Exhibit 99.2
GL BRANDS, INC. (fka "Freedom Leaf, Inc.") and Subsidiaries
Unaudited Pro Forma Combined Statement of Operations
For the Years Ended June 30, 2019
| GL Brands, Inc. & Subs | ECS Labs, LLC & Subs | Pro Forma Statement of Operations | ||||||||||
| Revenue, net | $ | 2,114,728 | $ | 2,834,423 | $ | 4,949,151 | ||||||
| Operating expenses | ||||||||||||
| Direct costs of revenue | 1,786,776 | 2,081,535 | 3,868,311 | |||||||||
| General and administrative | 8,966,195 | 910,458 | 9,876,653 | |||||||||
| Depreciation and amortization | 1,356,259 | 47,356 | 1,403,615 | |||||||||
| Bad debt expense | 211,769 | 1,084 | 212,853 | |||||||||
| Marketing and selling | 593,308 | 95,077 | 688,385 | |||||||||
| Total operating expenses | 12,914,307 | 3,135,510 | 16,049,817 | |||||||||
| Loss from operations | (10,799,579 | ) | (301,087 | ) | (11,100,666 | ) | ||||||
| Other income (expense) | ||||||||||||
| Interest expense | (63,586 | ) | (24,761 | ) | (88,347 | ) | ||||||
| Gain on settlement of debt | 100,000 | – | 100,000 | |||||||||
| Interest income | 228 | 42 | 270 | |||||||||
| Miscellaneous income | – | (9,777 | ) | (9,777 | ) | |||||||
| Loss on expiration of option | (125,000 | ) | – | (125,000 | ) | |||||||
| Gain/Loss on disposal of assets | (580,458 | ) | – | (580,458 | ) | |||||||
| Loss on impairment of assets | (780,884 | ) | – | (780,884 | ) | |||||||
| Total other income (expense) | (1,449,700 | ) | (34,496 | ) | (1,484,196 | ) | ||||||
| Net loss before non-controlling interest | (12,249,279 | ) | (335,583 | ) | (12,584,862 | ) | ||||||
| Loss attributable to non-controlling interest | 51,375 | – | 51,375 | |||||||||
| – | ||||||||||||
| Net loss attributable to common stockholders | $ | (12,197,904 | ) | $ | (335,583 | ) | $ | (12,533,487 | ) | |||
| Net loss attributable to common stockholders per share - basic and diluted | $ | (0.05 | ) | $ | NA | $ | (0.04 | ) | ||||
| Weighted average number of shares outstanding - basic and diluted | 223,193,519 | 86,419,752 | (A) | 309,613,271 | ||||||||
| Foreign currency translation gain | 13,759 | NA | 13,759 | |||||||||
| Total comprehensive loss | $ | (12,184,145 | ) | $ | (335,583 | ) | $ | (12,519,728 | ) | |||
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GL BRANDS, INC. (fka "Freedom Leaf, Inc.") and Subsidiaries
Unaudited Pro Forma Combined Statement of Operations
For the Years Ended June 30, 2019
| 1. | Description of Transaction |
On May 31, 2019, the GL Brands, Inc. (fka Freedom Leaf Inc.) (the “GL Brands”) closed the acquisition of Dallas, Texas based ECS Labs LLC (the “Acquisition”), including its two-wholly owned operating subsidiaries, B&B Labs, LLC, a Texas limited liability company and Texas Wellness Center, a Texas limited liability company, which constitute the “Green Lotus” premium hemp CBD products brand, whereby the GL Brands has acquired all of the issued and outstanding capital stock of ECS Labs, LLC (“ECS Labs”). In exchange, Carlos Frias, Daniel Nguyen, Alex Frias, and Chris Fagan received 86,419,752 shares of common stock, collectively.
ECS Labs was incorporated in the State of Texas on July 21, 2017, under the name of ECS Labs. ECS Labs, focused on producing and distributing Hemp CBD consumer packaged goods sold as food supplements, both under the brand Green Lotus Hemp and for white-label customers. The Company aims to produce the most innovative products for the consumer market domestically and internationally in Mexico, through the relationship with CBD Life. ECS Labs is the first company to supply Hemp CBD consumer packaged goods to the Mexican market on a commercial scale. ECS Labs aims to change the way people view the many hemp products with a focus on reaching a larger demographic. ECS Labs also has futures contracts with hemp biomass producers to ensure cost efficiency. ECS Labs has also partnered up with the largest US hemp biomass processors to further insure efficiency in production. ECS Labs also has a staff with more than 35 years of Pharmaceutical industry experience in R&D and production of products all the way from concept inception to market distribution.
| 2. | Basis of Pro Forma Presentation |
The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and is based on the historical consolidated financial statements of GL Brands and ECS Labs. The acquisition method of accounting is set forth in Accounting Standards Codification (“ASC”) 805, Business Combinations, and uses the fair value concepts defined in ASC 820,Fair Value Measurement. Under the acquisition method of accounting, the assets acquired, and liabilities assumed are generally recorded as of the completion of the purchase at their respective fair values and added to those of the GL Brands. Financial statements and reported results of operations of GL Brands will reflect these fair value adjustments, but the Company’s previously issued historical financial statements will not be retroactively restated.
The unaudited pro forma combined financial information has been prepared based on the historical consolidated financial statements of the GL Brands, and by accounting for the purchase using the acquisition method. The unaudited pro forma combined statements of operations give effect to the purchase as if it had been consummated on July 1, 2018 and combine the historical statements of operations of GL Brands and Subsidiary for the year ended June 30, 2019.
The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to events that are: (i) directly attributable to the purchase; (ii) factually supportable; and (iii) with respect to the statement of operations, expected to have a continuing impact on the combined results of operations. The unaudited pro forma combined financial information does not reflect the impact of possible revenue enhancements or cost savings initiatives.
| 3. | Adjustments to Unaudited Pro Forma Combined Statements of Operations |
Presented below are the Notes to the accompanying unaudited proforma combined statements of operations:
| (A) | Adjustment is to reflect the 86,419,752 shares issued as consideration for the purchase of ECS Labs. |
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