Note 5 - Notes Payable

3 Months Ended

Jun. 30, 2019

Disclosure Text Block [Abstract]

Note 5 - Notes Payable

Note 5 – Notes Payable

Note due 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 three months ended June 30, 2019, GBSLA made $100,000 in payments towards the loan and reduced the loan balance to $200,000. The balance is included in short-term notes payable on the Company’s June 30, 2019 unaudited condensed consolidated balance sheet.

Note Payable to 483 Management, LLC

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 one-time payment of $500,000 and issued a 0% unsecured Promissory Note (“483 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 three months ended June 30, 2019, the Company recorded $85,981 in interest expense related to amortization of the note discount.

As of the date of this report, two monthly payments on the 483 Note totaling $38,889 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 the Company believes it is more likely than not that it will be able to cure the default upon receipt of such notification. 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 $388,889 and impose a penalty interest rate of 10%, but must notify the Company in writing should it choose to do so.

Summary of Notes Payable

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

	As of June 30, 2019
Short-Term Notes Payable	Face Value	Discount	Carrying Value
6% Convertible promissory notes payable (Note 5)	$ 1,257,000	$ (463,091)	$ 793,909
8% Convertible Secured Promissory Note dated February 28, 2019 (Note 5)	1,330,000	(126,053)	1,203,947
8% Convertible Promissory Note dated April 23, 2019 (Note 5)	2,765,000	(367,312)	2,397,688
0% Note Payable dated October 23, 2017, current portion	272,222	(54,670)	217,552
0% Note Payable dated December 20, 2018	200,000	-	200,000
Total Short-Term Notes Payable	$ 5,824,222	$ (1,011,127)	$ 4,813,096
Long-Term Notes Payable
0% Note Payable dated October 23, 2017	$ 116,667	$ (6,607)	$ 110,059
Total Long-Term Notes Payable	$ 116,667	$ (6,607)	$ 110,059