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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. Results of Operations Prior toApril 22, 2021 , the Company operated two business segments:PrestoCorp, Inc. ("PrestoCorp"), a telehealth business, andGK Manufacturing and Packaging, Inc. ("GKMP"), a contract manufacturing business. OnApril 22, 2021 , the Company sold its controlling interest in GKMP. The discontinued operations of GKMP are reported separately, below. Discussion of results of operations includes the consolidated results of PrestoCorp. Three Months EndedJune 30 , 2021,compared with the Three Months EndedJune 30, 2020 Three Months Ended A B A-B June 30, 2021 June 30, 2020 Change Change % REVENUE $ 506,889 $ 708,504$ (201,615) -28% Cost of revenues 194,919 265,605 (70,686) -27%
Cost of sales % of total sales 38%
37% 1% Gross profit 311,970 442,899 (130,929) -30% Gross profit % of sales 62% 63% -1% OPERATING EXPENSES Professional fees 201,182 210,176 (8,994) -4% Depreciation and amortization 42,882 52,765 (9,883) -19% Wages and salaries 187,553 122,632 64,921 53% Advertising 140,980 110,856 30,124 27% General and administrative 229,268 236,103 (6,835) -3% Total operating expenses 801,865 732,532 69,333 9% NET LOSS FROM OPERATIONS (489,895)
(289,633) (200,262) 69% Revenues declined 28% in the three months endedJune 30, 2021 compared to the three months endedJune 30, 2020 . Revenues in the second quarter of 2021 decreased primarily due to a slow-down in the number of patients seeking medical marijuana cards when compared to year earlier period which saw a significant uptick in activity due to the pandemic. Activity levels in the second quarter of 2021 more closely matched pre-pandemic levels than the hyper active period that marked the start of the pandemic. We do not anticipate a significant spike in patients seeking our services due to pandemic effects, but the impact of other variants of the virus cannot be determined at this time. Gross profit margins for our services decreased 1% in the quarter endedJune 30, 2021 , compared with the same quarter a year earlier. The small decrease in gross profit despite the 28% decline in revenue reflects continuing emphasis on holding down the costs of our service delivery process. 3
Net operating loss for the three-month period endedJune 30, 2021 increased 69% compared to net loss for the three-month period endedJune 30, 2020 . We spent more on advertising and wages and salaries in the three months endedJune 30, 2021 when compared to the same period in 2020. The increased advertising costs resulted from expansion efforts to open new regions for our services and to attract new customers as concerns about in person doctor visits waned once vaccinations for COVID-19 became widely available. The increase in salaries and wages related primarily to increased costs of maintaining our status as a public company and our efforts during the second quarter of 2021 to structure and commence additional fund-raising activities. Six Months EndedJune 30, 2021 , compared with the Six Months EndedJune 30, 2020 Six Months Ended A B A-B June 30, 2021 June 30, 2020 Change Change % REVENUE $ 989,239$ 1,185,814 $ (196,575) -17% Cost of revenues 378,422 449,478 (71,056) -16% Cost of sales % of total sales 38%
38% 0% Gross profit 610,817 736,336 (125,519) -17% Gross profit % of sales 61.75% 62.10% 0% OPERATING EXPENSES Professional fees 320,921 489,262 (168,341) -34% Depreciation and amortization 85,763 104,149 (18,386) -18% Wages and salaries 337,398 307,541 29,857 10% Advertising 233,431 195,676 37,755 19% General and administrative 595,920 510,327 85,593 17% Total operating expenses 1,573,433 1,606,955 (33,522) -2% NET LOSS FROM OPERATIONS (962,616) (870,619) (91,997) 11%
Revenues declined 17% in the six months endedJune 30, 2021 compared to the six months endedJune 30, 2020 . Revenues in the first half of 2021 decreased primarily due to a slow-down in the number of patients seeking medical marijuana cards when compared to year earlier period which saw a significant uptick in activity due to the pandemic. Activity levels in the first half of 2021 more closely matched our historic operating levels. We do not anticipate a significant spike in patients seeking our services due to pandemic effects, but the impact of the delta and other variants of the virus cannot be determined at this time.
