Cannabis Sativa, Inc. - Quarter Report: 2016 March (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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 (Exact name of registrant as specified in its charter)

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(Address of Principal Executive Office) (Zip Code)

 

(Registrant's telephone number, including area code)

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

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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 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). ☒ 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.

 

 

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 May 16, 2016 is 17,484,738.

 

 

 

CANNABIS SATIVA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
		Unaudited
		March 31,				December 31,
		2016				2014
Assets
Current Assets
Cash and Cash Equivalents		$	13,798			$	10,356
Digital Currency			18,267				5,203
Accounts Receivable, Net			3,537				4,190
Employee Advance			44				44
Inventories			29,837				24,937
Investment in Joint Venture			35,000				35,000
Total Current Assets			100,483				79,730
Property and Equipment, Net			4,280				4,504
Intangible Assets, Net			2,891,359				2,904,121
Investment			9,760				9,760
Due from Related Parties			248,182				248,182
Deposits			4,236				4,236
Total Assets		$	3,258,300			$	3,250,533
Liabilities and  Stockholders' Equity
Current Liabilities:
Accounts Payable and Accrued Expenses		$	424,480			$	344,395
Due to Related Parties - Short Term			96,412				27,427
Total Liabilities			520,892				371,822
Stockholders' Equity:
Preferred stock $0.001 par value; 5,000,000 shares authorized;
428,585 issued and outstanding			428				428
Common stock $0.001 par value; 45,000,000 shares authorized;
17,404,738 and 17,374,738 shares issued and outstanding, respectively			17,405				17,375
Stock Subscriptions Payable			153,201				14,303
Additional Paid-In Capital			56,980,054				56,938,810
Accumulated Deficit			(54,414,574	)			(54,093,099	)
Total Cannabis Sativa, Inc. Stockholders' Equity			2,736,514				2,877,817
Non-Controlling Interest			894				894
Total Stockholders' Equity			2,737,408				2,878,711
Total Liabilities and Stockholders' Equity		$	3,258,300			$	3,250,533
"The accompanying notes are an integral part of these condensed consolidated financial statements"

 

 

 

 

CANNABIS SATIVA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31,		2016				2015
Revenues		$	15,087			$	1,102
Cost of Revenues			579				1,160
Gross Profit (Loss)			14,508				(58	)
General and Administrative Expenses			331,927				1,780,163
Loss from Operations			(317,419	)			(1,780,221	)
Interest Expense			4,056				7,861
Loss Before Income Taxes			(321,475	)			(1,788,082	)
Income Taxes			—				—
Net Loss for the Period			(321,475	)			(1,788,082	)
Loss Attributable to Non-Controlling Interest			—				—
Net Loss Attributable To Cannabis Sativa, Inc.		$	(321,475	)		$	(1,788,082	)
Net Loss for the Period per Common Share:
Basic & Diluted		$	(0.02	)		$	(0.11	)
Weighted Average Common Shares Outstanding:
Basic & Diluted			17,385,947				15,929,210
"The accompanying notes are an integral part of these condensed consolidated financial statements"

 

 

 

