UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
________________________
 
FORM 10-Q
__________________________
 
(Mark One)
ý
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

☐
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

GROWBLOX SCIENCES, INC.
(Exact name of registrant as specified in its charter)

Delaware
(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 )
 
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.   ý   Yes      ☐   No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    ý   Yes      ☐   No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ☐    
Accelerated filer ☐        
Non-accelerated filer ☐
(Do not check if a smaller Reporting Company)
Smaller reporting company   ý
 
 
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act).   ☐   Yes      ý   No  
 
There were  89,137,778 shares of common stock, par value $0.0001 per share, outstanding as of November 14, 2016.
 
GROWBLOX SCIENCES, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016

 
INDEX
 
PART I – FINANCIAL INFORMATION
Page
 
 
Item 1.
Financial Statements
3
 
 
 
 
Condensed Consolidated Balance Sheets at September 30, 2016 (unaudited) and March 31, 2016
3
     
 
Condensed Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended September 30, 2016 and 2015
4
     
 
Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended September 30, 2016 and 2015
5
     
 
Notes to Condensed Consolidated Financial Statements (unaudited)
6
 
 
 
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
11
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
15
Item 4.
Controls and Procedures
16
 
 
 
PART II – OTHER INFORMATION
 
 
 
Item 1.
Legal Proceedings
16
Item 1A 
Risk Factors
17
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
17
Item 3.
Defaults Upon Senior Securities
18
Item 4.
Mine Safety Disclosures
18
Item 5.
Other Information
18
Item 6.
Exhibits
19
 
 
 
SIGNATURES
  21

 
2
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

GROWBLOX SCIENCES, INC. AND SUBSIDIARIES
 
CONSOLIDATED CONDENSED BALANCE SHEETS
 
(unaudited)
 
   
   
30-Sep-16
   
31-Mar-16
 
 
           
CURRENT ASSETS:
           
      Cash and cash equivalents
 
$
2,072,032
   
$
34,824
 
      Accounts receivable
   
67,862
     
67,862
 
      Prepaid expenses
   
61,965
     
104,851
 
TOTAL CURRENT ASSETS
   
2,201,859
     
207,537
 
Property and Equipment, Net
   
6,825,209
     
1,953,048
 
Deposits and Prepayments
   
203,437
     
271,455
 
Other Assets
   
92,169
     
3,555
 
TOTAL ASSETS
 
$
9,322,674
   
$
2,435,595
 
CURRENT LIABILITIES:
               
Accounts Payable
 
$
147,963
   
$
902,123
 
Accrued Interest
   
126,400
     
61,786
 
Accrued Liabilities
   
260,554
     
834,348
 
Notes Payable, net of unamortized discount of $0.5 million  and $0.4 million at September 30, 2016 and March 31, 2016, respectively
   
786,418
     
463,532
 
    TOTAL CURRENT LIABILITIES
   
1,321,335
     
2,261,789
 
Note Payable
   
2,095,195
     
2,148,556
 
Capital Lease Obligations
   
3,823,634
     
-
 
TOTAL LIABILITIES
   
7,240,164
     
4,410,345
 
Commitments and Contingencies (Note 7)
               
STOCKHOLDERS' (DEFICIT)/ EQUITY:
               
Common Stock Common Stock, $0.0001 par value, 250,000,000 shares authorized, 77,769,845 and 47,335,147 shares issued and outstanding at September 30, 2016 and March 31, 2016
   
7,777
     
4,733
 
Deferred Stock Compensation
   
2,332,327
     
2,240,662
 
Additional Paid In Capital
   
24,320,905
     
16,638,318
 
Accumulated Deficit
   
(24,588,034
)
   
(20,779,860
)
TOTAL GROWBLOX SCIENCES, INC. STOCKHOLDERS' (DEFICIT)/EQUITY
   
2,072,975
     
(1,896,147
)
Non-controlling interest
   
9,535
     
(78,603
)
TOTAL (DEFICIT)/EQUITY
   
2,082,510
     
(1,974,750
)
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)/EQUITY
 
$
9,322,674
   
$
2,435,595
 
 
               
The accompanying notes are an integral part of these condensed consolidated financial statements
 
 
3

 
GROWBLOX SCIENCES, INC. AND SUBSIDIARIES
 
STATEMENTS OF OPERATIONS
 
(unaudited)
 
                         
               
   
For the Three Months Ended
September 30,
   
For the Six Months Ended
September 30,
 
   
2016
   
2015
   
2016
   
2015
 
                         
NET REVENUE
 
$
-
   
$
-
   
$
-
   
$
-
 
GENERAL AND ADMINISTRATIVE EXPENSES
   
2,197,557
     
2,693,145
     
3,405,338
     
4,215,910
 
LOSS FROM OPERATIONS
   
(2,197,557
)
   
(2,693,145
)
   
(3,405,338
)
   
(4,215,910
)
OTHER INCOME (EXPENSE)
                               
    Interest Expense
   
(297,929
)
   
(10,571
)
   
(456,460
)
   
(11,229
)
Other Income/(Expense)
   
(10,479
)
   
(985
)
   
(23,075
)
   
233
 
Total other expense
   
(308,408
)
   
(11,556
)
   
(479,535
)
   
(10,996
)
NET LOSS
   
(2,505,965
)
   
(2,704,701
)
   
(3,884,873
)
   
(4,226,906
)
Net income/(loss) attributable to non-controlling interest
   
(38,661
)
   
(23,704
)
   
(76,862
)
   
(204,160
)
NET LOSS ATTRIBUTABLE TO GROWBLOX SCIENCES, INC.
 
$
(2,467,304
)
 
$
(2,680,997
)
 
$
(3,808,011
)
 
$
(4,022,746
)
  Net loss per share - basic and diluted
 
$
(0.04
)
 
$
(0.06
)
 
$
(0.06
)
 
$
(0.09
)
  Weighted average common shares outstanding - basic and diluted
   
67,920,941
     
46,104,790
     
59,043,603
     
43,331,875
 
 
                               
The accompanying notes are an integral part of these consolidated condensed financial statements
 

4
 

GROWBLOX SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
           
             
 
 
Six Months Ended September 30,
 
   
2016
   
2015
 
OPERATING ACTIVITIES:
           
Net income (loss)
 
$
(3,884,873
)
 
$
(4,226,906
)
    Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation and amortization
   
137,133
     
88,072
 
Stock-based compensation
   
1,785,315
     
1,745,266
 
Amortization of debt discount and beneficial conversion feature
   
316,745
     
-
 
Loss on disposal
   
5,572
     
-
 
Changes in operating assets and liabilities:
               
Prepaid expenses and other assets
   
42,886
     
156,437
 
Accounts payable
   
33,716
     
586,770
 
Accrued expenses
   
(129,807
)
   
84,627
 
Net cash used in operating activities
   
(1,693,313
)
   
(1,565,734
)
INVESTING ACTIVITIES:
               
Purchase of property and equipment
   
(957,925
)
   
(761,793
)
Change in deposits
   
(21,856
)
   
29,514
 
Net cash used in investing activities
   
(979,781
)
   
(732,279
)
FINANCING ACTIVITIES:
               
Proceeds from issuance of common stock and warrants
   
4,140,354
     
1,229,057
 
Proceeds from non-controlling interest
   
165,000
     
300,000
 
Proceeds from notes payable
   
-
     
1,200,000
 
Proceeds from convertible notes
   
500,000
     
-
 
Payments under long-term obligations
   
(94,898
)
   
(30,000
)
Cash used to purchase warrants
   
-
     
(56,000
)
Other financing activities
   
(154
)
   
-
 
   Net cash provided by financing activities
   
4,710,302
     
2,643,057
 
Net change in cash and cash equivalent
   
2,037,208
     
345,044
 
CASH AND CASH EQUIVALENT AT BEGINNING OF PERIOD
   
34,824
     
-
 
CASH AND CASH EQUIVALENT AT END OF PERIOD
 
$
2,072,032
   
$
345,044
 
Non-cash transactions:
               
Stock issued to settle payables
 
$
590,777
   
$
167,451
 
Stock issued to upon partial conversion of long-term note payable
 
$
500,000
   
$
-
 
Stock issued to settle legal obligations
 
$
410,840
   
$
-
 
Capital lease obligation
 
$
3,900,000
   
$
-
 
Stock and warrants issued upon amendment of long-term note
 
$
875,663
   
$
-
 
 
               
The accompanying notes are an integral part of these consolidated condensed financial statements
 
 
5
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1 – Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements of Growblox 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, 2017. The balance sheet at March 31, 2016 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. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended March 31, 2016.
Principles of Consolidation
The condensed 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.
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 financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the comparative period amounts in order to conform to the current period presentation.  These reclassifications had no effect on the reported financial position, results of operations or cash flows of the entity.
Significant Accounting Policies
A description of the Company's significant accounting policies is included in Note 3 of its Annual Report on Form 10–K for the fiscal year ended March 31, 2016.
Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board ("FASB") issued amended accounting guidance that changes the accounting for leases and requires expanded disclosures about leasing activities. Under the new guidance, lessees will be required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases with terms greater than twelve months. Lessor accounting will remain largely unchanged, other than certain targeted improvements intended to align lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The amended guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact this guidance will have on its financial position and results of operations.
 
Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
6

Note 2 – Going Concern
The Company's condensed consolidated 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 approximately $24.6 million at September 30, 2016. In addition, the Company has consumed cash in its operating activities of approximately $1.7 million for the six months ended September 30, 2016 compared to $1.6 million for the same period last year. 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.
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.
Note 3 – Convertible Notes

In February 2016, the Company issued a short-term Promissory Note ("Note") with a face value of $192,500 resulting in aggregate proceeds of $175,000 reflecting a 9.1% original discount and a nominal rate of 10%. The Note is payable within one year of issuance and is convertible into 962,500 shares of the Company's common stock and 962,500 common stock purchase warrants at any time and from time to time before maturity at the option of the holder. Each warrant gives the Noteholder the right to purchase one share of common stock of the Company at an exercise price of $0.50 per share for a period of three years.  The beneficial conversion feature resulting from the discounted conversion price compared to the market price was calculated based on the date of issuance to be $94,037 after adjusting the effective conversion price for the relative fair value of the note proceeds compared to the fair value of the attached warrants and note. In addition to this discount related to the beneficial conversion feature, an additional discount of $66,912 was recorded based on the fair value of the 962,500 warrants attached to the note. This value was derived using the Black-Scholes valuation model. At September 30, 2016, the Note had a balance of $0.1 million net of $0.06 million unamortized discount and beneficial conversion feature.
In March 2016, the Company issued a short-term Promissory Note ("Note") with a face value of $300,000 resulting in aggregate proceeds of $250,000 reflecting a 16.67% original discount and a nominal rate of 20%. The Note is payable within one year of issuance and is convertible into 1,500,000 shares of the Company's common stock and 1,500,000 common stock to purchase warrants at any time and from time to time before maturity at the option of the holder. Each warrant gives the Noteholder the right to purchase one share of common stock of the Company at an exercise price of $0.50 per share for a period of three years. The beneficial conversion feature resulting from the discounted conversion price compared to the market price was calculated based on the date of issuance to be $143,750 after adjusting the effective conversion price for the relative fair value of the note proceeds compared to the fair value of the attached warrants and note. In addition to this discount related to the beneficial conversion feature, an additional discount of $93,750 was recorded based on the fair value of the 1,500,000 warrants attached to the note. At September 30, 2016, the Note had a balance of $0.2 million net of $0.1 million unamortized discount and beneficial conversion feature.
In July 2016, the Company issued a short-term Promissory Note ("Note") resulting in aggregate proceeds of $500,000. The Note is payable within one year of issuance and is convertible into 2,500,000 shares of the Company's common stock at any time and from time to time before maturity at the option of the holder. The beneficial conversion feature resulting from the discounted conversion price compared to the market price was calculated based on the date of issuance to be $350,000 after adjusting the effective conversion price for the relative fair value of the note proceeds compared to the fair value of the note. At September 30, 2016, the Note had a balance of $0.2 million net of $0.3 million unamortized beneficial conversion feature.
7
The Notes and Warrants were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 (the " Securities Act ") and/or Rule 506 of Regulation D under the Securities Act, as amended.

Note 4– Note Payable
The Company entered into a Note Purchase Agreement, dated May 12, 2015 and effective as of June 8, 2015, with Pacific Leaf Ventures, LP ("Pacific Leaf"), pursuant to which Pacific Leaf has made installment loans (the "Loans") to us in the aggregate amount of $1.75 million. The purpose of the financing is to provide for the acquisition and installation of an operating facility, equipment and other tangible assets by GBSN. Such facility and equipment will be dedicated to the cultivation of cannabis and the extraction of oils and other constituents present in cannabis, subject at all times to Nevada legal requirements. The note is convertible at the option of the holder into common shares at a conversion price of $0.50, subject to anti-dilution adjustments.
To evidence the Loans, the Company issued to Pacific Leaf a 6% senior secured convertible promissory note (the "Note"), bearing interest at the rate of 6% per annum, payable quarterly. All outstanding principal and interest due under the Note were due and payable on May 12, 2020. We were required to prepay the outstanding principal amount of the Note on a quarterly basis in an amount equal to 50% of the cash flow (accrued EBITDA) of GB Sciences Nevada, LLC ("GBSN") attributable to our percentage interest in GBSN no later than the earlier to occur of (a) the fifth (5th) business day following receipt of a distribution of the Company's Share of GBSN's EBITDA for the calendar quarter in question, or (b) thirty (30) days following the end of the calendar quarter in question, with the first such prepayment to be made not later than July 31, 2015 with respect to the quarter ending June 30, 2015. In order to induce the Pacific Leaf to extend the loan to the Company and to secure the payment and performance of all of the Secured Obligations, the Company agreed to grant Pacific Leaf a security interest in certain of its assets and enter into the lending agreement.
On February 8, 2016, the Company entered into the Amended and Restated 6% Senior Convertible Promissory Note ("Amended Note") with Pacific Leaf Ventures, LP ("Pacific Leaf").  The amended agreement modifies the 6% Senior Secure Convertible Promissory Note dated May 12, 2015 and effective as of June 8, 2015, in the principal amount of $1.75 million.
Per the terms of the amended agreement, Pacific Leaf may make up to $1.0 million in additional advances to the Company under the Amended Note bringing the total in the aggregate to $2.75 million. The note is convertible at the option of the holder into common shares at a conversion price of $0.25, subject to anti-dilution adjustments. The Company has an option to prepay the Amended Note, without premium or penalty, in whole or in part, with accrued interest to the date of such prepayment.
Until the payment in full of the Amended Note, the Investor or its designee shall have the option (the "Option") to purchase up to a 20% membership interest in GBSN for a purchase price equal to $100,000 for each 2% of membership interest purchased (i.e., $1,000,000 if the Option is exercised in full), provided that the Option may not be exercised for less than a 1% membership interest in GBSN.
In connection with the Amended Note, the Company also entered into the Amended and Restated Royalty Agreement with Pacific Leaf dated and effective as of February 8, 2016.  Per the terms of the Amended Royalty Agreement, the royalty rate at any time shall equal to the sum of (i) 9.1%, and (ii) the percentage calculated by dividing the amount advanced in excess of $1.75 million by $1.0 million, multiplied by the gross revenues of GBSN.  On the earlier of (i) the seventh anniversary of the royalty payment date, or (ii) the date that all amounts outstanding under the Amended Note have been paid in full, the royalty rate shall be reduced by 50%.
On June 13, 2016 the Company received notice from Pacific Leaf Ventures, LP ("Pacific Leaf") that it had elected to convert $500,000 of the Company's indebtedness to Pacific Leaf Note into common stock of the Company pursuant to the Amended and Restated 6% Senior Secured Convertible Promissory.  Accordingly, the Company has issued 2,000,000 shares of its common stock ($500,000 converted at a price of $0.25 per share) to Pacific Leaf and the Company's indebtedness to Pacific Leaf pursuant to the Note has been reduced by $500,000. As of September 30, 2016, the total amount of installments received, net of conversion, is $2.1 million.
8
On August 4, 2016, the Company entered into the Second Omnibus Amendment ("Second Amendment") of its existing agreements with Pacific Leaf.  The Second Amendment eliminates Pacific Leaf's option to purchase up to a 20% membership interest in GB Sciences Nevada LLC, a wholly owned subsidiary of the Company ("GBS") and reduces Pacific Leaf's existing royalty rate to 16.4% of the gross sales revenue of GBS.  It also caps maximum aggregate royalty payments to be made to Pacific Leaf at $2,420,000 with respect to any calendar year. In consideration of the amended terms, Pacific Leaf and its designees received 1,000,000 shares of the Company's common stock and a five-year warrant to purchase 1,500,000 shares of the Company's common stock at $0.36 per share resulting in related expense of approximately $0.9 million.
Note 5 – Capital Lease
In July, 2016, an entity associated with Pacific Leaf Partners, LLC completed the purchase of the building housing the Company's cultivation facility at 3550 W. Teco Ave., Las Vegas, NV. In connection with the purchase, the Company entered into an amended lease agreement for an initial term of 10.5 years with one option to extend the lease for five years, or until December 31, 2030. The monthly rent payments per the Amended Lease Agreement are $40,000 through December 31, 2017. Commencing January 1, 2018, the monthly rent payments will increase by 3% per annum through the expiration of the lease. We analyzed the transaction in accordance with the applicable accounting guidance determining that aggregate amount of $3.9 million met the requirements for capitalization. The building has been capitalized and is included in September 20, 2016 property and equipment, net balance with related obligations included as part of current and non-current liabilities. The obligation recorded is based upon the present value of the future minimum lease payment discounted at 11.6% interest rate. 
Note 6 – Capital Transactions
During the six months ended September 30, 2016, the Company issued an aggregate of 1,853,054 shares of common stock in settlement and release of certain obligations owed by the Company to various persons and recorded related expenses of $0.6 million, as follows:

·
The Company issued 512,275 shares of its common stock in connection with the conversion of $0.2 million in indebtedness owed by us to various persons at a conversion price of approximately $0.38 per share.

