UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the ﬁscal year ended December 31, 2019
	or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ﬁscal year ended December 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission ﬁle number: 000-55969

POTNETWORK HOLDINGS, INC. (Exact name of registrant as speciﬁed in its charter)

(Exact name of registrant as speciﬁed in its charter)

Colorado		46-5470832
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identiﬁcation No.)

3531 Griffin Road, Fort Lauderdale, FL		33312
(Address of principal executive oﬃces)		(Zip Code)

Colorado		46-5470832
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentiﬁcation No.)
3531 Griffin Road, Fort Lauderdale, FL		33312
(Address of principal executive oﬃces)		(Zip Code)

Registrant’s telephone number, including area code 800-433-0127

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Securities registered pursuant to section 12(g) of the Act:

Common Shares

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’ s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐☒ Smaller reporting company ☒ Emerging Growth Company ☒

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No ☒

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒

~~State~~The ~~the~~ aggregate market value of ~~the~~ voting ~~and~~stock ~~non-voting common equity~~ held by non-~~aﬃliates~~affiliates ~~computed~~of ~~by reference to~~ the ~~price~~registrant aton ~~which~~December ~~the~~31, ~~common~~2020, ~~equity~~ was ~~last sold~~$3, ~~or the average bid and asked price of such common equity~~783,482 asbased ofon the ~~last~~closing ~~business~~market ~~day~~price of the ~~registrant~~Registrant’s ~~most~~Common ~~recently~~Stock ~~completed~~on ~~second~~Yahoo ~~ﬁscal~~Finance ~~quarter.~~on ~~$8,551,371~~that date.

As of ~~July~~September 2027, ~~2020~~2021, there were ~~751~~909,~~836~~974,~~384~~924 shares of common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

TABLE OF CONTENTS

		Page No.
~~PART I~~	PART I
Item 1.	Business	4	4
Item 1A.	Risk Factors	9	9
Item 1B.	Unresolved Staff Comments	15	16
Item 2.	Properties	15	16
Item 3.	Legal Proceedings	16	16
Item 4.	Mine Safety Disclosures	17	17
~~PART II~~	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18	18
Item 6.	Selected Financial Data	19	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19	19
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	20	20
Item 8.	Financial Statements and Supplementary Data	20	20
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	20	20
Item 9A.	Controls and Procedures	21	21
Item 9B.	Other Information	22	21
~~PART III~~	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	25	23
Item 11.	Executive Compensation	27	25
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	28	26
Item 13.	Certain Relationships and Related Transactions, and Director Independence	29	27
Item 14.	Principal Accountant Fees and Services	30	27
~~PART IV~~	PART IV
Item 15.	Exhibits, Financial Statement Schedules	31	28
	Signatures	32	29

2 Table of Contents

PART I

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Annual Report on Form 10-K (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements will occur or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management, any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

Some factors that might cause such differences are described in the section entitled “Risk Factors” in this Report and in other documents that we file from time to time with the Securities and Exchange Commission (“SEC”), which factors include, without limitation, the following:

● Competition from other similar companies; ● Regulatory limitations on the products we can offer and markets we can serve; ● Other changes in the regulation of medical and recreational cannabis use; ● Changes in underlying consumer behavior, which may affect the business of our customers; ● Our ability to access adequate financing on reasonable terms and our ability to raise additional capital in order to fund our operations; ● Challenges with new products, services and markets; and ● Fluctuations in the credit markets and demand for credit.

●

Regulatory limitations on the products we can offer and markets we can serve;

●

Other changes in the regulation of medical and recreational cannabis use;

●

Changes in underlying consumer behavior, which may affect the business of our customers;

●

Our ability to access adequate financing on reasonable terms and our ability to raise additional capital in order to fund our operations;

●

Challenges with new products, services and markets; and

●

Fluctuations in the credit markets and demand for credit.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

The following description of the business of PotNetwork Holdings Inc. should be read in conjunction with the information included elsewhere in this Report. Unless the context indicates otherwise, references to the words “we,” “us,” “our,” “POTN,” and the “Company” in this Report refer to PotNetwork Holdings, Inc.

