UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q
___________________
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
| For the quarterly period ended: June 30, 2024 |
|
or |
| |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
| For the transition period from: _____________ to _____________ |
Commission File Number: 000-53571
Cannabis Sativa, Inc. |
(Exact name of registrant as specified in its charter) |
Nevada | | 20-1898270 |
(State or Other Jurisdiction | | (I.R.S. Employer |
of Incorporation) | | Identification No.) |
355 W. Mesquite Blvd. #C-70 Mesquite, Nevada 89027
(Address of Principal Executive Office) (Zip Code)
(702) 762-3123
(Registrant’s telephone number, including area code)
N/A
(Former name, former address, and former fiscal year, if changed since last report)
———————
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered. |
None | | |
1
Indicate by check mark whether the 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. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically 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). ☒ 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 | ☐ | Smaller reporting company | ☒ |
Emerging growth company | ☒ | | |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
The number of shares of the issuer’s Common Stock outstanding as of August 13, 2024, is 108,119,505.
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Attached after signature page.
Item 1C. Cybersecurity
We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. We currently have security measures in place to protect our clients, customers, employees, and vendor information and prevent data loss and other security breaches. We only use third party software for accounting, billing and payroll that has robust compliance and is actively involved in continuous assessment of risks from cybersecurity threats, including prevention, mitigation, detection, and remediation of cybersecurity incidents.
Our CEO is responsible for overseeing our business operations and is responsible for day-to-day assessment and confers weekly with subsidiary webmaster to understand any risks from cybersecurity threats, including the prevention, mitigation, detection, and remediation of cybersecurity incidents.
As our core operations are virtual, it is routine to undertake activities to prevent, detect, and minimize the effects of cybersecurity incidents, maintain business continuity, contingency, and have recovery plans for use in the event of a cybersecurity incident by the administering of local and cloud based back up of files and emails. We currently do not carry a cyber liability insurance policy but are evaluating whether to acquire one to mitigate any financial impact of a cybersecurity breach.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Certain statements in this Report constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, among others, uncertainties relating to general economic and business conditions; industry trends; changes in demand for our products and services; uncertainties relating to customer plans and commitments and the timing of orders received from customers; announcements or changes in our pricing policies or that of our competitors; unanticipated delays in the development, market acceptance or installation of our products and services; changes in government regulations; availability of management and other key personnel; availability, terms, and deployment of capital; relationships with third-party equipment suppliers; and worldwide political stability and economic growth. The words “believe,” “expect,” “anticipate,” “intend” and “plan” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.
3
Results of Operations
Three Months Ended June 30, 2024, compared with the Three Months Ended June 30, 2023
| | Three Months Ended | |
| | A | | | B | | | A-B | |
| | June 30, | | | June 30, | | | Change | | | Change % | |
2024 | 2023 |
REVENUE | | $ | 234,391 | | | $ | 323,197 | | | $ | (88,806) | | | | (27) | % |
Cost of revenues | | | 84,102 | | | | 120,608 | | | | (36,506) | | | | (30) | % |
Cost of sales % of total sales | | | 36 | % | | | 37 | % | | | | | | | (1) | % |
Gross profit | | | 150,289 | | | | 202,589 | | | | (52,300) | | | | (26) | % |
Gross profit % of sales | | | 64 | % | | | 63 | % | | | | | | | |
EXPENSES | | | | | | | | | | | | | | | | |
Professional fees | | | 91,597 | | | | 108,757 | | | | (17,160) | | | | (16) | % |
Depreciation and amortization | | | 302 | | | | 37,990 | | | | (37,688) | | | | (99) | % |
Wages and salaries | | | 97,009 | | | | 209,690 | | | | (112,681) | | | | (54) | % |
Advertising | | | 6,052 | | | | 4,630 | | | | 1,422 | | | | 31 | % |
General and administrative | | | 153,274 | | | | 146,339 | | | | 6,935 | | | | 5 | % |
Total expenses | | | 348,234 | | | | 507,406 | | | | (159,172) | | | | (31) | % |
NET LOSS FROM CONTINUING OPERATIONS | | | (197,945) | | | | (304,817) | | | | 106,872 | | | | (35) | % |
Revenue for the three months ended June 30, 2024, decreased 27% compared to the three months ended June 30, 2023. Cost of revenues as a percentage of sales decreased 30% between the periods. The decrease in revenues is primarily a result of the significant increase in competition for market share in the cannabis tele-medicine industry. This decrease in the demand for our service continued during the second quarter of 2024.
Total operating expenses decreased in June 30, 2024 compared with 2023 which trended down as did revenue in the current period. Decreases in professional fees, depreciation and amortization, wages and salaries expenses. Professional fees decreased with continuing efforts at cost reduction. PrestoDoctor management salaries also decreased in the three months ended June 30, 2024.