·
The Company issued 323,692 shares of common stock in connection with settlement of payroll liabilities owed by us to our executives at a conversion price of $0.19 per share. The Company recorded approximately $0.1 million of compensation expense.

·
The Company issued 1,017,087 shares of its common stock in connection with the conversion of $0.3 million in indebtedness owed by us to various persons at a conversion price of approximately $0.33 per share.

On April 8, 2016, the Company issued 200,000 of its common shares to its former Chief Financial Officer, in exchange for a full dismissal with prejudice of all causes of action pending in the complaint filed against the Company on August 19, 2015. The Company recorded approximately $0.04 million of legal settlement expense.
During the six months ended September 30, 2016, The Company issued 202,394 shares in exchange for consulting services and recorded a related expense of $0.07 million. The Company also issued 100,000 shares of common stock to employees and recorded an expense of $0.03 million.

On June 13, 2016 the Company received notice from Pacific Leaf Ventures, LP ("Pacific Leaf") that it had elected to convert $500,000 of the Company's indebtedness to Pacific Leaf Note into common stock of the Company pursuant to the Amended and Restated 6% Senior Secured Convertible Promissory.  Accordingly, the Company has issued 2,000,000 shares of its common stock ($500,000 converted at a price of $0.25 per share) to Pacific Leaf.
9

On August 4, 2016, Company issued 1,000,000 shares to Pacific Leaf and its designees and recorded a related expense of $0.4 million. The common shares were issued to satisfy the conditions under the Second Omnibus Amendment described in detail in Note 4 to the financial statements for the six months ended September 30, 2016.

On August 9, 2016, the Company finalized a settlement agreement in final disposition of the lawsuit filed by the Company on April 2, 2014, in the United States District Court for the Southern District of New York.  The suit is more particularly described in Part I, Item 3 of the Company's Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission on July 14, 2016.  The Company issued 1,400,000 shares of restricted common stock to certain non-affiliates of the Company and recorded a related expense of $0.4 million.

During six months ended September 30, 2016, the Company sold 14,847,500 units through a private placement at a price of $0.20 per unit.  Each unit consisted of one share of common stock and one common stock purchase warrant, expiring in three years, with an exercise price of $0.50. The Company also sold 9,281,750 units through a private placement at a price of $0.20 per unit.  Each unit consisted of one share of common stock and one common stock purchase warrant, expiring in five years, with an exercise price of $0.60. The Company recorded net proceeds of $4.1 million as a result of these issuances.

Options and Warrants
On June 1, 2016, we issued 900,000 stock options under our 2014 Equity Incentive Plan to the independent members of the Company's Board of Directors. The options are exercisable upon vesting for a period of 7 years from issuance at an exercise price of $0.16 per share. As of September 30, 2015, the Company recognized total of $0.1 million in share-based compensation expense related to options vested to date.

On June 1, 2016, we issued 1,400,000 stock options under our 2014 Equity Incentive plan to our Chief Executive Officer. The options are exercisable upon vesting for a period of 7 years from issuance at an exercise price of $0.30 per share. As of September 30, 2015, the Company recognized total of $0.2 million in share-based compensation expense related to options vested to date.

Effective on June 1, 2016, the Company amended its employment agreement with its Chief Science Officer, Andrea Small-Howard.  Pursuant to the amendment, Dr. Small-Howard surrendered a stock award for 450,000 shares of common stock in exchange for warrants to purchase 1,200,000 common shares at the strike price of $0.30 per share. As of September 30, 2015, the Company recognized total of $0.1 million in share-based compensation expense related to warrants vested to date.

On June 30, 2016, we issued 200,000 stock options under our 2014 Equity Incentive Plan to various employees. The options are exercisable upon vesting for a period of 10 years from issuance at an exercise price of $0.30 per share. As of September 30, 2015, the Company recognized total of $0.01 million in share-based compensation expense related to options vested to date.

On August 4, 2016, Company issued a warrant to purchase 1,500,000 shares of the Company's common stock at the price of $0.36 per share to Pacific Leaf and its designees and recorded a related expense of $0.5 million. The warrant to purchase common shares was issued to satisfy the conditions under the Second Omnibus Amendment described in detail in Note 4 to the financial statements for the six months ended September 30, 2016.

All of the foregoing securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 (the " Securities Act ") and/or Rule 506 of Regulation D under the Securities Act, as amended.

Note 7 – Commitments and Contingencies
Growblox Sciences, Inc.  v. GCM Administrative Services, LLC

On August 9, 2016, the Company finalized a settlement agreement in final disposition of the lawsuit filed by the Company on April 2, 2014, in the United States District Court for the Southern District of New York.  The suit is more particularly described in Part I, Item 3 of the Company's Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission on July 14, 2016.  The Company issued 1,400,000 shares of restricted common stock to certain non-affiliates of the Company and recorded a related expense of $0.4 million
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Cathryn Kennedy Complaint Settlement
On August 19, 2015, Cathryn Kennedy, our former Chief Financial Officer, filed a Complaint against us in the District Court in Clark County, Nevada alleging that she was assigned new duties by us which constituted a termination without cause effective July 24, 2015, and that as a consequence thereof she is entitled to severance, vacation pay and stock compensation from us pursuant to her Employment Agreement dated November 18, 2014.  On April 8, 2016, the Company entered into a mutual agreement with Cathryn Kennedy per terms of which the Company issued 200,000 of its unrestricted common shares valued at $40,000 in exchange for a full dismissal with prejudice of all causes of action pending in the above-referenced Complaint.
From time to time, the Company also becomes involved in certain legal proceedings and claims which arise in the ordinary course of business. In our opinion, based on consultations with outside counsel, the results of any of these ordinary course matters, individually and in the aggregate, are not expected to have a material effect on our results of operations, financial condition, or cash flows. As more information becomes available, if management should determine that an unfavorable outcome is probable on such a claim and that the amount of such probable loss that it will incur on that claim is reasonably estimable, we will record a reserve for the claim in question. If and when we record such a reserve is recorded, it could be material and could adversely impact our results of operations, financial condition, and cash flows.
Note 8 – 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 56,613,414 and 27,558,334 of potentially dilutive common shares at September 30, 2016 and March 31, 2016, respectively.  However, such common stock equivalents were not included in the computation of diluted net loss per share as their inclusion would have been anti-dilutive.
Note 9 – Subsequent Events
Pacific Leaf Note Conversion Notice
On October 4 and October 20, 2016 the Company received notices from Pacific Leaf Ventures, LP ("Pacific Leaf") that it had elected to convert $500,000 of the Company's indebtedness to Pacific Leaf Note into common stock of the Company pursuant to the Amended and Restated 6% Senior Secured Convertible Promissory.  Accordingly, the Company has issued 4,000,000 shares of its common stock ($1,000,000 converted at a price of $0.25 per share) to Pacific Leaf and the Company's indebtedness to Pacific Leaf pursuant to the Note has been reduced by $1,000,000.
Acquisition of Production License
 
On October 4, 2016, we acquired a 60% interest in a Nevada Medical Marijuana Production License with an option of up to 80%.  A production license enables us to convert cannabis plants into to oils and extracts that are suitable for creating medical compounds as well as consumer products. This license is critical and essential to our plan of producing cannabis-based medicines, and must be integrated into our cultivation facility to ensure quality control standards and efficiency in our production of cannabis medicines.
 
Short-Term Note Conversion
 
On November 8, 2016 the Company received a notice from the Holder of the Short-Term Promissory Note ("Note") issued in March 2016 with face value of $300,000. The Holder had elected to convert $300,000 of the Company's indebtedness into warrants and common stock of the Company pursuant to the Convertible Note Agreement. Accordingly, the Company had issued 1,500,000 shares of its common stock ($300,000 converted at a price of $0.20 per share) and 1,500,000 warrants to purchase shares of Common Stock of the Company at an exercise price of $0.50 per share for the period of three years.
 
