Cannabis Sativa, Inc. - Quarter Report: 2015 March (Form 10-Q)

cann10q03312015.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934
For the quarterly period ended: March 31, 2015
or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934
For the transition period from: _____________ to _____________

———————

Cannabis Sativa, Inc.

(Exact name of registrant as specified in its charter)

———————

NEVADA	000-53571	20-1898270
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation)	File Number)	Identification No.)

1646 W. Pioneer Blvd., Suite 120, Mesquite, Nevada 89027

(Address of Principal Executive Office) (Zip Code)

(702) 346-3906

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

———————

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. x Yes o 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). x Yes o 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	o			Accelerated filer	o
Non-accelerated filer	o			Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

The number of shares of the issuer’s Common Stock outstanding as of May 15, 2015 is 16,037,238.

INDEX

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheet – As of March 31, 2015 (Unaudited) and December 31, 2014
	Condensed Consolidated Statements of Operations (Unaudited) – For the Three Months Ended March 31, 2015 and 2014
	Condensed Consolidated Statements of Cash Flows (Unaudited) – For the Three Months Ended March 31, 2015 and 2014
	Notes to Condensed Consolidated Financial Statements

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.	Quantitative and Qualitative Disclosure About Market Risk

Item 4.	Controls and Procedures

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings

Item 1A.	Risk Factors

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.	Defaults Upon Senior Securities

Item 4.	Mine Safety Disclosures

Item 5.	Other Information

Item 6.	Exhibits

SIGNATURES

INDEX

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements.

CANNABIS SATIVA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS
		March 31,			December 31,
		2015			2014
		(Unaudited)
Current Assets
Cash and cash equivalents		$	13,329		$	25,994
Accounts receivable, net			-			-
Employee advance			-			13
Inventory			17,797			17,837
Available-for-sale securities			9,698			4,876
Prepaids			5,318,083			625,000

	Total Current Assets		5,358,907			673,720

Property and equipment, net			6,889			7,037
Intangibles, net			2,969,235			2,999,292
Deposits			1,031			1,031

	Total Assets	$	8,336,062		$	3,681,080

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
Accounts payable and accrued expenses		$	153,791		$	482,942
Due to related parties - short term			2,556,741			2,472,086
Accrued interest			5,667			5,667
	Total Current Liabilities		2,716,199			2,960,695
Due to related parties - long term			1,000,000			1,000,000
	Total Liabilities		3,716,199			3,960,695

Stockholders' Equity (Deficit)
Preferred stock, $.001 par value, 5,000,000 shares authorized,
None issued or outstanding			-			-
Common stock, $.001 par value, 45,000,000 shares authorized,
16,037,238 and 15,114,738 issued and outstanding, respectively			16,037			15,115
Accumulated other comprehensive income			9,698			4,876
Non-controlling interest			894			894
Additional paid-in capital			53,296,420			46,614,604
Retained deficit			(48,703,186	)		(46,915,104	)
	Total Stockholders' Equity (Deficit)		4,619,863			(279,615	)
	Total Liabilities and Stockholders' Equity (Deficit)	$	8,336,062		$	3,681,080

The Accompanying Notes are an Integral

Part of these Condensed Consolidated Financial Statements

INDEX

CANNABIS SATIVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)

	For the Three Months Ended March 31, 2015			For the Three Months Ended March 31, 2014


Revenues	$	1,102		$	1,445

Cost of goods sold		1,160			716

Gross profit		(58	)		729

General and administrative expenses		1,780,163			65,272

Loss from operations		(1,780,221	)		(64,543	)

Interest (expense)		(7,861	)		(9,562	)

Income (loss) before income taxes		(1,788,082	)		(74,105	)

Income taxes		-			-

Net Loss		(1,788,082	)		(74,105	)

(Income) loss attributable to non-controlling interest		-			-

Net loss attributable to Cannabis Sativa, Inc.	$	(1,788,082	)	$	(74,105	)

Net loss per common share
Basic and diluted	$	(0.11	)	$	(0.01	)

Weighted average common shares; basic and diluted		15,929,210			8,299,651

The Accompanying Notes are an Integral

Part of these Condensed Financial Statements

INDEX

CANNABIS SATIVA, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)

