10-K: Cannabis Sativa Inc. Reports 2023 Annual Results, Revenue Declines Amid Telemedicine Competition

Cannabis Sativa Inc. reports a 25% decrease in revenue for 2023, primarily due to increased competition in the telemedicine sector, while also highlighting strategic shifts towards brand development and product marketing.

Summary

• Cannabis Sativa Inc. reported a 25% decrease in revenue for the fiscal year ended December 31, 2023, with total revenue of $1,173,830 compared to $1,558,752 in 2022.
• The company's cost of revenues decreased by 33%, resulting in a gross profit of $773,084, a 20% decrease from the previous year.
• Operating expenses also decreased by 31% to $1,628,936 in 2023, down from $2,364,180 in 2022, due to cost reduction efforts.
• The company experienced a net loss from continuing operations of $855,852 in 2023, compared to a net loss of $1,403,270 in 2022.
• Cash used in operating activities was $63,111 in 2023, a significant decrease from $235,559 in 2022.
• The company ended 2023 with $83,762 in cash on hand.
• The company issued 43,247,674 shares of common stock for services and debt settlement during 2023.
• The company has an accumulated deficit of $82,083,492 as of December 31, 2023.

Sentiment

Score: 3

Explanation: The document presents a concerning financial picture with declining revenue, significant losses, and a low cash balance. While there are some positive aspects like cost reductions and strategic shifts, the overall sentiment is negative due to the company's financial instability and internal control weaknesses.

Positives

• Operating expenses decreased by 31% year-over-year, indicating successful cost reduction efforts.
• Cash used in operating activities decreased significantly, suggesting improved operational efficiency.
• The company is actively targeting expansion of its telemedicine platform into additional states.
• The company is focusing on brand development and product marketing in the cannabis and CBD spaces.
• The company has a portfolio of brands, products, and intellectual property for cannabis and CBD related products.

Negatives

• Revenue decreased by 25% year-over-year, primarily due to increased competition in the telemedicine industry.
• The company experienced a net loss from continuing operations of $855,852 in 2023.
• The company has an accumulated deficit of $82,083,492 as of December 31, 2023.
• The company's cash on hand is limited at $83,762, raising concerns about liquidity.
• The company has material weaknesses in internal controls over financial reporting.

Risks

• The company faces increased competition in the cannabis telemedicine industry, which is impacting revenue.
• The company's ability to expand into new areas and provide new services is not guaranteed.
• The company's lack of capital may hinder its ability to develop new products and expand its business.
• The company's financial statements have been prepared assuming it will continue as a going concern, which is uncertain given its losses and accumulated deficit.
• The company has identified material weaknesses in its internal controls over financial reporting.
• The company is subject to the risks associated with the cannabis industry, including regulatory uncertainty and potential federal enforcement actions.

Future Outlook

The company intends to focus on growth of its telemedicine business in 2024, while also seeking opportunities in brand development and marketing of products and services to the cannabidiol (CBD) and marijuana industries. The company also intends to focus on the consummation of an asset purchase agreement with MJ Harvest, Inc.

Management Comments

• Management is currently evaluating opportunities to expand the platform for medical marijuana evaluations into other states and is reviewing other telemedicine applications.
• Management believes that there is value in the Hi Brands name and that it may afford a sound outlet for the Company's products.
• Management intends to use social media to drive traffic to its websites.
• Management believes the cannabis industry will be characterized by an increased emphasis on high quality products, scientific validation, more liberal regulation, consolidation, and more funded research.

Industry Context

The company operates in the rapidly evolving cannabis and telemedicine industries. The cannabis industry is seeing increased legalization and acceptance, while the telemedicine industry is experiencing growth due to technological advancements and the COVID-19 pandemic. The company's strategy to focus on both telemedicine and brand development aligns with these trends.

Comparison to Industry Standards

• The company's revenue decline of 25% contrasts with the overall growth seen in the telemedicine sector, suggesting that the company is facing significant competitive pressures.
• The company's operating expense reduction of 31% is a positive sign, but it needs to be balanced against the revenue decline.
• The company's accumulated deficit of $82 million is a significant concern and is higher than many of its peers in the cannabis and telemedicine industries.
• The company's cash position of $83,762 is very low compared to industry standards, indicating a need for additional capital.
• The company's reliance on related party financing is not uncommon for smaller companies in the cannabis industry, but it does raise concerns about financial stability.
• The company's internal control weaknesses are a significant concern and need to be addressed to ensure accurate financial reporting.

Related Party Transactions

• The company received short-term advances and proceeds from notes payable from related parties and officers of the Company, including David Tobias and Cathy Carroll, to cover operating expenses.
• The notes payable bear interest at rates between 5% and 8% per annum.
• The company issued shares of common stock to related parties for services and debt settlement.
• The company has an outstanding loan in the amount of $4,000 to a director of the Company.
• The company has a balance due from MJ Harvest, Inc., with whom the Company plans to merge, of $75,054.

Stakeholder Impact

• Shareholders may experience dilution if the company raises capital through equity offerings.
• Employees may be affected by the company's cost reduction efforts.
• Customers may benefit from the company's expansion of its telemedicine platform and product offerings.
• Creditors may be concerned about the company's ability to repay its debts given its financial losses and low cash balance.

Next Steps

• The company intends to focus on growth of its telemedicine business.
• The company plans to seek opportunities in brand development and product marketing.
• The company intends to focus on the consummation of an asset purchase agreement with MJ Harvest, Inc.
• The company plans to develop new relationships with manufacturers and distributors to begin selling products.
• The company plans to use social media to drive traffic to its websites.

Key Dates

Keywords

cannabis, telemedicine, CBD, PrestoDoctor, revenue, financial results, operating expenses, net loss, stock issuance, internal controls, brand development, product marketing