CANNABIS SATIVA: Discussion and analysis by management of the financial position and operating results. (form 10-Q)

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 to April 22, 2021, the Company operated two business segments: PrestoCorp,
Inc. ("PrestoCorp"), a telehealth business, and GK Manufacturing and Packaging,
Inc. ("GKMP"), a contract manufacturing business. On April 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 Ended June 30, 2021,compared with the Three Months Ended June 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 ended June 30, 2021 compared to the
three months ended June 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 ended June 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 ended June 30, 2021 increased 69%
compared to net loss for the three-month period ended June 30, 2020. We spent
more on advertising and wages and salaries in the three months ended June 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 Ended June 30, 2021, compared with the Six Months Ended June 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 ended June 30, 2021 compared to the six
months ended June 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 June 30, 2021, compared to the same period a year earlier. Maintaining our gross margin percentages unchanged despite a 17% drop in revenues is attributable to our efforts to control costs at all levels of operations.

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 ended June 30, 2021 increased 11%
compared to net loss for the six-month period ended June 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.



In April 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 on April 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
through April 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 $ 92,259 $

  (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 June 30, 2021, was $ 120,809. During the same period, our cash flow decreased by
$ 10,030. Fundraising activities generated $ 93,758 within six months from the following sources:

• advances from related parties totaling $ 48,258,

• notes payable from related parties totaling $ 40,500, and

• sale of ordinary shares totaling $ 5,000.

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. On June 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 to Cannabis Sativa, Inc.
of $880,498 and $1,106,513, respectively, for the six-month periods ended June
30, 2021 and 2020, and had an accumulated deficit of $77,908,837 as of June 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 the World Health Organization and the
Centers for Disease Control and Prevention. Its rapid spread around the world
and throughout the United States prompted many countries, including the United
States, to institute restrictions on travel, public gatherings, and certain
business operations. These restrictions significantly disrupted economic
activity in the 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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