	For the Three Months Ended March 31, 2015			For the Three Months Ended March 31, 2014
Cash flows from operating activities:
Net loss	$	(1,788,082	)	$	(74,105	)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization		38,614			554
Contributed capital		7,489			11,655
Stock issued for services		1,578,250			-
Amortization of prepaid		41,667			-
Amortization of note discount		-			5,559
Changes in assets and liabilities:
Accounts receivable		-			(1,130	)
Employee advance		13			(250	)
Due from related party		-			(2,000	)
Inventory		40			(13,383	)
Prepaids		-			1,783
Deposits		-			(150	)
Accounts payable and accrued expenses		33,099			17,090
Accrued interest		-			1,348

Net cash used by operating activities		(88,910	)		(53,029	)

Cash flows from investing activities:
Purchase of fixed assets and intangibles		(8,410	)		(1,975	)

Net cash used by investing activities		(8,410	)		(1,975	)

Cash flows from financing activities:
Proceeds from related parties		125,000			93,080
Payments to related parties		(40,345	)		-

Net cash provided by financing activities		84,655			93,080

Net increase (decrease) in cash		(12,665	)		38,076

Cash at beginning of period		25,994			14,863

Cash at end of period	$	13,329		$	52,939

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	-	$	-
Taxes	$	-	$	-

Non-cash investing and financing activities:
Conversion of debt to equity	$	-	$	78,112
Unrealized gain on available-for-sale securities	$	4,822	$	-

The Accompanying Notes are an Integral

Part of these Condensed Financial Statements

INDEX

CANNABIS SATIVA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)

1. Summary of Significant Accounting Policies and Use of Estimates:

Presentation of Interim Information:

The condensed consolidated financial statements included herein have been prepared by Cannabis Sativa, Inc., formerly named Ultra Sun Corp. (“we”, “us”, “our” or “Company”), without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and should be read in conjunction with the annual report on Form 10-k filed with the SEC April 15, 2015. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, as permitted by the SEC, although we believe the disclosures, which are made, are adequate to make the information presented not misleading. Further, the condensed financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position at March 31, 2015, and the results of our operations and cash flows for the periods presented.

Interim results are subject to significant seasonal variations and the results of operations for the period ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.

Nature of Corporation:

We were incorporated under the laws of Nevada in November 2005. Our wholly-owned subsidiary Kush was acquired by us in June 2014 in exchange for shares of our common stock. Our wholly-owned subsidiary Wild Earth Naturals, Inc. (“Wild Earth”) was acquired by us in July 2013 in exchange for shares of our common stock. The acquisition of Kush resulted in a change of control of the Company and at or after the closing of the acquisition of Kush, the persons designated by Kush became the officers and directors of the Company. From our inception through September 30, 2013 we were engaged in the tanning salon business and operated a tanning salon in Saratoga Springs, Utah under the name “Sahara Sun Tanning.” As a result of our acquisition of Wild Earth in July 2013, we became engaged in the herbal skin care products business. On September 30, 2013 we sold the assets of the tanning salon business to a third party. As a result of our acquisition of Kush in June 2014, along with our Wild Earth operations we are now engaged in the developing and promoting natural cannabis products.

The following unaudited proforma condensed combined statement of operations reflects the results of operations of CANNABIS SATIVA for the three months ended March 31, 2014, the results of operations for WILD EARTH NATURALS for the three months ended March 31, 2014, and the results of operations for KUSH for the three months ended March 31, 2014 as if the Companies had been consolidated effective January 1, 2014.

	Cannabis Sativa			Wild Earth Naturals			Kush			Proforma

Revenue	$	-		$	1,445		$	-		$	1,445

Cost of revenue		-			716			-			716

Gross profit		-			729			-			729

General and adminstrative expense		202			65,070			377,643			442,915

Other expense
Interest expense		6,907			2,655			-			9,562

Loss from continued operations		(7,109	)		(66,996	)		(377,643	)		(451,748	)

Net loss	$	(7,109	)	$	(66,996	)	$	(377,643	)	$	(451,748	)

INDEX

CANNABIS SATIVA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)

Development Stage Activities and Operations:

Wild Earth has been in its initial stages of formation and for the three months ended March 31, 2014 had minimal revenues. A development stage activity is one in which all efforts are devoted substantially to establishing a new business and even if planned principal operations have commenced, revenues are insignificant.

