Note

– Sale of

50%

Membership Interest in GB Sciences Louisiana, LLC

November 15, 2019,

the Company entered into the Membership Interest Purchase Agreement ("MIPA") with Wellcana Plus, LLC ("Wellcana"). In consideration for the sale of its

50.01%

controlling membership interest in GB Sciences Louisiana, LLC (“GBSLA"), the Company received an

$8,000,000

Promissory Note ("Wellcana Note") with the potential to receive up to an additional

$8,000,000

in earn-out payments.

The Wellcana note bore interest at a rate of

per annum and payments were due beginning

June 1, 2020

and ending

December 1, 2021.

The Company recorded a

$1,389,408

discount on the note receivable based on an imputed interest rate of

17.0%,

and the carrying amount of the note was

$6,610,592

as of

November 15, 2019:

November 15, 2019 Note Receivable	Note Payments
June 1, 2020	$	500,000
September 1, 2020		750,000
December 1, 2020		1,000,000
March 1, 2020		1,250,000
June 1, 2021		1,500,000
September 1, 2021		1,500,000
December 1, 2021		1,500,000
Total proceeds		8,000,000
Discount on note receivable		(1,389,408	)
Net present value	$	6,610,592

Upon close of the sale on

November 15, 2019,

the Company recorded a gain on deconsolidation of $

4,393,242

related to the sale of its membership interest in GBSLA, calculated as follows:

	As of
Gain on Deconsolidation	November 15, 2019
Present value of promissory note	$	6,610,592
Carrying amount of non-controlling interest		8,707,651
Total		15,318,243

Carrying amount of assets		14,715,798
Carrying amount of liabilities		(3,790,797	)
Net assets deconsolidated		10,925,001
Gain on deconsolidation	$	4,393,242

August 24, 2020,

the Company entered into a letter of intent with Wellcana to discount the note receivable in exchange for accelerated payment. Pursuant to the letter of intent, the Company would receive payments totaling

$5,224,423,

including the repayment of a note payable to related party of

$151,923,

the forgiveness by Wellcana of

$172,500

in liabilities and the payment of

$4,900,000

in cash, on or before

October 15, 2020,

less any cash payments made by Wellcana up to the date of the final payment. Upon receipt of the payment, all liabilities owed to the Company by Wellcana, including the

$8,000,000

note receivable and any potential earn-out payments were to be considered satisfied in full. Wellcana would assume the annual

$250,000

research contribution commitment to LSU

(Note

)

, and the Company would retain

rights in the intellectual property developed under the research relationship. In addition, the Company agreed to reduce the

$750,000

note payment due on

September 1, 2020,

$500,000.

As a result of the

August 24, 2020

letter of intent, the Company determined that the amount of the note that was collectible as of

March 31, 2020

was

$5,224,423

and recorded a loss on modification of note receivable calculated as follows:

August 24, 2020 Modification	March 31, 2020
Total cash payments to be made by October 15, 2020	$	4,900,000
Liabilities to be forgiven upon receipt of October 15, 2020 payment		324,423
Total receivable (as modified)		5,224,423

Carrying value of note receivable as of March 31, 2020		6,969,720
Accrued interest as of March 31, 2020		150,137
Total amount receivable (prior to modification)		7,119,857

Loss on modification of note receivable	$	(1,895,434	)

The Company received payments from Wellcana totaling

$550,000

August

and

September

2020,

which in combination with the repayment of a note payable to related party of

$151,923

and the

$172,500

liabilities assumed by Wellcana reduced the final payment owed under the letter agreement to

$4,350,000.

October 15, 2020,

the Company was notified that Wellcana would be unable to make the payment of

$4,350,000

October 15, 2020,

and the parties entered into a letter agreement, which extended the due date of the final

$4,350,000

payment to

December 8, 2020.

The letter agreement also required Wellcana to provide proof of

$4,350,000

in funds and an escrow deposit of

$250,000,

which was to be released to the Company in the event that Wellcana were unable to make the

$4,350,000

payment on or before

December 8, 2020.

October 24, 2020,

the parties entered into the Escrow Agreement and Wellcana made the

$250,000

escrow payment on

October 29, 2020.

December 8, 2020,

Wellcana failed to make the payment and the

$250,000

escrow deposit was disbursed to the Company. The Company retained

$50,000

of the escrow disbursement as compensation for Wellcana's failure to meet the agreed-upon deadline of

December 8, 2020,

which is recorded in other income, and did

not

offset that amount against the

$4,350,000

balance owed by Wellcana. On

December 16, 2020,

Wellcana made payment of the remaining balance of

$4,150,000,

satisfying its obligations to the Company in full.

The Company's statements of operations and cash flows for the year ended

March 31, 2020

include activity through the close of the sale on

November 15, 2019,

classified as discontinued operations.