Table of Contents

ITEM 1. BUSINESS

Our Corporate History and Background

The Company’s primary business is conducted through its subsidiary, First Capital Venture Co., whose wholly-owned subsidiary, ~~Diamond~~ CBD, ~~Inc.~~LLC, does business under the trade style, Diamond CBD (“Diamond CBD”) and is engaged in the development and sales of hemp-derived CBD oil containing products., ~~Generically~~the majority of which contain “Full Spectrum CBD”, ~~products~~“Broad ~~containing~~Spectrum ~~hemp-derived~~CBD”, or “CBD ~~are~~Isolate”. ~~sold~~For all practical purposes First Capital Venture Co. conducts its business as ~~dietary~~Diamond ~~supplements~~CBD.

Hemp-derived CBD is distinguishable from CBD derived from marijuana. Hemp-derived CBD contains not more than 0.3 percent of THC, while marijuana contains in excess of this amount. ~~Marijuana~~As issuch, ~~regulated~~we ~~under the Controlled Substances Act. We do not~~ believe that our hemp-derived CBD products are regulated under the ~~Controlled Substances Act, but under the~~ Agricultural Act of 2018, commonly known as the “Farm Bill”.

The ~~Company~~2018 ~~maintains~~Farm ~~that~~Bill ~~all~~allows ~~products~~for ~~produced~~the interstate sale and ~~marketed~~transfer byof ithemp-derived products for commercial or other purposes. It also puts no restrictions on the sale, transport, or possession of hemp-derived products, so long as those items are produced in ~~compliance~~a manner consistent with the law. The Farm Bill ~~and~~ensures ~~all~~that ~~other~~any cannabinoid—components of CBD —that is derived from hemp will be legal, if that hemp is produced in a manner consistent with the Farm Bill, associated federal ~~and~~regulations, associated state ~~law~~regulations, and ~~regulation~~by a licensed grower as defined in the Farm Bill.

~~Diamond~~The ~~CBD’s~~Company ~~products~~maintains ~~are~~that ~~marketed~~all ~~under~~products 15produced ~~brand~~and ~~names,~~marketed ~~including~~by ~~“Diamond CBD”~~it, ~~“Chill”,~~are ~~“Relax”,~~in ~~“MediPets”~~compliance ~~and~~with the ~~premium~~Farm ~~“Meds~~Bill ~~BioTech”~~and ~~label,~~all asother ~~well~~federal asand ~~many~~state ~~others.~~law Inand ~~total,~~regulation. Diamond CBD offers ~~more~~its ~~than 800~~ products infor ~~variations~~sale bydirect ~~flavor, concentration and size that are sold over a nationwide distribution network exceeding 550 distributors and resellers that sell~~ to ~~thousands~~consumers ofvia ~~brick-and-mortar~~its ~~retailers~~website ~~and~~at ~~online merchants~~http://www. ~~The overall product line~~diamondcbd.com, ~~because~~as ofwell ~~its size, is constantly in flux~~ as ~~new~~through ~~products~~distributors ~~are added~~ and ~~products~~resellers ~~are~~in ~~culled based on several factors including, but not limited to, consumer acceptance, inventory levels, and replacement as~~ the ~~result~~United ~~of incremental improvement~~States.

Diamond CBD also offers for sale a majority of its products direct to consumers via its website at http://www.diamondcbd.com.

Corporate History

PotNetwork Holdings, Inc., (the “Company” or the “Registrant”) was originally incorporated in Nevada in ~~1996~~1988 as H P Capital Corp. The Company redomiciled in Wyoming in 2004 and changed its name to My Medical CD, Ltd. From May 2016 to March 2017, the Company was known as SND Auto Group, Inc. On March 3, 2017, the Company redomiciled in Colorado, and changed its name to PotNetwork Holdings, Inc.

