LLC was placed in service for use in the Company’s production facility. The Company recorded

$

113,623

as other expense in its Condensed Consolidated Statement of Operations for the

three

and

nine

months ended

December 31, 2018,

which represents the remaining balance of the outstanding note receivable from THC LLC.