ITEM 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis contains "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "could", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts" or "continue" , which list is not meant to be all-inclusive and other such negative terms and comparable technology.  These forward-looking statements, include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements.  The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include among other things: (1)product demand, market and customer acceptance of Growblox Sciences products, equipment and other goods, (ii) ability to obtain financing to expand its operations, (iii) ability to attract qualified personnel, (iv)competition pricing and development difficulties, (v) general industry and market conditions and growth rates, unexpected natural disasters, and other factors, which we have little or no control: and other factors discussed in the Company's filings with the Securities and Exchange Commission ("SEC"). The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.
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The following discussion highlights the Company's results of operations and the principal factors that have affected our financial condition, as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis is based on the Company's unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read this discussion and analysis together with such financial statements and the related notes thereto.
Overview
The Company seeks to be an innovative technology and solution company that converts the cannabis plant into medicines, therapies and treatments for a variety of ailments. The Company is developing and utilizing state of the art technologies in plant biology, cultivation and extraction techniques, combined with biotechnology, and plans to produce consistent and measurable medical-grade cannabis, cannabis concentrates and cannabinoid therapies.
Although we believe that maximum shareholder value will ultimately be achieved through the development, production and marketing of certified cannabinoid medicines, therapies and treatments, in order to generate cash flow and near term profitability, we intend to cultivate and dispense cannabis for medical purposes in both Nevada and other states which permit such sales and in which we and our operating partners are able to obtain cultivation and dispensing licenses.
We seek to become a trusted producer of consistent and efficacious medicinal strains and products, combining both cannabinoids and terpenes, which we intend to market in those states within the United States and in other countries where the sale of medical cannabis products are permitted. In addition, subject to obtaining Food and Drug Administrative (FDA) certification, we intend to market our cannabinoid-based drug discoveries on a world-wide basis.
We were incorporated in the State of Delaware on April 4, 2001, under the name "Flagstick Venture, Inc." On March 28, 2008, stockholders owning a majority of our outstanding common stock approved changing our then name "Signature Exploration and Production Corp." as our business model had changed.

On March 13, 2014, we entered into a definitive assets purchase agreement for the acquisition of assets, including the Growblox™ cultivation technology which resulted in a change in our corporate name on April 4, 2014, from Signature Exploration and Production Corporation to Growblox Sciences, Inc.

Plan of Operation
The Company will cultivate cannabis using innovative, but conventional methods in its wholly owned subsidiary, GB Sciences Nevada, LLC ("GBSN").  GBSN is in the final stages of opening Phase 1 of an approximately 28,000 sq. ft. facility in Las Vegas, Nevada.  When all phases of construction are completed, the facility is expected to produce 6,800 pounds of marijuana per year and generate revenues of $16.9 million, based on a projected wholesale price of $2,500 per pound.  Completion of all Phases of this facility is dependent upon the availability of capital to complete construction. The Company has made completion of all Phases of this facility its number one priority.

On October 4, 2016, we acquired a 60% interest in a Nevada Medical Marijuana Production License with an option of up to 80%.  A production license enables us to convert cannabis plants into to oils and extracts that are suitable for creating medical compounds as well as consumer products. This license is critical and essential to our plan of producing cannabis-based medicines, and must be integrated into our cultivation facility to ensure quality control standards and efficiency in our production of cannabis medicines. The Company's plan commence operations on or about October 1, 2016 has been pushed back to no later than January 2017. These discussed strategic modifications in our plan along with the acquisition of this production license contributed to the January 2017 date.

The Company still expects to meet its revenue projections for the fiscal year ended March 31, 2017 of approximately $700,000 as it can still achieve the same revenue because the production facility will open concurrently with the cultivation facility.  Thus, the Company will be able to acquire cannabis from other producers and process and sell products such as vape pens and edibles immediately.
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We expect our products to compete well in the marketplace because of the considerable efforts we have made in the plant genetics and tissue culturing of our proprietary strains of cannabis.  And, we are the exclusive Nevada grower of Kyle Kushman's proprietary marijuana strains which have been highly rated top sellers in California. Furthermore our ownership interest in the Showgrow dispensary on Fort Apache Boulevard in Las Vegas guarantees retail distribution of our products from that facility.  Our products will have enough exposure to ensure that consumers can appreciate its quality and superiority compared to other brands.

The current emphasis on near-term cash flow allows us to plan for exploiting the potential of our science assets.  We recently formed Growblox Life Sciences, LLC and have retained Fenwick & West, a Silicon Valley based law firm focusing on life sciences and high technology companies with a nationally top-ranked intellectual property practice, to development strategies for the protection of the Company's intellectual property. On October 11, 2016 we filed the first of several planned patent applications for life science inventions by its wholly-owned subsidiary, Growblox Life Sciences, LLC.  The current provisional patent application covers complex-cannabinoid-containing mixtures capable of enhancing dopamine secretion and protecting neurons from the mitochondria-induced free radical damage that occurs during disease progression in the brains of patients with Parkinson's disease, Alzheimer's disease, Lewy Body Dementia, and Huntington's disease, among others. At this time, the Company plans to seek partners in the pharmaceutical industry or alternatively venture funding to advance these cannabis-based formulations to clinical testing and commercialization.

Our proprietary Growblox chambers, anticipated to be commercially ready during the third quarter of fiscal 2017 will enable us to grow a consistent, pharmaceutical grade cannabis which is important irrespective of its ultimate consumers; a consistent recreational brand will be as important to consumers as a consistent medicine will be to its patients.
 
RESULTS OF OPERATIONS
The following table sets forth certain of our Statements of Operations data:
   
For the Three Months Ended September 30,
   
For the Six Months Ended September 30,
 
   
2016
   
2015
   
2016
   
2015
 
                         
Revenue
 
$
-
   
$
-
   
$
-
   
$
-
 
General and administrative expenses
   
2,197,557
     
2,693,145
     
3,405,338
     
4,215,910
 
Other Income/(Expense)
   
(308,408
)
   
(11,556
)
   
(479,535
)
   
(10,996
)
Net loss attributable to non-controlling interest
   
(38,661
)
   
(23,704
)
   
(76,862
)
   
(204,160
)
Net Loss
 
$
(2,467,304
)
 
$
(2,680,997
)
 
$
(3,808,011
)
 
$
(4,022,746
)
Comparison of the Three Months Ended September 30, 2016 and 2015
Revenues
The Company has not achieved any operating revenues to date.
General and administrative expenses
General and administrative expenses decreased $0.5 million to $2.2 million for the three months ended September 30, 2016 compared to $2.7 million for the three months ended September 30, 2015. The decrease in primarily attributable to $0.8 million decrease in consulting and advisory services related to development of our proprietary GrowBLOX Suites combined with a $0.3 million decrease in legal expenses offset by $0.9 million increase in expense related to amendment of long-term debt.
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Other expense
Total other expense increased by $0.3 million compared to the same period in prior year. The increase in primarily due to the recognition of $0.03 million in accrued interest related to the Pacific Leaf Loan and $0.2 million amortization of the debt discount related to the beneficial conversion features discount recorded on the convertible debt.
Comparison of the Six Months Ended September 30, 2016 and 2015
Revenues
The Company has not achieved any operating revenues to date.
General and administrative expenses
General and administrative expenses decreased $0.8 million to $3.4 million for the six months ended September 30, 2016 compared to $4.2 million for the six months ended September 30, 2015. The decrease in primarily attributable to a $0.9 million decrease in consulting and advisory services related to development of our proprietary GrowBLOX chambers combined with a $0.9 million decrease in professional service expense offset by $0.6 million increase in stock-based compensation expense $0.9 million increase in expense related to amendment of long-term debt.
Other expense
Total other expense increased by $0.5 million compared to the same period in prior year. The increase in primarily due to the recognition of $0.1 million in accrued interest related to the Pacific Leaf Loan and $0.3 million amortization of the debt discount related to the beneficial conversion features discount recorded on the convertible debt.