OnIn ~~January 30~~1996, ~~2017,~~it ~~the~~changed ~~Company~~its ~~acquired~~name ~~via~~to ~~reverse~~Araldica ~~triangular~~Wineries ~~merger~~Ltd., ~~100%~~and ofin ~~the~~2000, ~~ownership~~to ~~interest~~Interactive ofSolutions ~~the~~Corp, ~~privately-held~~which ~~First~~in ~~Capital Venture Co.~~2004, areverse ~~Florida~~merged ~~corporation.~~with ~~First~~y ~~Capital~~Medical ~~Venture~~CD, CoLtd., isand ~~the~~redomiciled ~~owner~~to ofWyoming. ~~Diamond~~The ~~CBD,~~Company ~~Inc.~~then ~~selling~~underwent ~~numerous~~a ~~CBD~~series ~~Oil~~of ~~products~~name atchanges: ~~both~~United ~~wholesale~~Treatment ~~and~~Centers, ~~retail~~Inc., ~~Pursuant~~from toJune ~~the~~26, ~~Share~~2008 ~~Exchange~~to ~~and~~February ~~Reorganization~~4, ~~Agreement~~2013, ~~the~~Element ~~First~~Trading ~~Capital~~Holding ~~Venture Co~~Inc., ~~shareholders~~from ~~exchanged~~February ~~their~~4, ~~shares~~2013-March ~~which~~5, ~~they~~2014, ~~held~~United inTreatment ~~First~~Centers, ~~Capital Venture Holdings Co~~Inc., ~~for~~from anMarch ~~aggregate total of 50~~5,~~000~~ ~~Class~~2014 Ato ~~preferred~~July ~~shares~~21, ~~of the Company~~2015, ~~wherein~~PotNetwork ~~the~~Holdings ~~shareholders~~Inc., ~~would~~from ~~own~~July ~~100%~~21, of2015 ~~this~~to ~~class~~May of20, ~~stock~~2016, ofSND ~~the~~Auto ~~Company~~Group, ~~(the~~Inc., ~~“Class~~from AMay ~~Preferred Shareholders”)~~20, ~~which~~2016 into ~~the~~January ~~aggregate~~5, ~~conferred~~2017, ~~voting~~and ~~control~~to ofPotNetwork ~~the~~Holdings ~~Company~~Inc. ~~First~~on ~~Capital~~January ~~Venture~~30, Co2017. ~~became~~On aMarch ~~wholly-owned~~3, ~~subsidiary~~2017, of the Company as ~~result~~PotNetwork ofHoldings, ~~the transaction~~Inc., redomiciled to Colorado.

~~Pursuant~~On toJanuary ~~a Stock Purchase Agreement dated June 8~~30, 2017, the Company acquired ~~all~~via ~~the~~reverse ~~capital~~triangular ~~stock~~merger of100% ~~PotNetwork Media Group, Inc., a Nevada corporation (“PMG”), in exchange for 3,000,000 shares~~ of the ~~Company’s~~ownership ~~common~~interest ~~stock issued to the shareholders~~ of ~~PMG, and~~ the ~~cancellation~~privately-held ofFirst aCapital ~~$50,000~~Venture ~~promissory note between the Company and PMG~~Co. ~~As a result~~, ~~PMG became~~ a ~~wholly-owned~~Florida ~~subsidiary~~corporation. ofFirst ~~the~~Capital ~~Company~~Venture Co. ~~PMG~~through isCBD, ~~the~~LLC ~~owner~~doing ofbusiness ~~the~~as ~~website~~Diamond ~~www.potnetwork.com.~~CBD, ~~Potnetwork.com~~was isselling annumerous ~~informational~~CBD ~~website~~and onrelated ~~the~~products ~~overall~~at ~~cannabis~~both ~~industry~~wholesale and ~~does~~retail, ~~not~~and ~~market~~by ~~any~~direct ~~products.~~ecommerce ~~PMG~~sales isto ~~also~~consumers over the ~~publisher~~age of ~~a magazine titled “PotNetwork~~18.”

~~The~~Pursuant to a Share Exchange and Reorganization Agreement, the First Capital Venture Co. shareholders exchanged their shares which they held in First Capital Venture Holdings Co. for an aggregate total of 50,000 Class A preferred shares of the Company, ~~has~~wherein ~~two~~the shareholders would own 100% of this class of stock of the Company (2the “Class A Preferred Shareholders”), which in the aggregate conferred voting control of the Company. First Capital Venture Co. became a wholly-owned ~~subsidiaries:~~subsidiary of the Company as result of the transaction.