The gross profit margins of our services, as a percentage of sales, remained essentially unchanged during the past six months
Total operating costs decreased sightly in the first half of 2021 compared to the same period in 2020. We substantially reduced professional fees and depreciation and amortization, but these decreases were offset by increases in wages and salaries, advertising, and general and administrative costs. The cost increases were primarily the result of our efforts to expand our business into new regions, attract more patient visits through advertising, and support general operational levels through funding efforts and targeted acquisition activities. Our targeted acquisition activities have not resulted in operational improvements to date, largely as a result of limited capital. Net operating loss for the six-month period endedJune 30, 2021 increased 11% compared to net loss for the six-month period endedJune 30, 2020 . The increase in our net operating loss was primarily the result of declines in revenue that were not offset by corresponding declines in cost structure. While management remains focused on keeping costs to manageable levels, we do not expect to see significant operating cost reductions in coming periods as we continue to seek other opportunities for expansion. Discontinued Operations. InApril 2021 , the Company entered into discussions with THC Farmaceuticals, Inc. ("CBDG") regarding sale of CBDS's controlling interest positions in GKMP and iBudtender Inc. (iBud"). The discussions were triggered by an interest on the part of CBDS management to refocus business efforts on growing PrestoCorp while streamlining financial reporting and management processes by eliminating assets that are no longer considered essential to the Company's core focus. The sale was completed onApril 22, 2021 . Management believes that the sale of GKMP and iBud will free up management time and resources to seek other acquisitions that are more closely aligned with the PrestoCorp business model. Consideration for the sale of the controlling interests consisted of 1,500,000 shares of CBDG common stock and 1,500,000 shares of CBDG preferred stock valued at$600,000 on the date of the acquisition.iBud had no revenues in the periods presented. Summaries of the discontinued operations of GKMP and the operations of iBud throughApril 22, 2021 are provided below. 4 April 1, 2021 Three Months January 1, 2021 Six Months Through Ended Through Ended DISCONTINUED OPERATIONS OF GKMP April 22, 2021 June 30, 2020 April 22, 2021 June 30, 2020 REVENUE $ 893$ 12,591 $ 75,866 $ 28,421 Cost of revenues 9,805 16,678 91,316 20,140 Cost of sales % of total sales 1098% 132% 120% 71% Gross profit (8,912) (4,087) (15,450) 8,281 Gross profit % of sales -998% -32% -20% 29% OPERATING EXPENSES Professional fees - - - -
Depreciation and amortization 1,077
- 5,526 - Wages and salaries 47,607 41,262 106,224 41,262 Advertising 695 14,536 1,693 16,804
General and administrative 13,036 108,577 104,177 210,215 Total operating expenses 62,415 164,375 217,620 268,281 NET LOSS FROM OPERATIONS (71,327) (168,462) (233,070) (260,000) DISCONTINUED OPERATIONS OF IBUD REVENUE $ - $ - $ - $ - Cost of revenues - - - - Cost of sales % of total sales 0%
0% 0% 0% Gross profit - - - - Gross profit % of sales 0% 0% 0% 0% OPERATING EXPENSES Professional fees - - - -
Depreciation and amortization 84
251 335 502 Wages and salaries - - - - Advertising - - - - General and administrative 800 - 800 - Total operating expenses 884 251 1,135 502 NET LOSS FROM OPERATIONS (884) (251) (1,135) (502) Aggregate net loss from discontinued operations (72,211) (168,713) (234,205) (260,502) Gain on sale of discontinued operations 164,470 - 164,470 -
TOTAL GAIN (LOSS) ON DISCONTINUED ACTIVITIES
(168,713)$ (69,735) $ (260,502)
GKMP and iBud generated losses from operations during the periods they were operated by the Company. In the second quarter of 2021, management determined that the time and effort required to turn these businesses around would be a significant drain on resources and would limit expansion of our PrestoCorp operations. The sale of our interests in GKMP and iBud will now allow management to more resources to PrestoCorp.
Liquidity and capital resources
Net cash flow used in operating activities for the six-month period ended
• advances from related parties totaling
• notes payable from related parties totaling
• sale of ordinary shares totaling
We also reported stock-based compensation of$886,277 during the six-month period from issuance of common stock and preferred stock as compensation for services performed by officers, directors, and contractors. OnJune 30, 2021 , our cash position was$312,077 . The sale of GKMP and iBud has reduced our net operating loss and negative cash flows, and our remaining operating subsidiary, PrestoCorp, is profitable. The overhead related to our status as a public company and our continuing efforts to acquire businesses that will supplement the operations of PrestoCorp will continue to generate consolidated losses from operations in the coming periods. Given our level of operations in the first six months of 2021, we expect that additional funds will be required. In the remainder of 2021, we expect to generate additional capital primarily from issuances of stock as compensation for services. 5 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 attributable toCannabis Sativa, Inc. of$880,498 and$1,106,513 , respectively, for the six-month periods endedJune 30, 2021 and 2020, and had an accumulated deficit of$77,908,837 as ofJune 30, 2021 . These factors, among others, raise 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. Management is currently evaluating fund-raising alternatives including private placement of equity securities, a secondary public offering, and various debt instruments. In addition, key members of management have indicated a willingness to provide additional operating capital from time to time. We are also currently selling a portion of our investment securities to generate cash for operations, and we have restructured our intercompany loans to PrestoCorp with a monthly amortization schedule and required monthly payments that will begin to address ongoing operating expenses that must be paid in cash. Based on all these considerations, we believe we will have sufficient capital to operate the business for the next twelve months. It will be important for the Company to be successful in its efforts to raise capital 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. COVID-19
COVID-19 has been declared a pandemic by theWorld Health Organization and theCenters for Disease Control and Prevention . Its rapid spread around the world and throughoutthe United States prompted many countries, includingthe United States , to institute restrictions on travel, public gatherings, and certain business operations. These restrictions significantly disrupted economic activity inthe United States and Worldwide. The Delta variant of the COVID-19 virus now appears to be creating another wave of infections and concerns about the virus' impact on business operations continues. To date, the disruption did not materially impact the Company's financial statements. The pandemic has had a positive impact on the telehealth business. If the severity of the economic disruptions increase as the duration of the COVID-19 pandemic continues, the negative financial impact due to reduced demand could be significantly greater in future periods. In addition, the economic disruptions caused by COVID-19 could also adversely impact the impairment risks for certain long-lived assets, equity method investments and goodwill. Management evaluated these impairment considerations and determined that no such impairments occurred through the date of this report. 6
Off-balance sheet provisions
Nothing
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