4
| | Six Months Ended | |
| | A | | | B | | | A-B | |
| | June 30, | | | June 30, | | | Change | | | Change % | |
2024 | 2023 |
REVENUE | | $ | 459,522 | | | $ | 668,565 | | | $ | (209,043) | | | | (31) | % |
Cost of revenues | | | 183,120 | | | | 226,009 | | | | (42,889) | | | | (19) | % |
Cost of sales % of total sales | | | 40 | % | | | 34 | % | | | | | | 6 | % |
Gross profit | | | 276,402 | | | | 442,556 | | | | (166,154) | | | | (38) | % |
Gross profit % of sales | | | 60 | % | | | 66 | % | | | | | | | |
EXPENSES | | | | | | | | | | | | | | | | |
Professional fees | | | 149,234 | | | | 161,898 | | | | (12,664) | | | | (8) | % |
Depreciation and amortization | | | 2,727 | | | | 75,979 | | | | (73,252) | | | | (96) | % |
Wages and salaries | | | 211,080 | | | | 324,793 | | | | (113,713) | | | | (35) | % |
Advertising | | | 7,932 | | | | 7,476 | | | | 456 | | | | 6 | % |
General and administrative | | | 278,165 | | | | 289,588 | | | | (11,423) | | | | (4) | % |
Total expenses | | | 649,138 | | | | 859,734 | | | | (210,596) | | | | (25) | % |
NET LOSS FROM CONTINUING OPERATIONS | | | (372,736) | | | | (417,178) | | | | 44,442 | | | | 11 | % |
Revenue for the six months ended June 30, 2024, decreased 31% compared to the six months ended June 30 2023. Cost of revenues as a percentage of sales increased 6% between the periods. The decrease in revenues is primarily a result of the significant increase in competition for market share in the cannabis tele-medicine industry. This decrease in the demand for our service continued during the second quarter of 2024.
Total operating expenses decreased in June 30, 2024 compared with 2023 which trended down as did revenue in the current period. Decreases in professional fees, depreciation and amortization, wages and salaries and general and administrative expenses. Professional fees decreased with continuing efforts at cost reduction. PrestoDoctor management salaries also decreased in the six months ended June 30, 2024.
Liquidity and Capital Resources
Cash used in operating activities was $62,809 in the six months ended June 30,2024. We ended the second quarter of 2024 with $61,193 in cash on hand.
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. We incurred net losses of $613,344 and $816,437, respectively, for the six months ended June 30, 2024, and 2023 and had an accumulated deficit of $82,659,595 as of June 30, 2024. The Company may seek to raise money for working capital purposes through a public offering of its equity capital or through a private placement of equity capital or convertible debt. It will be important for the Company to be successful in its efforts to raise capital in this manner if it is going to be able to further its business plan in an aggressive manner. Raising capital in this manner will cause dilution to current shareholders.
5
The amount of cash on hand the Company has does not provide sufficient liquidity to meet the immediate needs of our current operations.
Off Balance Sheet Arrangements
None
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Conclusions of Management Regarding Effectiveness of Disclosure Controls and Procedures
At the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act). Based on that evaluation, the CEO and the CFO have concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective as it was determined that there were material weaknesses affecting our disclosure controls and procedures.
Management of the Company believes that these material weaknesses are due to the small size of the company’s accounting staff. The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of remediation. To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external legal and accounting professionals. As the Company grows, management expects to increase the number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting during the quarter ended June 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
We are not a party to any material legal proceedings, and, to the best of our knowledge, no such legal proceedings have been threatened against us.
Item 1A. Risk Factors
Not required.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None.
6
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The following documents are included as exhibits to this report:
(a) Exhibits
(1) Incorporated by reference to Exhibits 3.01 and 3.02 of the Company’s Registration Statement on Form 10 filed January 28, 2009.
(2) XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Cannabis Sativa, Inc.