·In ~~First~~a ~~Capital~~separate ~~Venture Co.~~transaction, aon ~~Florida~~June ~~corporation~~8, ~~which~~2017, ~~has~~pursuant asto ~~its~~a ~~wholly-owned~~Stock ~~subsidiary,~~Purchase ~~Diamond~~Agreement ~~CBD,~~PotNetwork Holdings Inc., aacquired ~~Delaware~~all ~~corporation~~the ·capital stock of PotNetwork Media Group, Inc., a Nevada corporation (“PMG”), ~~operator~~in exchange for 3,000,000 shares of the ~~website~~Company’s common stock issued to the shareholders of PMG, ~~PotNetwork~~and the cancellation of an outstanding $50,000 promissory note between the Company and PMG. As a result, PMG became a wholly-owned subsidiary of the Company. PMG is the owner of the website www.potnetwork.com. Potnetwork.com is an informational website on the overall cannabis industry and does not market any products.

PotNetwork Holdings Inc., therefore, has two (2) wholly-owned subsidiaries:

	●	First Capital Venture Co., a Florida corporation which has as its wholly-owned subsidiary, CBD, LLC, a Florida limited liability company, doing business nationally as Diamond CBD; and

	●	PotNetwork Media Group, Inc., a Nevada corporation, operator of the website, PotNetwork.com.

Existing Products

~~The~~First ~~Company’s~~Capital ~~primary~~Venture ~~business~~Co. ~~is conducted~~ through its wholly-owned subsidiary, ~~First~~CBD, ~~Capital~~LLC, ~~Venture~~using ~~Co.,~~the ~~whose~~trade ~~subsidiary,~~style of Diamond CBD, ~~Inc.~~offers (numerous products that are marketed under several brand names, including “Diamond CBD”), is“Chill”, ~~engaged~~“Relax”, in“MediPets” and the ~~development~~premium ~~and~~“Meds ~~sales~~BioTech” oflabel, ~~hemp-derived~~as ~~CBD~~well ~~oil~~as ~~containing~~several ~~products~~others. ~~Generically~~In total, ~~products~~under ~~containing~~its ~~hemp-derived~~various brand names, Diamond CBD offers hundreds of products in variations by flavor, concentration and size that are sold asdirect ~~dietary~~to ~~supplements~~consumers over its website, http://www.diamondcbd.com/, and over a nationwide distribution network of distributors and resellers that sell to thousands of brick-and-mortar retailers and other online merchants.

Table of Contents

~~Hemp-derived~~The ~~CBD~~overall isproduct ~~distinguishable~~line, ~~from~~because ~~CBD~~of ~~derived~~its ~~from~~size, ~~marijuana.~~is ~~Hemp-derived~~constantly ~~CBD~~in ~~contains~~flux ~~not~~as ~~more~~new ~~than~~products ~~0.3~~are ~~percent~~added ofand ~~THC,~~products ~~while~~are ~~marijuana~~culled ~~contains~~based inon ~~excess~~several offactors ~~this~~including, ~~amount~~but not limited to, consumer acceptance. ~~Marijuana~~For isexample, ~~regulated~~due ~~under~~to ~~the~~consumer ~~Controlled~~demand, ~~Substances~~Diamond ~~Act.~~CBD Wehas dorecently ~~not~~added ~~believe~~to ~~that~~its ~~our~~product ~~hemp-derived~~line, additional CBD derivative products that it believes are ~~regulated~~subject ~~under~~to the ~~Controlled~~same ~~Substances~~federal ~~Act,~~regulation ~~but~~ under the ~~Agricultural~~Farm ~~Act~~Bill ofas ~~2018,~~are ~~known~~its asother ~~the~~CBD ~~“Farm Bill”~~products.