LIQUIDITY AND CAPITAL RESOURCES
Current Liquidity
The Company will need additional capital to implement our strategies. There is no assurance that it will be able to raise the amount of capital needed for future growth plans. Even if financing is available, it may not be on terms that are acceptable. If unable to raise the necessary capital at the times required, the Company may have to materially change the business plan, including delaying implementation of aspects of the business plan or curtailing or abandoning the business plan. The Company represents a speculative investment and investors may lose all of their investment. In order to be able to achieve the strategic goals, the Company needs to further expand its business and financing activities. Based upon the cash position, it is necessary to raise additional capital by the end of the next quarter in order to continue to fund current operations. These factors raise substantial doubt about the ability to continue as a going concern.  The Company is pursuing several alternatives to address this situation, including the raising of additional funding through equity or debt financings. In order to finance existing operations and pay current liabilities over the next twelve months, the Company will need to raise approximately $4-5 million of capital depending upon license status. No assurance can be given that the Company will be able to operate profitably on a consistent basis, or at all, in the future.
The principal sources of liquidity to date have been cash generated from sales of debt and equity securities and loans.
At September 30, 2016, cash was $2.1 million, other current assets excluding cash were $0.12 million and our working capital was $0.9 million. At the same time, current liabilities were approximately $1.3 million, which consisted principally of $0.8 million in notes payable, $0.3 million in accrued liabilities, and $0.1 million in accounts payable. At March 31, 2016, the Company had cash balance $0.03 million, other current assets excluding cash were $0.2 million and our working capital deficit was $2.1 million. Current liabilities were approximately $2.3 million, which consisted principally of $0.9 million in accounts payable, $0.8 million in accrued liabilities, and $0.5 million in notes payable. An improvement in our liquidity position at September 30, 2016 compared to March 31, 2016 is primarily attributable to the capital raised through private offerings.
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Sources and Uses of Cash
Operating Activities
Net cash used in operating activities was $1.7 million for the six months ended September 30, 2016, as compared to net cash used of $1.6 million for the six months ended September 30, 2015. We anticipate that cash flows from operations may be insufficient to fund business operations for the next twelve-month period. Accordingly, we will have to generate additional liquidity or cash flow to fund our current and anticipated operations. This will likely require the sale of additional common stock or other securities. There is no assurance that we will be able to realize any significant proceeds from such sales, if at all.

Investing Activities
During the six months ended September 30, 2016 and 2015, the Company used $1 million and $0.7 million, respectively, of cash in investing activities. The cash used in investing activities during the six months ended September 30, 2016 and 2015 was primarily for the purchase of property and equipment.
Financing Activities
During the six months ended September 30, 2016 and 2015, cash flows from financing activities totaled $4.7 million and $2.6 million, respectively. Cash flows from financing activities for the six months ended September 30, 2016 related primarily to $4.1 million in proceeds from the issuance of common stock and warrants, $0.5 million in proceeds from convertible notes, and $0.2 million in proceeds from non-controlling interests. Cash flows from financing activities for the six months ended September 30, 2015 related primarily to $1.2 million in proceeds from the issuance of common stock and warrants, $1.2 million in proceeds from notes payable, and $0.3 million in proceeds from non-controlling interests.
GOING CONCERN
The unaudited interim financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of approximately $24.6 million as of September 30, 2016, and further losses are anticipated in the development of the business raising substantial doubt about the ability to continue as a going concern. The ability to continue as a going concern is dependent upon generating profitable operations in the future and/or obtaining the necessary financing to meet obligations and repay liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and/or private placements of debt and equity securities. The financials do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty.
VARIABLES AND TRENDS
In the event the Company is able to obtain the necessary financing to progress with its business plan, the Company expects expenses to increase significantly to grow the business. Accordingly, the comparison of the financial data for the periods presented may not be a meaningful indicator of future performance and must be considered in light of these circumstances.
CRITICAL ACCOUNTING POLICIES
A description of the Company's significant accounting policies is included in Note 3 of its Annual Report on Form 10–K for the fiscal year ended March 31, 2016.
ITEM 3.   Quantitative and Qualitative Disclosures About Market Risk
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
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ITEM 4.   Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company  maintains disclosure controls and procedures that are designed to ensure that material information required to be disclosed in the periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and to ensure that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. At the end of the quarter ended September 30, 2016, the Company carried out an evaluation, under the supervision and with the participation of management, including the principal executive officer and the principal financial officer, of the effectiveness of the design and operation of disclosure controls and procedures, as defined in Rule 13(a)-15(e) and Rule 15d-15(e) under the 1934 Act. Based on this evaluation, management concluded that as of September 30, 2016 the disclosure controls and procedures were not effective due to material weaknesses as no member of our board of directors qualifies as an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act.
Limitations on Effectiveness of Controls and Procedures
Management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), does not expect that disclosure controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Controls
During the fiscal quarter ended September 30, 2016, there have been no changes in the internal controls over financial reporting that have materially affected or are reasonably likely to materially affect the internal controls over financial reporting. 
PART II – OTHER INFORMATION
ITEM 1.   Legal Proceedings
From time to time, the Company also becomes involved in certain legal proceedings and claims which arise in the ordinary course of business. In our opinion, based on consultations with outside counsel, the results of any of these ordinary course matters, individually and in the aggregate, are not expected to have a material effect on our results of operations, financial condition, or cash flows. As more information becomes available, if management should determine that an unfavorable outcome is probable on such a claim and that the amount of such probable loss that it will incur on that claim is reasonably estimable, we will record a reserve for the claim in question. If and when we record such a reserve is recorded, it could be material and could adversely impact our results of operations, financial condition, and cash flows.
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ITEM 1A.   Risk Factors
There are no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2016, as filed with the SEC.
ITEM 2.   Unregistered Sales of Equity Securities and Use of Proceeds
Common Stock
On June 13, 2016 the Company received notice from Pacific Leaf Ventures, LP ("Pacific Leaf") that it had elected to convert $500,000 of the Company's indebtedness to Pacific Leaf Note into common stock of the Company pursuant to the Amended and Restated 6% Senior Secured Convertible Promissory.  Accordingly, the Company has issued 2,000,000 shares of its common stock ($500,000 converted at a price of $0.25 per share) to Pacific Leaf.

On August 4, 2016, Company issued 1,000,000 shares to Pacific Leaf and its designees and recorded a related expense of $0.4 million. The common shares were issued to partially satisfy the conditions under the Second Omnibus Amendment described in detail in Note 4 to the financial statements for the six months ended September 30, 2016.

On August 9, 2016, the Company finalized a settlement agreement in final disposition of the lawsuit filed by the Company on April 2, 2014, in the United States District Court for the Southern District of New York.  The suit is more particularly described in Part I, Item 3 of the Company's Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission on July 14, 2016.  The Company issued 1,400,000 shares of restricted common stock to certain non-affiliates of the Company and recorded a related expense of $0.4 million.

During six months ended September 30, 2016, the Company sold 14,847,500 units through a private placement at a price of $0.20 per unit.  Each unit consisted of one share of common stock and one common stock purchase warrant, expiring in three years, with an exercise price of $0.50. The Company also sold 9,281,750 units through a private placement at a price of $0.20 per unit.  Each unit consisted of one share of common stock and one common stock purchase warrant, expiring in five years, with an exercise price of $0.60. The Company recorded net proceeds of $4.1 million as a result of these issuances.

Options and Warrants
On June 1, 2016, we issued 900,000 stock options under our 2014 Equity Incentive Plan to the independent members of the Company's Board of Directors. The options are exercisable upon vesting for a period of 7 years from issuance at an exercise price of $0.16 per share. As of September 30, 2015, the Company recognized total of $0.1 million in share-based compensation expense related to options vested to date.

On June 1, 2016, we issued 1,400,000 stock options under our 2014 Equity Incentive plan to our Chief Executive Officer. The options are exercisable upon vesting for a period of 7 years from issuance at an exercise price of $0.30 per share. As of September 30, 2015, the Company recognized total of $0.2 million in share-based compensation expense related to options vested to date.

Effective on June 1, 2016, the Company amended its employment agreement with its Chief Science Officer, Andrea Small-Howard.  Pursuant to the amendment, Dr. Small-Howard surrendered a stock award for 450,000 shares of common stock in exchange for warrants to purchase 1,200,000 common shares at the strike price of $0.30 per share. As of September 30, 2015, the Company recognized total of $0.1 million in share-based compensation expense related to warrants vested to date.

On June 30, 2016, we issued 200,000 stock options under our 2014 Equity Incentive Plan to various employees. The options are exercisable upon vesting for a period of 10 years from issuance at an exercise price of $0.30 per share. As of September 30, 2015, the Company recognized total of $0.01 million in share-based compensation expense related to options vested to date.

On August 4, 2016, Company issued a warrant to purchase 1,500,000 shares of the Company's common stock at the price of $0.36 per share to Pacific Leaf and its designees and recorded a related expense of $0.5 million. The warrant to purchase common shares was issued to satisfy the conditions under the Second Omnibus Amendment described in detail in Note 4 to the financial statements for the six months ended September 30, 2016.
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All of the foregoing securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 (the " Securities Act ") and/or Rule 506 of Regulation D under the Securities Act, as amended.

ITEM 3.   Defaults Upon Senior Securities

None.

ITEM 4.   Mine Safety Disclosures

Not Applicable.