Date: August 13, 2024
By: | /s/ David Tobias | |
| David Tobias Principal Executive Officer Principal Financial Officer | |
8
CANNABIS SATIVA, INC. |
|
Contents |
FS - 1
CANNABIS SATIVA, INC. | | | |
| | | |
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED |
| | | |
| June 30, | | December 31, |
| 2024 | | 2023 |
ASSETS | | | |
Current Assets | | | |
Cash | $61,193 | | $83,762 |
Investment in equity securities, at fair value | 25,500 | | 66,000 |
Right of use asset | - | | 10,232 |
| | | |
Total Current Assets | 86,693 | | 159,994 |
| | | |
| | | |
Advances to related party | 75,054 | | 75,054 |
Property and equipment, net | 2,299 | | 2,436 |
Intangible assets, net | 4,669 | | 7,259 |
Goodwill | 1,775,811 | | 1,775,811 |
| | | |
Total Assets | $1,944,526 | | $2,020,554 |
| | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| | | |
Current Liabilities | | | |
Accounts payable and accrued expenses | $141,841 | | $175,066 |
Operating lease liability, current | - | | 10,232 |
Accrued interest - related parties | 20,353 | | 20,130 |
Fair value of convertible component in convertible loans | 174,490 | | - |
Convertible notes payable | 230,560 | | 118,818 |
Notes payable to related parties | 197,410 | | 161,170 |
| | | |
Total Current Liabilities | 764,654 | | 485,416 |
| | | |
Long-term liabilities | | | |
Stock payable | 883,392 | | 777,747 |
| | | |
Total Liabilities | 1,648,046 | | 1,263,163 |
| | | |
Commitments and contingencies (Notes 6 and 8) | | | |
| | | |
Stockholders' Equity | | | |
Common stock $0.001 par value; 495,000,000 shares authorized; 103,014,672 and 88,814,037 shares issued and outstanding, respectively | 103,015 | | 88,815 |
Additional paid-in capital | 81,530,429 | | 81,392,196 |
Accumulated deficit | (82,659,595) | | (82,083,492) |
| | | |
Total Cannabis Sativa, Inc. Stockholders' Deficit | (1,026,151) | | (602,481) |
| | | |
Non-Controlling Interest | 1,322,631 | | 1,359,872 |
| | | |
Total Stockholders' Equity | 296,480 | | 757,391 |
| | | |
Total Liabilities and Stockholders' Equity | $1,944,526 | | $2,020,554 |
| | | |
| | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
FS - 2
CANNABIS SATIVA, INC. | | | | | | | | | |
| | | | | | | | | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED |
|
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, | | June 30, | | June 30, |
| | | 2023 | | 2022 | | 2024 | | 2023 |
| | | | | | | | | |
Revenues | | | $234,391 | | $323,197 | | $459,522 | | $668,565 |
| | | | | | | | | |
Cost of Revenues | | | 84,102 | | 120,608 | | 183,120 | | 226,009 |
| | | | | | | | | |
Gross Profit | | | 150,289 | | 202,589 | | 276,402 | | 442,556 |
| | | | | | | | | |
Operating Expenses | | | | | | | | | |
Professional fees | | | 91,597 | | 108,757 | | 149,234 | | 161,898 |
Depreciation and amortization | | | 302 | | 37,990 | | 2,727 | | 75,979 |
Wages and salaries | | | 97,009 | | 209,690 | | 211,080 | | 324,793 |
Advertising | | | 6,052 | | 4,630 | | 7,932 | | 7,476 |
General and administrative | | | 153,274 | | 146,339 | | 278,165 | | 289,588 |
| | | | | | | | | |
Total Operating Expenses | | | 348,234 | | 507,406 | | 649,138 | | 859,734 |
| | | | | | | | | |
Loss from Operations | | | (197,945) | | (304,817) | | (372,736) | | (417,178) |
| | | | | | | | | |
Other (Income) and Expenses | | | | | | | | | |
Unrealized (gain) loss on investment | | | (7,350) | | 2,400 | | 7,500 | | 213,883 |
(Gain) loss on debt settlement | | | 16,109 | | (114) | | 7,776 | | 10,527 |
Loss on return of investment securities | | | - | | - | | 33,000 | | 155,735 |
Financial expense | | | 184,072 | | 9,233 | | 192,332 | | 19,114 |
| | | | | | | | | |
Total Other (Income) Expenses, Net | | | 192,831 | | 11,519 | | 240,608 | | 399,259 |
| | | | | | | | | |
Loss Before Income Taxes | | | (390,776) | | (316,336) | | (613,344) | | (816,437) |
| | | | | | | | | |
Income Taxes | | | - | | - | | - | | - |
| | | | | | | | | |
Net Loss for the Period | | | (390,776) | | (316,336) | | (613,344) | | (816,437) |
| | | | | | | | | |
Income (loss) attributable to non-controlling interest - PrestoCorp | | | (14,946) | | 16,150 | | (37,242) | | 38,971 |
| | | | | | | | | |
Net Loss for the Period Attributable To Cannabis Sativa, Inc. | | | $(375,830) | | $(332,486) | | $(576,102) | | $(855,408) |
| | | | | | | | | |
| | | | | | | | | |
Net Loss for the Period per Common Share: Basic & Diluted | | $(0.00) | | $(0.01) | | $(0.01) | | $(0.02) |
| | | | | | | | | |
Weighted Average Common Shares Outstanding: | | | | | | | | | |
Basic & Diluted | | | 94,364,400 | | 48,169,783 | | 91,619,670 | | 46,926,618 |
| | | | | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
FS - 3
CANNABIS SATIVA, INC. | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023 |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | Common Stock | | | | | | | | | | | |
| | Shares | | Amount | | Additional Paid-In Capital | | Accumulated Deficit | | Non-controlling Interest - Prestocorp | | | Total | | |
