Note

– Notes Payable and Line of Credit

Note Payable dated

October 23, 2017

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

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

related to the difference between the face value and present value of the note.

To date, the Company has made principal payments totaling

$330,555

and the principal balance of the note was

$369,445

March 31, 2021

. During the year ended

March 31, 2021

, the Company recorded interest expense of

$13,929

related to amortization of the note discount. The remaining unamortized discount as of

March 31, 2021

, was

$0.

August 10, 2020,

the Company entered into the Membership Interest Purchase Agreement ("Nopah MIPA") for the sale of its interest in GB Sciences Nopah, LLC

(Note

)

. The Nopah MIPA will close upon successful transfer of the Nevada Medical Marijuana Cultivation Facility Registration Certificate. Upon close, the principal balance of the note will be reduced to

$190,272.

The maturity date of the note was be extended to

July 31, 2021,

with

payments of principal or interest due until maturity. In addition, the note will

longer bear interest at the penalty rate of

15%

unless there is a new event of default.

Line of Credit dated

November 27, 2019

In connection with the Binding Letter of Intent dated

November 27, 2019

(Note

)

, the Teco Subsidiaries entered into a promissory note and line of credit for up to

$470,000

from the purchaser of the membership interests in the Teco Subsidiaries. The purpose of the line of credit is to supply working capital for the Teco Subsidiaries, and the note matures upon the close of the sale of the Teco Subsidiaries. The principal and accrued interest balances outstanding at the time of closing will be considered paid in full upon closing and will

not

reduce the purchase price received by GB Sciences. As of

March 31, 2021

, the Teco Subsidiaries have received

$485,000

in advances under the line of credit, reflecting an informal agreement with the lender to increase the line of credit by

$15,000.

The Company accrued interest of

$38,767

on the line of credit for the year ended

March 31, 2021

, and the balance of the line of credit was

$485,000

March 31, 2021

. The note and related interest expense are included in current liabilities from discontinued operations and loss from discontinued operations.

Note Payable dated

May 7, 2020

May 7, 2020,

the Company received

$135,000

cash from an investor, net of

$15,000

in brokerage fees, and issued a

$150,000

promissory note. The note bears interest at a rate of

8.0%

per annum. The note was to be repaid upon the

first

proceeds received from the

$8,000,000

promissory note related to the sale of the Company's membership interest in GB Sciences Louisiana, LLC, or from the proceeds of the sale of the Teco Facility. As inducement to enter into the note transaction, the Company repriced

8,002,500

preexisting warrants held by the investor to an exercise price of

$0.04.

The repriced warrants were valued at

$272,085

on the date of the transaction using the Black-Scholes Model, which exceeded the value of the warrants prior to the price reduction of

$49,525

$222,560.

As the result of the increase in the estimated fair value of the warrants, the Company recorded a full discount on notes payable of

$150,000.

During the year ended

March 31, 2021

, the Company recorded interest expense of

$154,964

related to the note consisting of accrued interest of

$4,964

and

$150,000

related to amortization of the note discount. The Company paid

$154,964

October 5, 2020,

in full satisfaction of the note.

Line of Credit dated

July 24, 2020

July 24, 2020,

the Company entered into the Loan Agreement,

Secured Promissory Note, and Security Agreement (together, the

"July 24

Note") with AJE Management, LLC, which established a revolving loan of up to

$500,000

that the Company

may

draw on from time to time. The loan is collateralized by the Teco Facility, subject to the pre-existing lien held by CSW Ventures, L.P. in connection with the

Senior Secured Convertible Promissory Note dated

February 28, 2019.

Any advances will be made at the sole discretion of the lender following a written request made by the Company. Contemporaneously with the Loan Agreement, the Company and AJE Management entered into the Amendment to the Membership Interest Purchase Agreement with AJE Management. The amendment provides that any balances outstanding under the

July 24

Note at the time of the close of the sale of the Teco Facility will be forgiven in exchange for a reduction to the

$4,000,000

note receivable that the Company will receive as consideration for the sale of the Teco Facility. The reduction to the note receivable will be equal to

times the balance outstanding under the

July 24

Note on the date of the close of the sale of the Teco Facility. The balance outstanding under the note plus accrued interest

may

be repaid at any time prior to the close of the sale of the Teco facility

(Note

)

December 29, 2020,

the Company entered into the Omnibus Amendment with the purchaser of the Teco Facility. The Omnibus Amendment reduces the amount of the note receivable that the Company will receive from the sale of the Teco Facility by

$975,000

(

three

times

$325,000

in advances made under the

July 24

Note) to

$3,025,000.

Any advances made to the Company under the

July 24

Note in excess of

$325,000

will reduce the amount of cash received upon close of the sale of Teco

one

-for-one, i.e., such advances will be considered advance payments of the

$4,000,000

cash purchase price. The Company also agreed that it will

not

repay the balances outstanding under the

July 24

Note prior to the closing of the Teco sale. As a result of the Omnibus Amendment, the Company accrued a modification expense of

$650,000

(

two

times

$325,000

in addition to

$325,000

in advances already recorded under the

July 24

Note). The Company has received

$50,000

in additional advances above

$325,000

bringing the total balance to

$1,025,000

March 31, 2021

. Interest expense was

$12,510

for the year ended

March 31, 2021

Summary of Notes Payable

As of

March 31, 2021

, the following notes payable were recorded in the Company's consolidated balance sheet:

	As of March 31, 2021
	Face Value			Discount			Carrying Value
0% Note Payable dated October 23, 2017 (Note 5)	$	369,445		$	-		$	369,445
8% Line of Credit dated November 27, 2019 (Note 5)		485,000			-			485,000
8% Line of Credit dated July 24, 2020 (Note 5)		1,025,000			-			1,025,000
6% Convertible promissory notes payable (Note 6)		1,060,000			-			1,060,000
8% Convertible Secured Promissory Note dated February 28, 2019, as amended (Note 6)		1,111,863			-			1,111,863
6% Convertible notes payable due January 18, 2022 (Note 6)		325,000			(296,504	)		28,496
Total short-term notes and convertible notes payable		4,376,308			(296,504	)		4,079,804
Less: Notes payable classified as discontinued operations		(485,000	)		-			(485,000	)
Total short term notes and convertible notes payable classified as continuing operations	$	3,891,308		$	(296,504	)	$	3,594,804

6% Convertible promissory notes payable due September 30, 2023 (Note 6)	$	197,000		$	(40,561	)	$	156,439
6% Convertible note payable due December 31, 2023 (Note 6)		250,000			(114,029	)		135,971
Total long term convertible notes payable classified as continuing operations	$	447,000		$	(154,590	)	$	292,410

As of

March 31, 2020

, the following notes payable were recorded in the Company's consolidated balance sheet:

	As of March 31, 2020
	Face Value			Discount			Carrying Value
0% Note Payable dated October 23, 2017 (Note 5)	$	369,445		$	(13,929	)	$	355,516
8% Line of Credit dated November 27, 2019 (Note 5)		480,000			-			480,000
6% Convertible promissory notes payable (Note 6)		1,257,000			(155,340	)		1,101,660
8% Convertible Secured Promissory Note dated February 28, 2019, as amended (Note 6)		1,271,863			(409,481	)		862,382
8% Convertible Promissory Note dated April 23, 2019 (Note 6)		2,765,000			(29,830	)		2,735,170
Total short term notes and convertible notes payable		6,143,308			(608,580	)		5,534,728
Less: Notes payable classified as discontinued operations		(480,000	)		-			(480,000	)
Total short term notes and convertible notes payable classified as continuing operations	$	5,663,308		$	(608,580	)	$	5,054,728