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.

Accounts Receivable:

We estimate credit loss reserves for accounts receivable on an individual receivable basis. A specific impairment allowance reserve is established based on expected future cash flows and the financial condition of the debtor. We charge off customer balances in part or in full when it is more likely than not that we will not collect that amount of the balance due. We consider any balance unpaid after the contract payment period to be past due. At March 31, 2015 the company has established an allowance for doubtful accounts of $3,697 which is equal to the full amount of recorded accounts receivable.

Inventory:

The Company calculates inventory using the average cost method to value inventory. Inventory cost includes those costs directly attributable to the product before sale.

Fair Value of Financial Instruments:

Cash and Cash Equivalents:

For financial accounting purposes, cash and cash equivalents are considered to be all highly liquid investments purchased with an initial maturity of three (3) months or less.

Earnings per Share:

Basic earnings per share is computed by dividing income 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 an entity. As of March 31, 2015 and 2014, the Company has no outstanding potentially dilutive securities.

Revenue Recognition:

The Company recognizes revenue from product sales or services rendered when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured.

INDEX

CANNABIS SATIVA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)

Intangible Assets:

Intangible assets are comprised of patents, trademarks, the Company’s “CBDS.com” website domain and intellectual property rights. The patent is being amortized using the straight-line method over its economic life, which is estimated to be twenty (20) years. The trademark, which is still in the application phase, is expected to have an indefinite useful life. The CBDS.com website is expected to have an indefinite useful life. The intellectual property rights are being amortized using the straight-line month over its economic life, which is estimated to be (20) years.

Income Taxes:

The Company estimates the annual tax rate based on projected taxable income for the full year and records a quarterly income tax provision in accordance with the anticipated annual rate. As the year progresses, we refine the estimates of the year’s taxable income as new information becomes available, including year-to-date financial results. This continual estimation process can result in a change to the expected effective tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected annual tax rate. Significant judgment may be required in determining the Company’s effective tax rate and in evaluating our tax positions.

The effective income tax rate of 0% for the periods ended March 31, 2015 and 2014 differed from the statutory rate, due primarily to net operating losses incurred by the Company in the respective periods. For the three months ended March 31, 2015 a tax benefit of approximately $28,800 would have been generated. For the three months ended March 31, 2014 a tax benefit of approximately $25,000 would have been generated. However, all benefits have been fully offset through an allowance account due to the uncertainty of the utilization of the net operating losses. As of March 31, 2015 the Company had net operating losses of approximately $14,148,328 resulting in a deferred tax asset of approximately $4,810,400. As of March 31, 2014 the Company had net operating losses of approximately $255,000 resulting in a deferred tax asset of approximately $87,000.

The Company has established a valuation allowance in the full amount of the deferred tax asset due to the uncertainty of the utilization of operating losses in future periods.

Pending Accounting Pronouncements:

There have been no recent accounting pronouncements issued which are expected to have a material effect on the Company’s financial statements.

2. Eden Holdings LLC

During the quarter ended September 30, 2014, the Company created Eden Holdings LLC. The purpose of the entity is to hold the intellectual property of Cannabis Sativa, Inc. As of March 31, 2015 there has been no activity in the LLC.

3. Available-for-Sale Securities

On January 10, 2014 the Company received 10,835 shares of BioAdaptives, Inc. as a result of Kush’s holdings in Hemp, Inc. The shares were received when Hemp, Inc. completed a spin-off of BioAdaptives, Inc. Each 923 shares of Hemp, Inc. received 1 share of BioAdaptives, Inc. At the time of the spin-off, Kush, Inc. was the owner of 10,000,000 shares of Hemp, Inc. common stock. This resulted in Kush receiving 10,835 shares of BioAdaptives, Inc. At March 31, 2015 the market price of BioAdaptives, Inc. was $.8951 per share resulting in a value of $9,698.

Available-for-sale securities are an investment in a marketable trading security. As such it will be adjusted to fair market value at each reporting date. The unrealized price variation will be reflected on our statement of comprehensive income (loss) as well as in our equity section of our balance sheet as an accumulated comprehensive loss.