| | | | | | | | | | | | | | | |
Balance - January 1, 2023 | | 45,566,363 | | $45,567 | | $80,939,618 | | $(80,603,069) | | $1,290,566 | | | $1,672,682 | | |
Common stock issued - note payable conversion | | 320,513 | | 321 | | 25,316 | | - | | - | | | 25,637 | | |
Net loss for the period | | - | | - | | - | | (522,922) | | 22,821 | | | (500,101) | | |
| | | | | | | | | | | | | | | |
Balance - March 31, 2023 | | 45,886,876 | | 45,888 | | 80,964,934 | | (81,125,991) | | 1,313,387 | | | 1,198,218 | | |
Common stock issued - note payable conversion | | 1,711,397 | | 1,711 | | 37,289 | | - | | - | | | 39,000 | | |
Common stock issued for services | | 2,450,000 | | 2,450 | | 85,750 | | - | | - | | | 88,200 | | |
Net loss for the period | | - | | - | | - | | (332,486) | | 16,150 | | | (316,336) | | |
| | | | | | | | | | | | | | | |
Balance - June 30, 2023 | | 50,048,273 | | $50,049 | | $81,087,973 | | $(81,458,477) | | $1,329,537 | | | $1,009,082 | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Balance - January 1, 2024 | | 88,814,037 | | $88,815 | | $81,392,196 | | $(82,083,492) | | $1,359,872 | | | $757,391 | | |
Net loss for the period | | - | | - | | - | | (200,273) | | (22,295) | | | (222,568) | | |
| | | | | | | | | | | | | | | |
Balance - March 31, 2024 | | 88,814,037 | | 88,815 | | 81,392,196 | | (82,283,765) | | 1,337,577 | | | 534,823 | | |
Common stock issued - notes payable conversion | | 2,580,159 | | 2,580 | | 25,993 | | - | | - | | | 28,573 | | |
Common stock issued for services in accounts payable | 11,620,476 | | 11,620 | | 112,240 | | - | | - | | | 123,860 | | |
Net loss for the period | | - | | - | | - | | (375,830) | | (14,946) | | | (390,776) | | |
| | | | | | | | | | | | | | | |
Balance - June 30, 2024 | | 103,014,672 | | $103,015 | | $81,530,429 | | $(82,659,595) | | $1,322,631 | | | $296,480 | | |
| | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | | |
FS - 4
CANNABIS SATIVA, INC. | | | | | |
| | | | | | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED |
| | | | | | |
| | | | | | |
For the six months ended June 30, | | 2024 | | | 2023 |
| | | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
| Net loss for the period | | $(613,344) | | | $(816,437) |
| Adjustments to reconcile net loss for the period to net cash | | | | | |
| used in operating activities: | | | | | |
| Unrealized loss (gain) on investments | | 7,500 | | | 213,883 |
| Depreciation and amortization | | 2,727 | | | 75,979 |
| Loss on debt settlement | | 7,776 | | | 10,527 |
| Loss on return of investment securities | | 33,000 | | | 155,735 |
| Stock issued for services | | - | | | 88,200 |
| Stock payable for services | | 231,250 | | | 196,527 |
| Note payable issued for services | | 30,000 | | | 55,000 |
| Changes in Assets and Liabilities: | | | | | |
| Change in fair value of convertible component in convertible loans | | 174,490 | | | - |
| Accounts payable and accrued expenses | | 62,352 | | | (31,321) |
| Accrued interest - related parties | | 1,440 | | | 50 |
| Net Cash Used in Operating Activities | | (62,809) | | | (51,857) |
| | | | | | |
| Cash Flows from Investing Activities: | | | | | |
| Proceeds from sale of stock held for investment | | - | | | 9,040 |
| Advances to related party | | - | | | (19,388) |
Net Cash Used in Investing Activities | | - | | | (10,348) |
| | | | | | |
| Cash Flows from Financing Activities: | | | | | |
| Proceeds from convertible note payable | | 30,000 | | | - |
| Proceeds from related parties notes payable, net | | 10,240 | | | 22,884 |
| Net Cash Provided by Financing Activities | | 40,240 | | | 22,884 |
| | | | | | |
NET CHANGE IN CASH | | (22,569) | | | (39,321) |
| | | | | | |
CASH AT BEGINNING OF PERIOD | | 83,762 | | | 97,445 |
| | | | | | |
CASH AT END OF PERIOD | | $61,193 | | | $58,124 |
| | | | | | |
Supplemental Disclosures of Non Cash Activities: | | | | | |
Noncash investing and financing activities | | | | | |
Shares issued in consideration of convertible notes and interest payable – related parties | | $7,453 | | | $30,000 |
Shares issued in consideration of convertible notes payable | | $21,120 | | | $39,000 |
Convertible note issued for payable | | $86,022 | | | $- |
Common stock issued for services in accounts payable | | $123,860 | | | $- |
| | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. |
FS - 5
CANNABIS SATIVA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2024 and 2023
1. Organization and Summary of Significant Accounting Policies
Nature of Business:
Cannabis Sativa, Inc. (the “Company,” “us”, “we” or “our”) was incorporated as Ultra Sun Corp. under the laws of Nevada in November 2004. On November 13, 2013, we changed our name to Cannabis Sativa, Inc. We operate through several subsidiaries including:
·PrestoCorp, Inc. (“PrestoCorp”)
·Wild Earth Naturals, Inc. (“Wild Earth”)
·Kubby Patent and Licenses Limited Liability Company (“KPAL”)
·Hi Brands, International, Inc. (“Hi Brands”)
·Eden Holdings LLC (“Eden”).