ITEM 5.   Other Information

Board of Directors Expansion and Management Changes

Effective April 29, 2016 the Company's Board of Directors was expanded to five members. As a result of the expansion, the Board of Directors elected Leslie Bocskor, Shane Terry and John Poss to serve as Members of the Board of Directors for a term of three years to fill the three existing vacancies.

The Board of Directors also accepted the resignation of Craig Ellins as Chief Executive Officer of the Company and immediately appointed Craig Ellins to serve as Chief Innovation Officer of the Company.

The Board of Directors elected John Poss to serve as Chief Executive Officer until such time as the Board of Directors can identify and hire a suitable replacement. Mr. Poss has been serving as the CFO of the Company since August, 2015 and its COO since December 31, 2015.  He will continue serving as CFO and COO until suitable replacements can be recruited.

On June 1, 2016, the Board of Directors established compensation for outside directors to be $25,000 annually with an additional $1,000 for each meeting attended.  The compensation is payable in cash or stock at the election of the Company.  The outside directors also each received options to purchase 450,000 shares of stock which vest over 24 months.  The strike price of the options is $0.16 per share, the market value of the Company's common stock on the date the outside directors were elected to the Board.

Executive Appointments

On August 5, 2016, the Company's Board of Directors accepted the resignation of John Poss as Chief Financial Officer of the Company and appointed Ksenia Griswold as the Company's Vice President and Chief Financial Officer. Mr. Poss will continue to serve as the President, Chief Executive Officer, and Chief Operating Officer of the Company. Ms. Griswold has been serving as the controller of the Company since November, 2015.  For the five years prior to that time beginning in October, 2010, she worked in the Las Vegas, Nevada office of Ernst & Young, LLP.  At the time of her departure from Ernst & Young, she was audit manager.  Pursuant to the appointment of Ms. Griswold as the Company's Vice President and Chief Financial Officer, the Company entered into an Amended and Restated Employment Agreement, effective October 7, 2016.  The agreement will end on November 1, 2017, which end date can be extended upon the mutual agreement of the parties.  Under the agreement Ms. Griswold will receive an annual salary of not less than $110,000 and options to acquire 350,000 shares of the Company's common stock subject to certain vesting requirements.  The option strike price is the market value of the stock on the date the options were granted.

Amendments to the Executive Employment Agreements

Pursuant to the appointment of Mr. Poss as the Company's President, Chief Executive Officer and Board Member, the Company entered into an Amended and Restated Employment Agreement, effective June 1, 2016.  The agreement will end on May 1, 2017, which end date can be extended upon the mutual agreement of the parties.  Under the agreement Mr. Poss will receive an annual salary of not less than $120,000 and quarterly bonuses equal to the value of 125,000 shares of Growblox common stock.  Bonuses are payable in S-8 stock or cash in the discretion of the Company.  Under the agreement, Mr. Poss will also receive options to acquire 1,400,000 shares of the Company's common stock subject to certain vesting requirements.  The option strike price is the market value of the stock on the date the options were granted.
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Effective on June 1, 2016, the Company amended its employment agreement with its Chief Science Officer, Andrea Small-Howard.  Pursuant to the amendment, Dr. Small-Howard surrendered a stock award for 450,000 shares of common stock in exchange for warrants to purchase 1.2 million common shares at the strike price of $0.30 per share.

Also on June 1, 2016, the Board amended compensation arrangements with Mr. Craig Ellins, the Chairman and Chief Innovation Officer of the Company.  Pursuant to the amendment, warrants issued on June 22, 2015, for the purchase of 5,000,000 shares of common stock of the Company at the exercise price of $0.45 per share were cancelled and warrants for the purchase of 5,000,000 shares of common stock of the Company at the exercise price of $0.30 were issued to Mr. Ellins.

Establishment of Audit and Compensation Committees
Audit Committee
 
On July 6, 2016, the Board established the Audit Committee and approved and adopted a charter (the "Audit Committee Charter") to govern the Audit Committee. The audit committee is comprised of Leslie Bocskor and Shane Terry, each of whom is independent under the rules of the Securities and Exchange Commission and the Nasdaq Stock Market listing standards. Leslie Bocskor is designated the chairperson of the committee. In addition to the enumerated responsibilities of the Audit Committee in the Audit Committee Charter, the primary function of the Audit Committee is to assist the Board in its general oversight of our accounting and financial reporting processes, audits of our financial statements, and internal control and audit functions.

Compensation Committee
 
On July 6, 2016, the Board established the Compensation Committee and approved and adopted a charter (the "Compensation Committee Charter"). The compensation committee is comprised of Leslie Bocskor and Shane Terry, each of whom is independent under the rules of the Securities and Exchange Commission and the Nasdaq Stock Market listing standards. Leslie Bocskor is designated the chairperson of the committee. In addition to the enumerated responsibilities of the Compensation Committee in the Compensation Committee Charter, the primary function of the Compensation Committee is to oversee the compensation of our executives, produce an annual report on executive compensation for inclusion in our proxy statement, if and when required by applicable laws or regulations, and advise the Board on the adoption of policies that govern our compensation programs.

ITEM 6.   Exhibits
In reviewing the agreements included as exhibits to this Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
·
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
·
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
·
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
·
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
19
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-Q and the Company's other public filings, which are available without charge through the SEC's website at http://www.sec.gov.
The following exhibits are included as part of this report:
Exhibit Number
 
Description of Exhibit
3.1
 
Articles of Incorporation ( Incorporated by reference to an exhibit to Form SB-2 No. 333-82580 filed with the Commission on February 12, 2002)
3.2
 
Amendment to Articles of Incorporation ( Incorporated by reference to Exhibit 3.2 to Form S-1/A No. 333-82580 filed with the Commission on October 6, 2014 and Exhibit 3.2 to Form 10-K No. 333-82580 filed with the Commission on June 27, 2014 )
3.3
 
Bylaws ( Incorporated by reference to an exhibit to Form SB-2 No. 333-82580 filed with the Commission on February 12, 2002 )
10.1
 
Amended Employment Agreement between Registrant and Ksenia Griswold dated October 7, 2016
31.1
 
Certification of Principal Executive Officer and Pursuant to Rule 13a-14
31.2
 
Certification of Principal Financial Officer Pursuant to Rule 13a-14
32.1*
 
CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
32.2*
 
CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS
 
XBRL Instance Document
101.SCH
 
XBRL Taxonomy Extension Schema Document
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
 
XBRL Taxonomy Extension Labels Linkbase Document
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
* This certification is being furnished and shall not be deemed "filed" with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference
20
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
GROWBLOX SCIENCES, INC.
 
 
November 14, 2016
By:
/s/ John Poss
 
John Poss, Chief Executive Officer (Principal Executive Officer)
 
 
 
GROWBLOX SCIENCES, INC.
 
 
November 14, 2016
By:
/s/ Ksenia Griswold
 
Ksenia Griswold, Chief Financial Officer (Principal Financial Officer)
 
 

21
Exhibit 10.1
 
AMENDED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (" Agreement ") is made and entered into as of the 7 th day of October, 2016 by and between Growblox Science, Inc. , a Delaware corporation (hereinafter), called the " Company ") and Ksenia Griswold (hereinafter called the " Executive ").
 
A.        The Company and the Executive entered into an employment agreement dated November 2 nd , 2015 (the "Prior Agreement").
 
B.         The Board of Directors of the Company (the " Board ") and the Executive desire to amend and restate in their entirety the Prior Agreements and to assure the Company of the Executive's continued employment in an executive capacity and to compensate her therefore.
 
C.         The Board has determined that this Agreement will reinforce and encourage the Executive's continued attention and dedication to the Company.
 
D.        The Executive is willing to make her services available to the Company on the terms and conditions hereinafter set forth.
 
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, the parties agree as follows:
 
Agreement
 
 
1.
Employment .
 
1.1           Employment and Term . The Corporation hereby agrees to employ the Executive as its Vice President and Chief Financial Officer, in such capacity, agrees to provide services to the Corporation for the period which began on October 7, 2016 and shall end on November 1, 2017 (the " Termination Date ") (or such later date as may be agreed to by the parties within 120 days prior to the Termination Date) (the "Employment Period ").
 
1.2           Duties of Executive . The Executive shall serve as the Chief Financial Officer of the Company and, unless otherwise specified by the Board each of the Company's subsidiaries. Subject to the preceding sentence, during the Employment Period, the Executive shall diligently perform all services as may be reasonably assigned to her by the Board, and shall exercise such power and authority as may from time to time be delegated to her by the Board. The Executive shall be required to report solely to, and shall be subject solely to the supervision and direction of the Board at duly called meetings thereof, and no other person or group shall be given authority to supervise or direct Executive in the performance of her duties. In addition, the Executive shall regularly consult with the Board with respect to the Company's business and affairs. The Executive shall devote such portion of her working time and attention as she deems appropriate to the business and affairs of the Company (excluding any vacation and sick leave to which the Executive is entitled), render such services to the best of her ability, and use her reasonable best efforts to promote the interests of the Company. It shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement.
 