INDEX

CANNABIS SATIVA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)

The following is a summary of the Company’s available-for-sale securities at March 31, 2015:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value (Net Carrying Amount)		Accumulated Other Comprehensive Income

Equity Securities	$	-	$	9,698	$	-	$	9,698	$	9,698

Total Available-for-Sale Securities	$	-	$	9,698	$	-	$	9,698	$	9,698

4. Fair Value Measurements

We adopted ASC Topic 820 for financial instruments measured at fair value on a recurring basis. ASC Topic 820 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

	·	Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
	·	Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
	·	Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The carrying amounts of accounts receivable, inventory, notes payable, accounts payable, accrued liabilities approximate fair value given their short term nature or effective interest rates. We measure certain financial instruments at fair value on a recurring basis. As of March 31, 2015, assets and liabilities measured at fair value on a recurring basis were as follows:

	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	$	9,698	$	9,698	$	-	$	-
Total assets measured at fair value	$	9,698	$	9,698	$	-	$	-

Liabilities:	$	-	$	-	$	-	$	-
Total liabilities measured at fair value	$	-	$	-	$	-	$	-

INDEX

CANNABIS SATIVA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)

5. Due to Related Parties

During the three months ended March 31, 2015 the Company received additional short-term advances from related parties and officers of the Company to cover operating expenses. As of March 31, 2015, net advances to the Company were $666,229. These advances are non-interest bearing in nature. The Company has imputed interest on these sums at the rate of 5% per annum and has recorded interest expense related to these balances in the amount of $7,489. Because the related parties do not expect the imputed interest to be repaid, the interest has been recorded as a contribution of capital at March 31, 2015.

Kush, a wholly-owned subsidiary of the Company, is a party to three individual license agreements with Steve Kubby. Pursuant to the license agreements Kush owed a total of $3,060,000 in license fees to Mr. Kubby at various dates. As of March 31, 2015, the Company has paid a total of $169,489 of the total amount. As of March 31, 2015, the remaining amount due Mr. Kubby under the license agreements is $2,890,511. The table below represents the future payment schedule due Mr. Kubby related to license agreements:

Payment Date:	Amount Due:
July 31, 2015		890,511
December 31, 2015		1,000,000
June 30, 2016		1,000,000
		2,890,511
Less: Current Portion		(1,890,511	)

Long-term portion	$	1,000,000

Under the terms of the agreements, in the event any such payment is not made in full when due, and if the stock of Licensee or its parent is publicly traded in the over-the-counter market or on a national exchange, Licensee may pay or the Licensor may elect to be paid the unpaid payment amount in the form of unregistered shares of such publicly traded stock of Licensee or its parent, which shares shall be valued at a 35% discount to the average closing price for such stock in the over-the-counter market or on a national exchange during the 30 trading days preceding the issuance of such shares.

6. Common Stock

On January 1, 2015, the Company’s board of directors authorized the issuance of 100,000 shares of its common stock to one of its officers. The value of the shares on the date of issuance was $690,000. As of March 31, 2015, the Company has recognized $172,500 in compensation expense related to this transaction with the remaining $517,500 being recorded as a prepaid.

On January 1, 2015, the Company’s board of directors authorized the issuance of 10,000 shares of its common stock to each of its seven board of directors for each year of service. The Company issued 2,500 shares to each board member retroactive to the fourth quarter of 2014 in addition to 10,000 each for 2015 for a total of 12,500 shares each. The Company had recorded a liability in the amount of $120,750 related to the retroactive issuance in its December 31, 2014 financial statements. The Company recorded $120,750 in professional fees on its statement of operations for the three months ended March 31, 2015 with an additional $362,250 being recorded as a prepaid on the Company’s balance sheet.

On January 1, 2015, the Company’s board of directors authorized the issuance of 35,000 shares of its common stock to one of its officers for retroactive compensation in 2014. The value of the shares was determined to be $241,500 based on the trading price of the stock on the date of authorization. The Company had recorded a liability in the same amount in its balance sheet dated December 31, 2014.

INDEX

CANNABIS SATIVA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended March 31, 2015 and 2014

(Unaudited)

On January 7, 2015, the Company’s board of directors authorized the issuance of 500,000 shares of its common stock to a consulting group for services to be provided during the year ended December 31, 2015. The value of the issuance was determined to be $3,500,000 based on the market value of the Company’s common stock on the date of issuance. The Company recorded $875,000 in consulting expense related to this transaction with the remaining $2,625,000 being recorded as a prepaid which will be amortized over the remainder of the year.