PrestoCorp is a 51% owned subsidiary. Wild Earth, KPAL, Hi Brands, and Eden are wholly owned subsidiaries. At June 30, 2024 and December 31, 2023, PrestoCorp is the sole operating subsidiary.
Our primary operations for the six months ended June 30, 2024 were through PrestoCorp, which provides telemedicine online referral services for customers desiring medical marijuana cards in states where medical marijuana has been legalized. The Company is actively seeking new business opportunities for acquisition and is continually reviewing opportunities for product and brand development through our Wild Earth, Hi Brands, and KPAL subsidiaries.
Basis of Presentation
Operating results for the three and six months ended June 30, 2024, may not be indicative of the results expected for the full year ending December 31, 2024. For further information, refer to the financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The interim financial statements should be read in conjunction with audited financial statements and related footnotes set forth in our annual report filed on Form 10-K for the year ended December 31, 2023, as filed with the United States Securities and Exchange Commission on May 14, 2024.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of June 30, 2024, and its results of operations, cash flows, and changes in stockholders’ equity for the three and six months ended June 30, 2024. The financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States (‘GAAP”) for complete financial statements.
Principles of Consolidation:
The condensed consolidated financial statements include the accounts of Cannabis Sativa, Inc. (the “Company” or “CBDS”), and its wholly-owned subsidiaries and PrestoCorp, a 51% owned subsidiary. All significant inter-company balances have been eliminated in consolidation.
Going Concern:
The Company has an accumulated deficit of $82,659,595 at June 30, 2024, which, among other factors, raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they are due.
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CANNABIS SATIVA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2024 and 2023
Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions by management affect the allowance for doubtful accounts, the carrying value of long-lived assets (including goodwill and intangible assets), the provision for income taxes and related deferred tax accounts, certain accrued liabilities, revenue recognition, contingencies, and the value attributed to stock-based awards.
Net Loss per Share:
Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period and contains no dilutive securities. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company. Potentially dilutive shares are excluded from the calculation of diluted net loss per share because the effect is anti-dilutive. For the six months ended June 30, 2024 and December 31, 2023 the Company had -0- and 50,000 outstanding warrants, respectively, and -0- shares of convertible preferred stock, respectively, that would be dilutive to future periods net income if converted.
Reclassifications
Certain amounts in the prior year financial statements have been reclassified to conform with current year presentation. The reclassifications made to the prior year have no impact on net income or overall presentation of the financial statements.
Recent Accounting Pronouncement:
Accounting Standards Updates Adopted
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12 Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The update is to address issues identified as a result of the complexity associated with applying generally accepted accounting principles for certain financial instruments with characteristics of liabilities and equity. The update is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and with early adoption permitted. Early adoption of this update had no impact on the Company’s consolidated financial statements.
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.
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CANNABIS SATIVA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2024 and 2023
2. Intangibles and Goodwill
The Company considers all intangibles to be definite-lived assets with lives of 5 to 10 years. Intangibles consisted of the following at June 30, 2024 and December 31, 2023:
| June 30, 2024 | | December 31, 2023 |
CBDS.com website (Cannabis Sativa) | $13,999 | | $13,999 |
Intellectual Property Rights (PrestoCorp) | 240,000 | | 240,000 |
Patents and Trademarks (KPAL) | 1,281,411 | | 1,281,411 |
Total Intangibles | 1,535,410 | | 1,535,410 |
Less: Accumulated Amortization | (1,530,741) | | (1,528,151) |
Net Intangible Assets | $4,669 | | $7,259 |
Amortization expense for the three and six months ended June 30, 2024 and 2023 was $233 (2023: $37,921) and $2,590 (2023: $75,842), respectively.
