6. Stockholders' Equity

9 Months Ended

Sep. 30, 2020

Disclosure Text Block [Abstract]

6. Stockholders' Equity

6.  Stockholders’ Equity

Share Capital

The authorized capital of the Company consists of 45,000,000 shares of Common Stock with a par value of $0.001 and 5,000,000 shares of preferred stock issuable in series with such rights, preferences and conditions as the Board of Directors may establish.  The Company has designated and established the rights of Series A preferred stock (“Series A”) with a par value of $0.001.  The Company is authorized to issue up to 5,000,000 shares of Series A.  The holders of Series A are entitled to dividends if the Company declares a dividend on common shares, have no liquidation preference, have voting rights equal to 1 vote per share, and can be converted into one share of common at any time. In the nine months ended September 30, 2020, a related party converted 340,172 preferred shares into 340,172 shares of common stock. No preferred shares were converted in the nine months ended September 30, 2019.

Shares of Stock issued for Asset Acquisition

In the nine months ended September 30, 2020, the Company acquired assets and established GK Manufacturing and Packaging, Inc. (“GKMP”) to conduct contract manufacturing operations for customers seeking to obtain CBD infused products, including salves, tinctures, edibles, and other products containing CBD. In connection with the acquisition, the Company issued two key individuals an aggregate of 100,000 shares of common stock with a fair value of $109,000 for a 51% interest in GKMP. Assets acquired included inventory needed for manufacturing the CBD products ($47,987); a packaging line and other manufacturing equipment ($164,488); and a deposit ($1,250). The assets values totaled $213,725, of which $104,725 relates to the 49% non-controlling interest. GKMP also assumed the payments on a lease for equipment, agreed to provide up to $500,000 of additional working capital to GKMP, and agreed to an earnout provision where additional shares of common stock may become issuable to the key individuals in the event certain performance standards are met. See Note 7.

Upon completion of the acquisition of assets for GKMP, GKMP entered into employment agreements with the two key individuals. The employment agreements are terminable at any time with or without cause, but in the event of termination without cause, the salary will continue for six months. Salary for the president of GKMP is set at $65,000 per annum and salary for the Vice

President – Sales and Marketing is set at $50,000 per annum.  The agreements also provide the individuals with expense reimbursements and other employee benefits comparable to those being offered to the other employees of the Company. Currently, GKMP has not established any other employee benefit programs. The 49% non-controlling interest is considered a related party to the Company because the non-controlling interest is owned, in part by the president of GKMP.

The completion of the GKMP asset acquisition resulted in payment of a finder’s fee to an unrelated party. The finder’s fee was paid by issuance of 50,000 shares of common stock with a fair value at the time of issuance of $36,000 which was recognized as an expense upon completion of the acquisition.

2017 Stock Plan

On July 28, 2017, the Company adopted the Cannabis Sativa 2017 Stock Plan which authorized the Company to utilize common stock to compensate employees, officers, directors, and independent contractors for services provided to the Company.  The Company authorized up to 3,000,000 shares of common stock to be issued pursuant to the 2017 Stock Plan. At September 30, 2020, the Company was authorized to issue up to 85,070 additional shares under the 2017 Stock Plan.

Warrants

At September 30, 2020 and December 31, 2019, the Company had outstanding warrants to purchase 125,000 shares and 174,900 shares of the Company’s common stock, respectively. The exercise price on 125,000 warrants was $0.80 per share and these warrants expire in November 2022. Warrants to purchase up to 49,900 shares of common stock at $2.00 per share expired on February 1, 2020.

Securities Issuances

During the nine months ended September 30, 2020 and 2019, shares of common stock and preferred stock were issued to related and non-related parties for stock payable as of the prior year end, and/or for services, acquisitions and settlements. The following tables break out the issuances by type of transaction and by related and non-related parties. The Company also issued 50,000 shares of common stock for $25,000 pursuant to a private placement that was closed during the nine months ended September 30, 2020.

Nine months ended September 30, 2020
Share Issuances	Services						Other Activity							Total
Shares issued for stock payable	Common		Preferred		Value		Common		Preferred			Value		Common		Preferred			Value
Related party issuance		521,411		223,214	$	431,201		—		—		$	—		521,411		223,214		$	431,201
Unrelated party issuance		441,827		—		209,484		—		—			—		441,827		—			209,484
Total shares for stock payable		963,238		223,214	$	640,685		—		—		$	—		963,238		223,214		$	640,685
Conversion of preferred stock		—		—	$	—		340,172		(340,172	)	$	—		340,172		(340,172	)	$	—
Services
Related party issuances
David Tobias, Officer, Director		—		235,964	$	136,490		—		—		$	—		—		235,964		$	136,490
Brad Herr, Officer, Director		335,543		—		193,034		—		—			—		335,543		—			193,034
Robert Tankson, Director		108,773		—		56,082		—		—			—		108,773		—			56,082
Cathy Carroll, Director		235,964		—		136,490		—		—			—		235,964		—			136,490
Trevor Reed, Director		39,328		—		22,749		—		—			—		39,328		—			22,749
Keith Hyatt, President GKMP		164,932		—		100,580		—		—			—		164,932		—			100,580
Kyle Powers, CEO PrestoCorp		92,593		—		44,444		—		—			—		92,593		—			44,444
Total related party issuances		977,133		235,964		689,869		—		—			—		977,133		235,964			689,869
Unrelated Party issuances		1,362,133		—		865,339		—		—			—		1,362,133		—			865,339
Total shares for services		2,339,266		235,964	$	1,555,208		—		—		$	—		2,339,266		235,964		$	1,555,208
Issuance for acquisitions		—		—	$	—		100,000				$	109,000		100,000		—		$	109,000
Aggregate totals		3,302,504		459,178	$	2,195,893		440,172				$	109,000		3,742,676		119,006		$	2,304,893

Nine months ended September 30, 2019
Share Issuances	Services						Other Activity							Total
Shares issued for stock payable	Common		Preferred		Value		Common			Preferred		Value		Common			Preferred		Value
Related party issuances		85,681		39,391	$	340,080		—			—	$	—		85,681			39,391	$	340,080
Unrelated paryt issuances		41,380		—		114,216		—			—		—		41,380			—		114,216
Total shares for stock payable		127,061		39,391	$	454,296		—			—	$	—		127,061			39,391	$	454,296
Services
Related Party issuances
David Tobias, Officer, Director		—		115,871	$	207,389		—			—	$	—		—			115,871	$	207,389
Donald Lundbom, CFO		92,826		—		166,864		—			—		—		92,826			—		166,864
Stephen Downing, Director		15,021		—		27,002		—			—		—		15,021			—		27,002
Cathy Carroll, Director		30,041		—		54,002		—			—		—		30,041			—		54,002
Trevor Reed, Director		12,016		—		21,601		—			—		—		12,016			—		21,601
Deborah Goldsberry, Director		12,016		—		21,601		—			—		—		12,016			—		21,601
Michael Gravel, Director		12,016		—		21,601		—			—		—		12,016			—		21,601
Total related party issuances		173,936		115,871	$	520,060		—			—	$	—		173,936			115,871	$	520,060
Unrelated party issuances		174,949		—	$	355,543		—				$	—		174,949			—	$	355,543
Total shares for services		348,885		115,871	$	875,603		—			—	$	—		348,885			115,871	$	875,603
Shares cancelled		—		—	$	—		(70,000	)		—	$	—		(70,000	)		—	$	—
Aggregate totals		475,946		155,262	$	1,329,899		(70,000	)		—	$	—		405,946			155,262	$	1,329,899