January 30, 2015, the Company’s board of directors authorized the issuance of 200,000 shares to two consultants for services to be provided during the year ended December 31, 2015. The value of the issuance was determined to be $1,640,000. The Company has recorded $410,000 in consulting expense related to this transaction with the remaining $1,230,000 being recorded as prepaid consulting services which will be amortized over the remainder of the year.

7. Hi Brands International Inc. – Centuria Foods Agreement

On February 6, 2015, the Company formed Hi Brands International Inc., a Nevada Corporation and wholly owned subsidiary of Cannabis Sativa, Inc.

On February 25, 2015, the Company through its wholly owned subsidiary Hi Brands International, Inc. (jointly referred to hereinafter as “Cannabis Sativa”), entered into a Purchase, Supply and Joint Venture Agreement (the “Agreement”), with Centuria Natural Foods, Inc. (“Centuria”) whereby Cannabis Sativa will market Centuria’s proprietary CBD (Cannabidiol) Rich Hemp Oil products (the “Products”).

The initial term of the Agreement is one year which may be renewed for additional one year periods upon the mutual agreement of the parties. Within the first 90 days of the initial term of the Agreement, Cannabis Sativa shall order at least 5,000 units of Product. Thereafter, Cannabis Sativa shall order at least 5,000 units of Product per month with the additional requirement that Cannabis Sativa order a minimum of 55,000 units of Product during the first 12 months of the Agreement. Fifty percent of all gross revenue generated by the sale of the Products will be paid to Cannabis Sativa and fifty percent will be paid to Centuria.

As of March 31, 2015, there has not been any activity in Hi Brands International Inc. other than the execution of the above agreement. The Company has not ordered any product under this agreement as of March 31, 2015.

8. Going Concern Considerations

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has incurred net losses since inception. As reported in the financial statements, the Company has an accumulated deficit of $48,703,186. At March 31, 2015, the Company had total assets of $8,336,062 and liabilities totaling $3,716,199 all of which 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 its ability to raise adequate capital to fund operating losses until it is able to engage in profitable business operations. To the extent financing is not available, the Company may not be able to, or may be delayed in, developing its services and meeting its obligations. The Company will continue to evaluate its projected expenditures relative to its available cash and to evaluate additional means of financing in order to satisfy its working capital and other cash requirements. The accompanying financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

9. Subsequent Events

The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued, and determined there are no additional events that require disclosure.

INDEX

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

The following is management’s discussion and analysis of certain significant factors affecting the Company’s financial position and operating results during the periods included in the accompanying condensed financial statements. Except for the historical information contained herein, the matters set forth in this discussion are forward-looking statements.

Overview

We are currently engaged in the research, development and licensing of specialized natural cannabis products, including cannabis formulas, edibles, topicals, strains, recipes and delivery systems. We plan to develop, produce and market these products via joint ventures with companies licensed under, and in full compliance with, state regulations applicable to cannabis businesses. We are also developing natural skin care and topical pain management formulas and fulfilling and shipping orders to both wholesale and retail customers. We believe that the natural skin care business is a growing sector and that we can gain increased market share. Subject to the availability of additional capital, we hope to expand in both the cannabis and the skin care markets by increased marketing efforts, specifically vending at major industry trade shows.

Results of Operations

	For the three months ended March 31, 2015			For the three months ended March 31, 2014			Change			% Change
	(Unaudited)			(Unaudited)
Revenue	$	1,102		$	1,445		$	(343	)		-23.74	%
Cost of goods sold		(1,160	)		(716	)		(444	)		62.01	%
Gross profit		(58	)		729			(787	)		-107.96	%
General and administrative expenses		(1,780,163	)		(65,272	)		(1,714,891	)		2627.30	%
Interest expense		(7,861	)		(9,562	)		1,701			-17.79	%
Net Loss	$	(1,788,082	)	$	(74,105	)	$	(1,713,977	)		2312.90	%

Three Months Ended March 31, 2015 compared to Three Months Ended March 31, 2014

Revenue – The Company had immaterial revenues related to its ongoing operations for the three months ended March 31, 2015 and 2014.

Cost of Goods Sold – The Company had immaterial cost of goods sold for the three months ended March 31, 2015 and 2014.