CANNABIS SATIVA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31,		2016				2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss for the Period		$	(321,475	)		$	(1,788,082	)
Adjustments to Reconcile Net Loss for the Period to Net Cash
Used in Operating Activities:
Depreciation and Amortization			12,986				38,614
Stock Issued for Services			179,624				1,578,250
Contributed Capital			—				7,489
Amortization of Prepaid			—				41,667
Imputed Interest on Loans			548				—
Changes in assets and liabilities:
Digital Currency			(13,064	)			—
Accounts Receivable			653				—
Inventories			(4,900	)			40
Employeee Advances			—				13
Accounts Payable and Accrued Expenses			80,085				33,099
Due to Related Parties - Short Term			15,000				—
Net Cash Used in Operating Activities:			(50,543	)			(88,910	)
Cash Flows from Investing Activities:
Purchase of Fixed Assets and Intangibles			—				(8,410	)
Net Cash Used in Investing Activities:			—				(8,410	)
Cash Flows from Financing Activities:
Payments to Related Parties			(2,515	)			(40,345	)
Proceeds from Related Parties			56,500				125,000
Net Cash Provided by Financing Activities:			53,985				84,655
NET CHANGE IN CASH AND CASH EQUIVALENTS			3,442				(12,665	)
Cash and Cash Equivalents - Beginning of Period			10,356				25,994
Cash and Cash Equivalents - End of Period		$	13,798			$	13,329
Supplemental Disclosure of Cash Flow Activities:
Interest		$	—			$	—
Income taxes		$	—			$	—
Supplemental Disclosures of Non Cash Activities:
Unrealized Gain on Available for Sale Securities		$	—			$	4,822
"The accompanying notes are an integral part of these condensed consolidated financial statements"

 

	·	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.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

Results of Operations

Three Months Ended March 31, 2016 Compared With Three Months Ended March 31, 2015

Net revenue for the three months ended March 31, 2016 and 2015 was $15,087 and $1,102, respectively. Cost of revenues for the three months ended March 31, 2016 and 2015 was $579 and $1,160, respectively. Gross profit (loss) for the three months ended March 31, 2016 and 2015 was $14,508 and ($58), respectively.  Net loss for the three months ended March 31, 2016 was $321,475 compared to net loss of $1,788,082 for the three months ended March 31, 2015.

 

Total operating expenses were $331,927 for the three months ended March 31, 2016 compared to $1,780,163 for the three months ended March 31, 2015.  The significant decrease in general and administrative expenses was attributable to common stock grants for compensation and consulting services during the three months ended March 31, 2015.   Other general and administrative expenses consisted primarily of professional fees, payroll expenses, rent and transfer agent fees. Other expenses for the three months ended March 31, 2016 were interest expense of $4,056 compared to interest expense of $7,861 for the three months ended March 31, 2015.

Liquidity and Capital Resources

Our operations used approximately $50,543 in cash for the three months ended March 31, 2016. Investing activities used $-0- for the three months ended March 31, 2016 and financing activities provided cash of $53,985 for the three months ended March 31, 2016. Cash required during the three months ended March 31, 2016, came principally from cash proceeds from related parties in the amount of $56,500.

Our operations used approximately $88,910 in cash for the three months ended March 31, 2015. Investing activities used cash of $8,410 for the three months ended March 31, 2015 and financing activities provided cash of $84,655 for the three months ended March 31, 2015. Cash required during the three months ended March 31, 2016, came principally from cash proceeds from related parties in the amount of $125,000.

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 loss of $321,475 and $1,788,082, respectively, for the three months ended March 31, 2016 and 2015 and had an accumulated deficit as of March 31, 2016.  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 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.  These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Off Balance Sheet Arrangements

None

 

Not required.

 

 

 

 

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, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

 

PART II – OTHER INFORMATION

 

 

On August 26, 2015, the Company filed a complaint in the District Court of Clark County, Nevada, Department No. XXVIII against Jeff W. Holmes, Greg W. Holmes, Kevin J. Asher and Colonial Stock Transfer Company, Inc., a Utah Corporation, seeking declaratory relief for the cancelation of common shares of the Company issued in connection with a consulting agreement.  The complaint alleges generally a breach of the consulting agreement by the defendants.  In addition to seeking a cancellation of shares, the complaint seeks general, consequential and punitive damages and costs in unspecified amounts.

 

See the risk factors discussed in Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2015.

 

 

 

 

None, other than as previously reported on Form 8-K.

 

None.

 

Not applicable.

 

None.

 

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.

 

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 16, 2016

 

By:  /s/ Mike Gravel

Mike Gravel Chief Executive Officer

(Principal Executive Officer)

By:  /s/ Catherine Carroll

Catherine Carroll, Chief Financial Officer

(Principal Financial and Accounting Officer)