1.3          Place of Performance . In connection with her employment by the Company, the Executive shall be based at the Company's principal executive offices in Las Vegas, Nevada.
 
 
2.
Compensation .
 
2.1          Base Salary . Commencing on November 4, 2016 the Executive shall receive a base salary at the annual rate of not less than $110,000 for during the period of her employment payable in installments consistent with the Company's normal payroll schedule, subject to applicable withholding and other taxes.
 
2.2          Bonuses . The Executive shall be entitled to receive such bonuses as may from time to time be granted to the Executive by the Board in the exercise of the Board's sole discretion.
 
2.3          Stock Option. The Executive will be granted options to acquire 350,000 shares of the Company's common stock.  The Executive's options will include the following terms:
(a)   Vesting and Term.   The options shall vest as follows: (i) one-third on the date of grant; (ii) one-third 12 months after the date of grant; (iii) one-third twenty-four months after the date of grant.  The options shall vest in their entirety upon the occurrence of change of control or termination without a cause.  The options may be exercised by the Executive within seven years of the granting of the entirety of the options granted in this agreement.
(b)   Other Terms . The options shall be eligible for cashless exercise at the election of the Executive.  The options shall have piggyback registration rights.
 
2.4.          Expense Reimbursement and Other Benefits .
 
(a)           Expense Reimbursement . During the term of Executive's employment hereunder, the Company, upon the submission of reasonable supporting documentation by the Executive, shall reimburse the Executive for all reasonable expenses actually paid or incurred by the Executive in the course of and pursuant to the business of the Company.
 
(b)           Vacation . During the Initial Term, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its subsidiaries as in effect at any time hereafter with respect to other key executives of the Company and its subsidiaries; provided, h owever, that in no event shall Executive be entitled to fewer than four weeks paid vacation per year.
 
(c)           Benefit Plans The Executive shall participate in all employee benefit plans and fringe benefits provided by the Company. The Company reserves the right to amend, modify or terminate any of these plans and benefits. The Executive will be entitled to whatever benefits may be provided to you in accordance with the terms of these plans and benefits, as amended from time to time.
 
 
3.
Termination .
 
3.1           Termination for Cause . Notwithstanding anything contained to the contrary in this Agreement, this Agreement may be terminated by the Company for Cause. As used in this Agreement, Cause" shall only mean (i) an act or acts of personal dishonesty taken by the Executive and intended to result in substantial personal enrichment of the Executive at the expense of the Company, (ii) subject to the following sentences, repeated violation by the Executive of the Executive's material obligations under this Agreement which are demonstrably willful and deliberate on the Executive's part and which are not remedied in a reasonable period of time after receipt of written notice from the Company, or (iii) the conviction of the Executive for any criminal act which is a felony. For purposes of the preceding sentence, criminal act shall not include any act that violates U.S. Federal law that is related in any way to cannabis. Upon any determination by the Company's Board of Directors that Cause exists under clause (ii) of the preceding sentence, the Company shall cause a special meeting of the Board to be called and held at a time mutually convenient to the Board and Executive, but in no event later than ten (10) business days after Executive's receipt of the notice contemplated by clause (ii). Executive shall have the right to appear before such special meeting of the Board with legal counsel of her choosing to refute any determination of Cause specified in such notice, and any termination of Executive's employment by reason of such Cause determination shall not be effective until Executive is afforded such opportunity to appear. Any termination for Cause pursuant to clause (i) or (iii) of the first sentence of this Section 3.1 shall be made in writing to Executive, which notice shall set forth in detail all acts or omissions upon which the Company is relying for such termination.
 
Upon any termination pursuant to this Section 3.1, the Executive shall be entitled to be paid her Base Salary to the date of termination and the Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of termination).
 
3.2           Disability . Notwithstanding anything contained in this Agreement to the contrary, the Company, by written notice to the Executive, shall at all times have the right to terminate this Agreement, and the Executive's employment hereunder, if the Executive shall, as the result of mental or physical incapacity, illness or disability, fail to perform her duties and responsibilities provided for herein for a period of more than ninety (90) consecutive days in any 12-month period. Upon any termination pursuant to this Section 3.2, the Executive shall be entitled to be paid her Base Salary to the date of termination and the Company shall have no further liability hereunder (other than for reimbursement for reasonable business expenses incurred prior to the date of termination).
 
3.3           Death . In the event of the death of the Executive during the term of his employment hereunder, the Company shall pay to the estate of the deceased Executive an amount equal to the sum of (x) any unpaid amounts of her Base Salary to the date of her death, plus (y) six months of Base Salary.
 
3.4           Termination Without Cause . At any time the Company shall have the right to terminate Executive's employment hereunder by written notice to Executive; provided, however, that the Company shall (i) pay to Executive any unpaid Base Salary accrued through the effective date of termination specified in such notice, and (ii) pay to the Executive in a lump sum, in cash within 30 days after the date of employment termination, an amount equal to six months base pay. Additionally, all unvested stock options will immediately vest. The Company shall be deemed to have terminated the Executive's employment pursuant to this Section 3.4 if such employment is terminated (i) by the Company without Cause, or (ii) by the Executive voluntarily for "Good Reason." For purposes of this Agreement, "Good Reason" means:
 
(a)         the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 1.2 of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;
 
(b)          any failure by the Company to comply with any of the provisions of this Agreement (including, without limitation, the provisions of Section 2 or Section 3 hereof), other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;
 
 
 (c)          any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement;
 
(d)          any termination by the Executive within ninety (90) days following a "Change of Control" (hereinafter defined);
 
For purposes of this Section 3.4, any good faith determination of "Good Reason" made by the Executive shall be conclusive.
 
3.5          Change of Control .
 
(a)          For purposes of this Agreement, a "Change in Control" shall mean and include:
 
(i)          The acquisition (other than by or from the Company) at any time following the date hereof, by any person, entity or group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the Exchange Act"), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50%or more of either the then outstanding shares of common stock or the combined voting power of the Company's then outstanding voting securities entitled to vote generally in the election of directors; or
 
(ii)        All or any of the individuals who, as of the date hereof, constitute the Board (as of the date hereof the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or
 
(iii)        Approval by the stockholders of the Company of (A) a reorganization, merger or consolidation with respect to which persons who were the shareholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities, (B) a liquidation or dissolution of the Company, or (C) the sale of all or substantially all of the assets of the Company, unless the approved reorganization, merger, consolidation, liquidation, dissolution or sale is subsequently abandoned.
 
(iv)        The approval by the Board of the sale, distribution and/or other transfer or action (and/or series of sales, distributions and/or other transfers or actions from time to time or over a period of time), that results in the Company's ownership of less than 50% of the Company's current assets.
 
 
 
 (b)          In the event of a Change of Control and if the Executive shall elect to terminate her employment for Good Reason within ninety (90) days following such change of Control, the Company or its successor in interest shall pay to the executive in a lump sum, in cash within 30 days after the date of employment termination, an amount equal to one dollar less than the product of (x) the sum of the Executive's then Base Salary for the applicable Anniversary Year plus the amount of the highest annual bonus or other incentive compensation payment theretofore made by the Company to the Executive, multiplied times (y) three (the " Change of Control Payment ").
 
 
 
4.
Restrictive Covenants .
 
4.1           Nondisclosure . During her employment and for twelve (12) months thereafter, Executive shall not divulge, communicate, use to the detriment of the Company or for the benefit of any other person or persons, or misuse in any way, any Confidential Information (as hereinafter defined) pertaining to the business of the Company. Any Confidential Information or data now or hereafter acquired by the Executive with respect to the business of the Company shall be deemed a valuable, special and unique asset of the Company that is received by the Executive in confidence and as a fiduciary, and Executive shall remain a fiduciary to the Company with respect to all of such information.
 
For purposes of this Agreement, " Confidential Information " means all material information about the Company's business disclosed to the Executive or known by the Executive as a consequence of or through her employment by the Company (including information conceived, originated, discovered or developed by the Executive) after the date hereof, and not generally known.
 
4.2           Nonsolicitation of Employees . While employed by the Company and for a period of six (6) months thereafter, Executive shall not directly or indirectly, for herself or for any other person, firm, corporation, partnership, association or other entity, attempt to employ or enter into any contractual arrangement with any employee or former employee of the Company, unless such employee or former employee has not been employed by the Company for a period in excess of six months.
 
4.3           Assignment of Intellectual Property . During her employment and for twelve (12) months thereafter, Executive shall assign to the Company all patent applications, trade secrets, inventions, data, discoveries knowhow, research and development and other intellectual property relating to the business of the Company and its subsidiaries that the Executive shall create, acquire or discover, whether alone or in conjunction with others.
 