General and Administrative Expenses – The Company had general and administrative expenses of $1,780,163 for the three months ended March 31, 2015 and general and administrative expenses of $65,272 for the three months ended March 31, 2014. The significant increase in general and administrative expenses was attributable to common stock grants for compensation and consulting services. Other general and administrative expenses consisted primarily of professional fees, payroll expenses, rent and transfer agent fees.

Interest Expense – The Company had interest expenses of $7,861 for the three months ended March 31, 2015 and $9,562 for the three months ended March 31, 2014. Interest expense for the three months ended March 31, 2015 was made up of imputed interest on related party advances. Interest expense for the periods ended March 31, 2014 was primarily related to the Company’s convertible notes and the corresponding note discount amortization related to the notes.

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Liquidity and Capital Resources

As of March 31, 2015, we had cash on hand of $13,329.We have had to borrow funds to cover our start-up costs and operating short-falls. We believe we will be able to meet ongoing expenses from revenues sometime in the future. However, at the present time, any short-falls will continue to be covered by management or existing shareholders.

We have had to rely on short-term funding from management or shareholders in the past and there can be no assurance that such persons will continue to provide funding in the future. During the year ended December 31, 2014, the Company received an aggregate of $324,950 in advances from shareholders’ and related parties.

The Company may also seek to raise money for working capital purposes through a public offering of its equity capital or through a private placement of 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. As mentioned before, for the immediate needs of our current operations, we anticipate continuing to fund operations through management and shareholder loans. There can be no assurance that management and shareholders will continue to loan the Company funds.

As we move to expand our operations, we anticipate incurring new debt as we increase our marketing and production. We anticipate it will take approximately two to three years to pay off the debt associated with our opening and the purchase of equipment.

Forward-Looking Statements

We have made forward-looking statements, within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, in this quarterly report on Form 10-Q, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include the information concerning our possible or assumed search for new business opportunities and future costs of operations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. These uncertainties and other factors include, but are not limited to the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2013 in Part I, Item 1A under the caption “Risk Factors.” Actual results may differ materially from those expressed in the forward-looking statements. You should understand that many important factors could cause our results to differ materially from those expressed in the forward-looking statements. These factors include, without limitation, Wild Earth as a development stage business, the Company’s need for additional capital, our regulatory environment, our limited operating history, our ability to implement our growth strategy, our ability to integrate acquired companies and their assets and personnel into our business, our obligations to pay professional fees, and other economic conditions and increases in corporate maintenance and reporting costs. Unless legally required, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Off Balance Sheet Arrangements

None

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required.

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Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Under the supervision and with the participation of our management including our chief executive officer and our chief financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not a party to any material pending legal proceedings and, to the best of its knowledge, its properties are not the subject of any such proceedings.

Item 1A. Risk Factors.

See the risk factors discussed in Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following documents are included as exhibits to this report:

(a) Exhibits

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Exhibit Number	SEC Reference Number	Title of Document	Location

3.1	3	Articles of Incorporation	Incorporated by Reference(1)
3.2	3	Certificate of Amendment to Articles of Incorporation	This Filing
3.3	3	Bylaws	Incorporated by Reference(1)
31.1	31	Section 302 Certification of Principal Executive Officer	This Filing
31.2	31	Section 302 Certification of Principal Financial Officer	This Filing
32.1	32	Section 1350 Certification of Principal Executive Officer	This Filing
32.2	32	Section 1350 Certification of Principal Financial Officer	This Filing
101.INS(2)		XBRL Instance Document	This Filing
101.SCH(2)		XBRL Taxonomy Extension Schema	This Filing
101.CAL(2)		XBRL Taxonomy Extension Calculation Linkbase	This Filing
101.DEF(2)		XBRL Taxonomy Extension Definition Linkbase	This Filing
101.LAB(2)		XBRL Taxonomy Extension Label Linkbase	This Filing
101.PRE(2)		XBRL Taxonomy Extension Presentation Linkbase	This Filing

(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.

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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: May 15, 2015

By: /s/ Gary E. Johnson

Gary E. Johnson, President and Chief Executive Officer

(Principal Executive Officer)

By: /s/ Catherine Carroll

Catherine Carroll, Chief Financial Officer

(Principal Financial and Accounting Officer)