~~The~~While ~~2018~~most ~~Farm~~of ~~Bill~~the ~~allows~~products ~~for~~marketed under the ~~interstate~~Diamond ~~sale~~CBD brand are geared to human health and ~~transfer~~wellness, ofits ~~hemp~~“MediPets” product line is a 100% natural and organic cannabinoid oil-~~derived~~based ~~products~~health ~~for~~and ~~commercial~~wellness orsolution ~~other~~for ~~purposes~~dogs and cats. ItAlong ~~also~~with ~~puts~~the noCompany’s ~~restrictions~~Pet onCBD ~~the~~food ~~sale~~for small, ~~transport~~medium, orlarge ~~possession~~dogs ofand ~~hemp-derived~~cats, these products, sooffer ~~long~~pet asowners ~~those~~a ~~items~~new ~~are~~way ~~produced~~to support their pet’s mood and wellness in a ~~manner~~non-invasive, ~~consistent~~non-toxic ~~with~~way. ~~the~~Technavio, ~~law.~~a ~~The~~leading ~~Farm~~market ~~Bill~~research ~~ensures~~firm, ~~that~~recently ~~any~~analyzed ~~cannabinoid—components~~the ofglobal ~~CBD~~pet ~~—that~~care isindustry ~~derived~~and ~~from~~forecasted ~~hemp~~a ~~will~~CAGR beof ~~legal,~~5% ifbetween ~~that~~2018-2022 ~~hemp~~(Global isPet ~~produced~~Dietary inSupplements aMarket ~~manner~~2018-2022, ~~consistent~~March ~~with~~2018). ~~the~~According ~~Farm~~to ~~Bill~~that report, ~~associated~~rising ~~federal~~pet ~~regulations,~~ownership ~~associated~~combined ~~state~~with ~~regulations,~~increased consumer spending on premium natural and byorganic apet ~~licensed~~care ~~grower~~products asare ~~defined~~fundamental infactors ~~the~~driving ~~Farm~~that ~~Bill~~growth.

~~The~~Under ~~Company~~Diamond ~~believes~~CBD’s ~~that~~various ~~all products produced and marketed by it~~brands, ~~are~~its inproducts ~~compliance~~containing ~~with~~CBD ~~the Farm Bill~~ and ~~all~~CBD ~~other~~derivatives ~~federal~~may ~~and~~be ~~state~~grouped ~~law~~into ~~and~~the ~~regulation.~~following categories:

~~Diamond~~· ~~CBD’s~~Flavored ~~products~~and ~~are~~unflavored ~~marketed~~oils ~~under~~in 15varying ~~brand~~concentrations ~~names,~~· ~~including~~Vaping ~~“Diamond~~pens ~~CBD”,~~and ~~“Chill”,~~additives ~~“Relax”,~~· ~~“MediPets”~~Edibles ~~and~~such ~~the~~as ~~premium~~chewable “~~Meds BioTech~~gummies” ~~label~~, asand ~~well~~lollipops as· ~~many~~Capsules ~~others.~~· InBeverage ~~total,~~energy/relaxation ~~Diamond~~“shots” ~~CBD~~· ~~offers~~Topical ~~over~~application ~~800~~creams ~~products~~ in ~~variations~~various byconcentrations ~~flavor,~~(including ~~concentration~~the ~~and~~premium ~~size~~“Meds ~~that~~BioTech” ~~are~~brand) ~~sold~~· ~~over~~Dog ~~a nationwide distribution network exceeding 550 distributors~~ and ~~resellers~~cat ~~that~~wellness ~~sell~~products ~~to thousands of brick-and-mortar retailers and online merchants. The overall product line, because of its size, is constantly~~ in ~~flux~~various asdosages ~~new products are added~~ and ~~products~~delivery ~~are~~formats ~~culled~~(the ~~based~~“MediPets” onbrand) ~~several~~· ~~factors~~Skin ~~including~~care, ~~but~~bath ~~not limited to, consumer acceptance, inventory levels,~~ and ~~replacement~~body asproducts ~~the~~· ~~result~~Hemp ~~of incremental improvement.~~flowers

While most of Diamond CBD’s products are geared to human health and wellness, its “MediPets” product line is a 100% natural and organic cannabinoid oil-based health and wellness solution for dogs and cats. Along with the company’s Pet CBD food for small, medium, large dogs and cats, these products offer pet owners a new way to support their pet’s mood and wellness in a non-invasive, non-toxic way. The global pet care industry is expected to reach $110 billion in 2017, according to Euromonitor Research (The State Of Global Pet Care: Trends And Growth Opportunities, September 2017). Technavio, a leading market research firm, recently analyzed the global pet care industry and forecasted a CAGR of 5% between 2016-2020 (Global Pet Dietary Supplements Market 2018-2022, March 2018). According to that report, rising pet ownership combined with increased consumer spending on premium natural and organic pet care products are fundamental factors driving that growth.

Diamond CBD also offers for sale a majority of its products direct to consumers via its website at http://www.diamondcbd.com/.