Amortization of intangibles through 2029 is:
July 1, 2024 to June 30, 2025 | | $ | 932 |
July 1, 2025 to June 30, 2026 | | | 932 |
July 1, 2026 to June 30, 2027 | | | 932 |
July 1, 2027 to June 30, 2028 | | | 932 |
July 1, 2028 to June 30, 2029 | | | 932 |
Goodwill in the amount of $3,010,202 was recorded as part of the acquisition of PrestoCorp that occurred on August 1, 2017. Cumulative impairment of the PrestoCorp goodwill totals $1,234,391 as of June 30, 2024 and December 31, 2023. The balance of goodwill at June 30, 2024 and December 31, 2023 was $1,775,811.
3. Related Party Transactions
In addition to items disclosed in Notes 6, the Company had additional related party transactions during the six months ended June 30, 2024 and 2023.
Historically, the Company has received funds from borrowings on notes payable and advances from related parties and officers of the Company to cover operating expenses. Related parties include the officers and directors of the Company and a significant shareholder holding in excess of 10% of the Company’s outstanding shares.
During the six months ended June 30, 2024 and 2023, David Tobias, the Company’s chief executive officer and director, loaned $10,240 and $22,721, respectively to the Company for notes payable bearing interest at the rate of 5% per annum due on December 31, 2024. The note payable totaled $58,160 and $47,921 at June 30, 2024 and December 31, 2023, respectively.
During the six months ended June 30, 2024, the Company and Cathy Carroll, director, entered into a note payable for $15,000 for compensation due her for services. Ms. Carroll’s note bears interest at 5% per annum and is due December 31, 2024. The note payable totaled $139,250 and $109,250 at June 30, 2024 and December 31, 2023, respectively.
The Company also has an outstanding loan in the amount of $4,000 to a director of the Company. It accrues interest at 5% per annum. On May 22, 2024, the Company paid off this loan and the accrued interest with stock. See Note 6.
During the three and six months ended June 30, 2024 and 2023, the Company recorded interest expense related to notes payable to related parties at the rates between 5% and 8% per annum in the amounts of $689 (2023: $6,158) and $1,440 (2023: $11,815), respectively.
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CANNABIS SATIVA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2024 and 2023
The following tables reflect the related party payable balances.
| Related party payables | | Accrued interest | | Total |
| June 30, 2024 |
David Tobias, CEO & Director | $58,160 | | $17,461 | | $75,621 |
New Compendium, greater than 10% Shareholder | - | | 1,906 | | 1,906 |
Stock payable | 413,750 | | - | | 413,750 |
Cathy Carroll, Director | 139,250 | | 986 | | 140,236 |
Totals | $611,160 | | $20,353 | | $631,513 |
| Related party payables | | Accrued interest | | Total |
| December 31, 2023 |
David Tobias, CEO & Director | $47,920 | | $13,779 | | $61,699 |
New Compendium, greater than 10% Shareholder | - | | 1,906 | | 1,906 |
Cathy Carroll, Director | 109,250 | | 986 | | 110,236 |
Stock payable | 332,500 | | - | | 332,500 |
Other Affiliates | 4,000 | | 1,200 | | 5,200 |
Totals | $493,670 | | $17,871 | | $511,541 |
At June 30, 2024 and December 31, 2023, the Company has a balance due from MJ Harvest, Inc., with whom the Company plans to merge, of $75,054 (see Note 9). The amount is included in advances to related party on the condensed consolidated balance sheets. The funds were advanced to MJ Harvest, Inc. to cover operating expenses.
The following tables reflect the related party transactions.
| Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 |
Director fee | $11,875 | $11,875 | 11,875 | 11,875 |
Outside services | 59,375 | 59,375 | 118,750 | 118,750 |
Management fee | 9,923 | 23,625 | 27,287 | 44,100 |
Payroll expenses | 38,896 | - | 38,896 | - |
4. Investments
At June 30, 2024 and December 31, 2023, the Company owns -0- shares of common stock of Medical Cannabis Payment Solutions (ticker: REFG). In January 2023, the Company sold all of its holdings in REFG for $9,041 and recognized a loss of $155,735.
In 2021, the Company received 1,500,000 shares of common stock and 1,500,000 shares of preferred stock of THC Pharmaceuticals Inc. (ticker: CBDG). The CBDG shares were received as consideration for the sale of the Company’s majority interest in iBud and GKMP in the year ended December 31, 2021. On the date of sale, the shares were valued at fair value which was $0.20 per share or $600,000 in the aggregate. The Company’s Chief Executive Officer and Chairman of the Board, David Tobias is a Director of CBDG. On January 1, 2024, the preferred shares were returned to CBDG.