6
 
 
4.4           Injunction . It is recognized and hereby acknowledged by the parties hereto that a breach by the Executive of any of the covenants contained in Section 4.1, 4.2 or 4.3 of this Agreement will cause irreparable harm and damage to the Company, the monetary amount of which may be virtually impossible to ascertain. As a result, the Executive recognizes and hereby acknowledges that the Company shall be entitled to an injunction from any court of competent jurisdiction enjoining and restraining any violation of any or all of the covenants contained in this Section 4 by the Executive or any of her affiliates, associates, partners or agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other remedies the Company may possess.
 
 
5.
Other Matters .
 
5.1           Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
 
5.2.           Notices : Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given when delivered by hand or when deposited in the United States mail, by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
 
If to the Company:                   Growblox Sciences, Inc.
3550 West Teco
Las Vegas, Nevada 89118
Phone: 866-721-0297

If to the Executive:                  Ksenia Griswold
6724 Gray Horse Street
Las Vegas, NV 89149
 
or to such other addresses as either party hereto may from time to time give notice of to the other in the aforesaid manner.
 
5.3.          Successors .
 
(a)          This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives.
 
(b)          This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
 
(c)          The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, the term "Company" shall mean and include the Company as hereinbefore defined and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law or otherwise.
 
5.4.        Severability . The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part thereof, all of which are inserted conditionally on their being valid in law, and in the event that any one or more of the words, phrases, sentences, clauses or sections contained in this Agreement shall be declared invalid, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, or section or sections had not been inserted. If such invalidity is caused by length of time or size of area, or both, the otherwise invalid provision will be considered to be reduced to a period or area which would cure such invalidity.
 
5.5.        Waivers . The waiver by either party hereto of a breach or violation of any term or provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation.
 
5.6         Damages . Nothing contained herein shall be construed to prevent the Company or the Executive from seeking and recovering from the other damages sustained by either or both of them as a result of its or her breach of any term or provision of this Agreement.
 
5.7         No Third Party Beneficiary . Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person (other than the parties hereto and, in the case of Executive, his heirs, personal representative(s) and/or legal representative) any rights or remedies under or by reason of this Agreement.
 
5.8         Full Settlement . The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Company agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company or others of the validity or enforceability of or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code.
 
 
5.9.        Certain Reduction of Payments by the Company .
 
(a)          Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a " Payment "), would be nondeductible by the Company for Federal income tax purposes because of Section 280G of the Code, then the aggregate present value of amounts payable or distributable to or for the benefit of the Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as " Agreement Payments ") shall be reduced to the Reduced Amount. The " Reduced Amount " shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be nondeductible by the Company because of Section 280G of the Code. Anything to the contrary notwithstanding, if the Reduced Amount is zero and it is determined further that any Payment which is not an Agreement Payment would nevertheless be nondeductible by the Company for Federal income tax purposes because of Section 280G of the Code, then the aggregate present value of Payments which are not Agreement Payments shall also be reduced (but not below zero) to an amount expressed in present value which maximizes the aggregate present value of Payments without causing any Payment to be nondeductible by the Company because of Section 280G of the Code. For purposes of this Section 5.9, present value shall be determined in accordance with Section 280G(d)(4) of the Code. Any amount which is not paid in the taxable year in which it was originally scheduled to be paid as a result of the postponement thereof pursuant hereto shall be payable in the next succeeding taxable year in which such payment will not result in the disallowance of a deduction pursuant to either Section 162(m) or 280G of the Code; provided, however, that all postponed payments shall be placed in a Rabbi trust or similar vehicle for the benefit of the Executive in such a way that the amounts so transferred are not taxable to such person or deductible by the Company until payment from such vehicle to the Executive is made. In the event a payment has been made to the Executive, but then disallowed as a deduction by the Internal Revenue Service and return of the payment is required into the trust, said payment to the Executive shall be treated as a loan and said payment to the trust shall be treated as repayment of said loan. The Company shall not pledge, hypothecate or otherwise encumber any amounts held in the trust or other similar vehicle for the benefit of the Executive hereunder.
  
(b)          All determinations required to be made under this Section 16 shall be made by a firm of independent public accountants selected by the Executive and approved by the Company, which approval shall not be unreasonably withheld or delayed (the " Accounting Firm "), which shall provide (ii) detailed supporting calculations both to the Company and the Executive within twenty (20) business days of the termination of Executive's employment or such earlier time as is requested by the Company, and (iii) an opinion to the Executive that he has substantial authority not to report any excise tax on her Federal income tax return with respect to any Payments. Any such determination by the Accounting Firm shall be binding upon the Company and the Executive. The Executive shall determine which and how much of the Payments shall be eliminated or reduced consistent with the requirements of this Section 5.9, provided that, if the Executive does not make such determination within ten business days of the receipt of the calculations made by the Accounting Firm, the Company shall elect which and how much of the Payments shall be eliminated or reduced consistent with the requirements of this Section 5.9 and shall notify the Executive promptly of such election. Within five business days thereafter, the Company shall pay to or distribute to or for the benefit of the Executive such amounts as are then due to the Executive under this Agreement. All fees and expenses of the Accounting Firm incurred in connection with the determinations contemplated by this Section 5.9 shall be borne by the Company.
 
(c)          As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Payments will have been made by the Company which should not have been made (" Overpayment ") or that additional Payments which will not have been made by the Company could have been made (" Underpayment "), in each case, consistent with the calculations required to be made hereunder. In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against the Executive which the Accounting Firm believes has a high probability of success, determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the Executive shall be treated for all purposes as a loan ab initio to the Executive which the Executive shall repay to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to have been made and no amount shall be payable by the Employee to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which the Executive is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.
 
5.10.        Conflicts With Certain Existing Arrangements . The Company agrees that (a) it shall not hereafter acquire a "Conflicting Organization" or otherwise expand its present business activities such that Executive could reasonably be expected to be deemed in breach or violation of such non-competition covenants, and (b) it shall indemnify and hold harmless the Executive from any and all damages that Executive may hereafter suffer or incur by reason of any such Company acquisition or expansion of business after the date hereof.
  
5.11          Headings . The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.
 
5.12          Amendment . This Agreement may only be amended by a written instrument executed by each of the parties hereto.
 
5.13          Entire Agreement . This Agreement supersedes, amends and restates in their entirety, all of the Prior Agreements, constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.
 
5.14          Binding Effect . This Agreement shall inure solely to the benefit of and shall be binding upon the Company and the controlling persons, directors and officers of the Company, and its respective successors, legal representatives, heirs and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provisions herein contained.
 
5.15          Governing Law; Consent to Jurisdiction; Trial by Jury . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Agreement shall be brought and enforced in the Supreme Court of the State of Nevada, Clark County, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 5.2 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company agrees that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys' fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
 
5.16          Execution in Counterparts . This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Delivery of a signed counterpart of this Agreement by facsimile or email/pdf transmission shall constitute valid and sufficient delivery thereof.
  
5,17         Waiver, etc . The failure of any of the parties hereto to at any time enforce any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such provision, nor to in any way effect the validity of this Agreement or any provision hereof or the right of any of the parties hereto to thereafter enforce each and every provision of this Agreement. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Agreement shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.
 
Signature pages follow
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
 
 
COMPANY:
 
 
 
GROWBLOX SCIENCES, INC.
 
 
 
 
 
 
 
By:
  /s/ John Poss
 
Name:  John Poss
 
Title:    Chief Executive Officer
 
 
 
 
EXECUTIVE:
 
 
 
 
By:
/s/ Ksenia Griswold
 
Ksenia Griswold
 
 
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER 
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John Poss, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Growblox Sciences, Inc.;
2.   Based on my knowledge, the quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.   Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this report;
4.   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures; and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.
 
Date:  November 14, 2016
/s/ John Poss
 
John Poss, Chief Executive Officer (Principal Executive Officer)
 
Exhibit 31.2
CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ksenia Griswold, certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Growblox Sciences, Inc.;
2.   Based on my knowledge, the quarterly report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.   Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this report;
4.   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures; and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.   The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.
 
Date:  November 14, 2016
/s/ Ksenia Griswold
 
Ksenia Griswold, Chief Financial Officer (Principal Financial Officer)

 
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Growblox Sciences, Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John Poss, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
 
Date:  November 14, 2016
/s/ John Poss
 
John Poss, Chief Executive Officer (Principal Executive  Officer)

 
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Growblox Sciences, Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ksenia Griswold, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
 
Date:  November 14, 2016
/s/  Ksenia Griswold
 
Ksenia Griswold, Chief Financial Officer (Principal Financial Officer)