Diamond DBD’s products are grouped in the following categories:

· Flavored and unflavored CBD oils in varying concentrations · Vaping pens and additives · Edibles such as chewable “gummies”, crumble “dabs”, and other edible forms · Beverage energy/relaxation “shots” · CBD topical application creams in varying concentrations (including the premium “Meds BioTech” brand) · Pet (dog and cat) wellness products in various dosages and delivery formats (the “MediPets” brand) · Hemp Toke Hemp Cigarettes · CBD bath bombs

Consumer markets served by Diamond CBD are extensive. In terms of geography, the products are sold wherever legal and the Company stipulates to its distribution channels that the products may only be sold to end-user persons eighteen years of age or older (See Item 1A “Risk Factors” for a further explanation of the laws regarding the sale of hemp-derived CBD products). Initially, the Company focused distribution on market segments receptive to hemp-derived CBD products, such as vape shops, smoke shops and various countercultural focused retail outlets. Distribution was greatly expanded throughout 2017 and 2018 as the result of investment in new products and channel marketing (e.g., product catalogues and sell sheets, trade show and conference attendance, channel specific sales force), resulting in a vast broadening of distribution footprint and accelerated market growth, market penetration and revenue generation. For example, with the addition of specialized product lines, such as Meds BioTech and MediPets, the Company has been able to enter into new market segments such as vitamin/supplement shops, fitness centers, wellness practitioners of various disciplines, pet supply stores, and veterinary channels.

The strategic intent of the marketing plan in 2017 and 2018, has been to create a defendable “marketing wall” around distribution channels and retail outlets to minimize competition exposure. The Company has expended more than $11,000,000 in sales and marketing in 2017 and in 2018 combined. In parallel with distribution strategies, the Company has embraced various cause-related marketing initiatives in association with non-profit entities in order to position itself as socially conscious. Diamond CBD is engaged in select target market consumer awareness and brand preference campaigns, and is launching in 2019, two new national sales programs, one to educate and sell its products to consumers in shopping malls, and one to sell its products directly to brick-and-mortar resellers in metro markets in Florida via a fleet of mobile sales vans stocked with displays and product for immediate placement.

5 Table of Contents

Product Formulation and Production

Diamond CBD uses its commercial suppliers and contract manufacturers for ~~its~~ product research and development, formulation, quality testing, production and packaging. These suppliers and manufacturers hold, as required, the necessary regulatory and other licenses/permits specific to each ~~one~~’s activity. ~~Diamond~~All ~~CBD~~customer ~~outsources~~order fulfillment asis ~~well.~~outsourced ~~The~~under ~~Company has adopted~~ a drop shipment fulfillment model. ~~that~~As ~~allows~~a ~~the third-party supplier to ship the merchandise directly to each customer. Therefore~~result, the Company does not hold any inventory. ~~Any~~but ~~and~~rather ~~all~~inventory ~~raw~~is ~~materials~~held ~~constituting active ingredients in its products are routinely tested~~ by ~~a third-party laboratory for purity and consistency of active ingredient concentrations. The Company owns its own propriety formulas for all its products, which it regards as trade secrets (~~the ~~Company~~drop ~~does not own any patents nor has any pending), and continuously is engaged in both new product development and product incremental improvement with its suppliers~~shipper. ~~New product development and incremental improvement costs are absorbed by each respective supplier as part of their overhead in providing services to the Company.~~

Products and formulations are routinely tested for purity and consistency of active ingredient concentration by third-party laboratories holding the necessary regulatory and other licenses/permits. The Company owns its own propriety formulas for its proprietary products, which it regards are trade secrets (the Company nor its subsidiaries do not own any patents nor have any patents pending on its proprietary products). Through its suppliers, Diamond CBD continuously is engaged in both new product development, product testing and product incremental improvement through its suppliers.

Sales Channels

In addition to selling its products directly to consumers ~~from its website~~, Diamond CBD, ~~and indirectly the Company,~~ depends upon ~~its~~a network of distributors and resellers to ~~represent~~market and sell its ~~product~~products innationally ~~various~~where ~~markets~~permitted by law. ~~The~~As ~~Company~~a ~~has~~result, ~~over~~the ~~500~~Company’s ~~distributors~~brands ~~across~~are ~~the~~sold ~~U.S.~~through ~~that~~an ~~distribute~~informal tonetwork of thousands of retail points of ~~retail~~ distribution. No single distributor represents more than 10% of the Company’s aggregate sales volume. The Company is continuously ~~evaluating~~evaluates the performance of its distributors and sales channels and periodically restructures or updates its ~~agreements and~~ methods of distribution.