The Company’s investment in CBDG represents 15% of CBDG’s voting shares on a fully diluted basis which, coupled with Mr. Tobias’ position as a director and his individual investment in CBDG, results in the Company having significant influence over CBDG. The Company elected to account for its investment in CBDG at fair value because
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CANNABIS SATIVA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2024 and 2023
the Company does not intend to hold the investment for a long period of time and the shares are readily marketable. The fair value of the Company’s investment at June 30, 2024 and December 31, 2023 was $25,500 and $66,000 resulting in a unrealized (gain) loss of ($7,350) (2023: $2,400) and $7,500 (2023: $213,883) for the change in fair value during the three and six months ended June 30, 2024 and 2023, respectively. The returned preferred shares are accounted for as a loss on return of investment securities on the statement of operations for the six months ended June 30, 2024 in the amount of $33,000.
5. Convertible Notes Payable
On January 1, 2023, the Company entered into an agreement with Carolyn Merrill (“Carolyn”) whereby the Company issued a convertible note to Carolyn with a principal amount of $72,262. As stated in the January 1, 2023, agreement Ms Merrill’s contract compensation will also be added to the note for her services through March 31, 2023 in the amount of $25,000. On December 19, 2023, $11,500 of note payable was converted to 6,700,000 shares common stock which were valued at $36,800 resulting in a loss on conversion of $25,300. Note payable at December 31, 2023 was $85,762. The note bears interest at 8% and has a term of one year when payment of principal and interest is due and 12% thereafter. If payment by S-8 shares the amount paid will be with a 10% discount, if by agreement and paid with restricted stock will be with a 30% discount. Both methods are calculated using the average of the lowest 3 closing prices during the 30 trading days preceding the request for conversion.
The Company accounted for the note in accordance with ASC 470-20, Debt with conversion and other Options. As of June 30, 2024, the conversion feature was revalued at $27,083.
On September 18, 2023, the Company entered into an agreement with Quick Capital, LLC whereby the Company issued a convertible note with a principal amount of $33,055. The maturity date is nine months after the issue date, accruing interest at 12% per annum and can be converted after 180 days from date of issue at a fixed rate of $0.01 per share. On June 26, 2024, Quick Capital converted $7,613 of note payable, $2,967 accrued interest and $1,420 fees for a total of $12,000 into 1,200,000 shares common stock. The market value on June 26, 2024 was $0.0176 or a market value of $21,120 which gave rise to a loss on conversion of $9,120.
The Company accounted for the note in accordance with ASC 470-20, Debt with conversion and other Options. As of June 30, 2024, the conversion feature was revalued at $103.
On August 16, 2023, the Company entered into an agreement with Colonial Stock Transfer Company, Inc., (“CSTC”) whereby the Company issued a convertible note to CSTC with a principal amount of $11,020. The note bears interest at 10% and has a term of one year when payment of principal and interest is due. If payment by S-8 shares the amount paid will be with a 10% discount, if by agreement and paid with restricted stock will be with a 25% discount. The conversion methods are calculated using the lowest closing prices during the 25 trading days preceding the request for conversion.
On January 15, 2024, the Company entered into an agreement with Carolyn Merrill (“Carolyn”) whereby the Company issued a convertible note to Carolyn with a principal amount of $75,000. The note bears interest at 5% and has a term of one year when payment of principal and interest is due. If payment by S-8 shares the amount paid will be with a 10% discount, if by agreement and paid with restricted stock will be with a 30% discount. Both methods are calculated using the average of the lowest 3 closing prices during the 30 trading days preceding the request for conversion.
The Company accounted for the note in accordance with ASC 470-20, Debt with conversion and other Options. As of June 30, 2024, the conversion feature was revalued at $147,304.
On May 22, 2024, the Company entered into an agreement with Quick Capital, LLC whereby the Company issued a convertible note with a principal amount of $33,333. The Company received $25,000 after loan costs of $5,000 and original issue discount of $3,333. The original issue discount is included in loss on debt settlement. The maturity date is nine months after the issue date, accruing interest at 12% per annum and can be converted after 180 days from date of issue at a fixed rate of $0.02 per share.
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CANNABIS SATIVA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2024 and 2023
The Company accounted for the note in accordance with ASC 470-20, Debt with conversion and other Options. As of June 30, 2024, the conversion feature was revalued at $0.
Interest expense for the three and six months ended June 30, 2024 and 2023 was $2,144 (2023: $6,157) and $10,146 (2023: $11,815), respectively. Accrued interest payable is included in accounts payable and accrued expenses on the condensed consolidated balance sheet.