The Markets for Our Products

~~Market~~It ~~research~~is ~~firm,~~expected ~~Brightfield~~that ~~Group,~~U.S. ~~estimates~~consumer ~~that~~sales ~~the~~of cannabidiol (CBD) ~~oil~~will ~~industry~~reach isaround ~~growing~~1.8 atbillion U.S. dollars by 2022, which would represent a ~~rate~~significant ofincrease ~~55%~~from ~~year~~around ~~over~~half ~~year~~a ~~and~~billion ~~projects~~U.S. ~~that~~dollars in 2018. Following a similar trajectory, sales of legal cannabis in the U.S. ~~domestic~~are ~~market~~projected ~~for~~to ~~CBD~~hit ~~oil~~23 ~~products~~billion ~~will~~U.S. dollars in 2025. (Source: https://www.statista.com/statistics/760498/total-us-cbd-sales/) aThe ~~minimum~~growth of $1the ~~billion~~market byshows ~~2020~~that ~~(Forbes,~~hemp-derived ~~August~~CBD ~~23,~~products ~~2017).~~have become “mainstream” as consumers increasingly perceive them as providing wellness benefits.

~~The~~Consumer ~~growth~~markets served by the Company’s brands are extensive. In terms of geography, its products are sold wherever legal and the ~~market~~Company ~~shows~~stipulates to its distribution channels that ~~hemp~~the products may only be sold to end-~~derived~~user ~~CBD~~persons ~~products~~eighteen ~~are~~years ~~becoming~~of age or older (See Item 1A “~~mainstream~~Risk Factors” asfor ~~consumers~~a ~~increasingly~~further ~~perceive~~explanation ~~them~~of asthe ~~providing~~laws ~~wellness~~regarding ~~benefits~~the sale of CBD products).

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Initially, the Company focused distribution on market segments receptive to CBD products, such as vape shops, smoke shops and various countercultural focused retail outlets. Distribution efforts were greatly expanded from 2017 through 2020 as the result of investment in new products and channel marketing (e.g., product catalogues and sell sheets, trade show and conference attendance, channel specific sales force), resulting in a broadening of its distribution footprint and segment market penetration. For example, with the addition of specialized product lines, such as Meds BioTech and MediPets, the Company is entering into new market segments such as vitamin/supplement shops, fitness centers, and pet supply stores.

Since its inception, the strategic intent of the Diamond CBD marketing plan has been to create a defendable “marketing wall” around its distribution channels and retail outlets to minimize competitive incursions. The maintenance of such a marketing wall requires ongoing investment and vigilance. Consequently, the Company continues to expend a significant portion of its gross revenue on sales and marketing efforts to build/support consumer awareness and brand preference, as well as to drive direct-to-consumer sales of its many brands.

Competition

Currently, in the United States, there are no businesses that can demonstrate or claim a dominant market share of the growing CBD products market. Competition, outside those companies that provide over 0.3 percent THC containing CBD in ~~states~~States where that is allowed under state law, is limited to numerous brands with geocentric distribution footprints. Overall, there are no major pharmaceutical manufacturing companies marketing general purpose CBD products into the overall CBD market at this time, although the Company is expecting such an entry in the future. Competition also includes many small regional marketers/packagers of CBD oil containing products that have limited distribution and economic resources.

Overall at this time, there are no major pharmaceutical manufacturing companies marketing general purpose CBD products into the overall CBD market, however, the Company is expecting such an entry in the future. Competition also includes many small regional marketers/packagers of CBD oil containing products that have a limited distribution footprint.

Employees

The Company has 13 full-time employees.

Patents and Trademarks

The Company holds trademark, “PotNetwork”, under U.S. registration number 86860539, registered on January 31, 2017, and expiring on January 31, 2027. It is used by the Company in its own branding and that of its website, PotNetwork.com.

The Company holds no patents, nor at this time, has any patent pending.