6. Stockholders’ Equity
Change in Authorized Shares
The Company increased the number of authorized common shares the Company is authorized to issue to 495,000,000 on August 8, 2022. This change in capital structure was approved without a meeting by the consent of the shareholders holding a majority of the common stock outstanding and Articles of Amendment were filed with the State of Nevada.
Securities Issuances
During the six months ended June 30, 2023, 2,031,910 shares of common stock were issued to convert $54,000 of a note payable to a non-related party. See Note 5.
During the six months ended June 30, 2023, 2,450,000 shares of common stock were issued to pay bonuses in the amount of $88,200.
During the six months ended June 30, 2024, 11,620,476 shares of common stock were issued to pay services that were included in accounts payable at December 2023 in the amount of $123,860.
During the six months ended June 30, 2024, 1,380,159 shares of common stock were issued to convert $4,000 of a note payable and $1,217 of accrued interest to a related party. The note was converted at a discount of 30% at a average of the lowest closing prices for 30 days prior to January 29, 2024 which produced a loss on debt settlement of $2,236. See Note 3.
During the six months ended June 30, 2024, 1,200,000 shares of common stock were issued to convert $7,613 of a note payable, $2,967 of accrued interest and $1,420 of fees. The note was converted at a flat rate of $0.01. Market value at date of conversion was $0.0176 which produced a loss on debt settlement of $9,120. See Note 5.
Stock payable at June 30, 2024 consists of 22,548,554 preferred shares and 15,478,008 restricted common shares owed to members of the board of directors and officers for directors’ fees and contract services. These shares were valued at $743,750 based on the fair value of the Company’s common stock at the date of board authorization. An additional 4,702,249 common shares were owed to as non-related vendor at June 30, 2024 valued at $139,643 based on the fair value of the Company’s common stock at the date of board authorization.
Stock Compensation Plans
2020 Stock Plan
On September 25, 2020, the Company adopted the Cannabis Sativa 2020 Stock Plan which authorized the Company to utilize common stock to compensate employees, officers, directors, and independent contractors for services provided to the Company. By resolution dated September 25, 2020, the Company authorized up to 1,000,000 shares of common stock to be issued pursuant to the 2020 Stock Plan. This amount was subsequently increased to 2,000,000 shares on January 27, 2021. At June 30, 2024 and December 31, 2023 44,425 shares were available for future issuance.
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CANNABIS SATIVA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2024 and 2023
7. Commitments and Contingencies
Litigation.
In the ordinary course of business, we may face various claims brought by third parties and we may, from time to time, make claims or take legal actions to assert our rights, including intellectual property disputes, contractual disputes and other commercial disputes. Any of these claims could subject us to litigation. As of June 30, 2024, no claims are outstanding.
8. Proposed Merger with MJ Harvest, Inc.
On August 8, 2022, the Company entered into a Merger Agreement (the “Merger Agreement”) with MJ Harvest, Inc. (“MJHI”). Pursuant to the Merger Agreement, MJHI will merge with and into the Company and the Company will be the surviving corporation in the Merger. The Merger is expected to be consummated once the shareholders of the Company and the shareholders of MJHI approve the Merger which management expects will be completed early in the second quarter of calendar year 2023. The terms of the Merger Agreement are summarized below:
·The name of the surviving company in the Merger will be Cannabis Sativa, Inc.
·Each share of MJHI common stock outstanding on the effective date of the Merger will be converted into 2.7 shares of CBDS Common Stock.
·The Merger is subject to majority approval of the shareholders of both MJHI and CBDS.
·The shareholders of MJHI and CBDS will have rights to dissent from the Merger, and, if the notice of dissent is properly given, the dissenting shareholders may be paid fair value for such dissented shares.
·The Board of Directors of the surviving company following the Merger is intended to consist of Patrick Bilton, Randy Lanier, Clinton Pyatt, and David Tobias.
·The Executive Officers of the Company following the Merger are intended to include Patrick Bilton - Chief Executive Officer, Clinton Pyatt - Chief Operating Officer.
·The Merger Agreement includes representations and warranties, covenants, and conditions for MJHI and CBDS as are customary for transactions of this nature.
·No brokerage fees are payable in connection with the Merger.
·If majority shareholder approval of the merger is not obtained, the Merger will not occur, and the Merger Agreement will be terminated.
·All costs and expenses in connection with the Merger transactions will be borne by CBDS, except that MJHI will be responsible for expenses of its own legal counsel and auditing costs.
The merger was withdrawn with the SEC in August 2023. The Company and MJ Harvest are continuing discussions in hopes of completing this transaction.
9. Subsequent events
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and determined that there are no additional material subsequent events to report.
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