Government Regulation

I. The Company’s CBD Products Are Not Subject to the Controlled Substances Act

The Agriculture Improvement Act of 2018 (“AIA” or “the Act”) exempted hemp-derived cannabidiol products (“hemp-derived CBD products”) from the federal Controlled Substances Act (“CSA”). Specifically, the AIA, also known as the Farm Bill of 2018, established a legal definition of “hemp”: the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [∆-9 THC] concentration of not more than 0.3 percent on a dry weight basis.

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The Act amends the CSA to exclude “hemp” from the definition of “marihuana.” It also amended the CSA to exclude THC found in “hemp” from the “tetrahydrocannabinols” listed in Schedule I. Therefore, hemp-derived CBD products that contain less than less than 0.3% of 9∆-THC, such as those marketed by PotNetwork, are not controlled substances under the CSA. These amendments to the CSA took immediate effect on December 20, 2018.

By way of background, the CSA establishes five “schedules” into which a substance with abuse potential may be classified. Substances that fall under any one of the five schedules are subject to various requirements and restrictions enforced by the U.S. Drug Enforcement Administration (“DEA”). The most restrictive is Schedule I, which is reserved for those substances having a high potential for abuse that do not have a currently accepted medical use, and that lack accepted safety for use under medical supervision.

Marijuana has long been classified under Schedule I. Previously, DEA took the position that CBD met the expansive definition of “marijuana”, which made it subject to Schedule I as well. Specifically, DEA created a code number in Schedule I for “marihuana extract,” defined as “an extract containing one or more cannabinoids that has been derived from any plant of the genus Cannabis, other than the separated resin (whether crude or purified) obtained from the plant.” DEA made clear that the agency considered CBD to fall within the definition of “marihuana extract” (and to therefore be a Schedule I substance) if the CBD came from the part of the cannabis plant that is included within the definition of “marijuana.”

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The passage of the AIA confirms that hemp-derived CBD products are now excluded from the CSA. As noted above, the AIA amended the definition of “marihuana” as follows:

(A) Subject to subparagraph (B), the term ‘marihuana’ means all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds to resin.

(B) The term ‘marihuana’ does not include—

(i) hemp, as defined in section 297A of the Agricultural Marketing Act of 1946.

II. Limits of the AIA

Although the AIA removed “hemp” from the CSA, the Act has limitations.

a. Products containing more than 0.3% of 9∆-THC still subject to the CSA.

Notably, the AIA’s exclusion of “hemp” from the CSA definition of “marihuana” is limited to those parts, derivatives, or extracts of the plant containing less than 0.3% of 9∆-THC. Parts, derivatives, and extracts containing levels of 9∆-THC greater than 0.3% meet the definition of marihuana and are subject to the CSA. Consequently, manufacturers and distributors of CBD products must be prudent with respect to verifying the levels of 9∆-THC in products.

b. Hemp production and cultivation restrictions

The AIA requires the establishment of a shared Federal-state program to regulate the cultivation and production of hemp. The USDA is actively engaged in rulemaking efforts to implement these requirements and state laws are evolving in response. Our Company is not involved in the cultivation or production of hemp; however, we recognize that new rules will impact the industry as a whole and we are closely monitoring the USDA’s rulemaking efforts.

c. Hemp-derived CBD remains subject to FDA regulatory authority

Further, The Federal Food, Drug and Cosmetic Act (“FDCA”) and the AIA authorize the FDA to regulate the marketing and distribution of hemp products in interstate commerce that are intended for consumption, including topical use. Pursuant to its jurisdiction, FDA may regulate hemp as a feed, food, dietary supplement, cosmetic or drug depending on the intended use of the hemp and whether the hemp is otherwise a permissible ingredient for a particular intended use. The AIA expressly preserves the FDA’s authority over “hemp” that is intended to be used as a drug, device, cosmetic, food (including animal food), dietary supplement, or tobacco product.

Generally, hemp-derived CBD products that are intended for ingestion and intended to support the normal function/structure of the body or added as an ingredient in food, may be considered a dietary supplement or conventional food under the FDCA. However, FDA has taken the position through advisory Warning Letters to multiple companies that CBD products are precluded from being marketed as dietary supplements or as food because CBD is subject to statutory exclusions designed to protect the integrity of the drug approval process.

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Specifically, the statutory definition of a “dietary supplement” excludes an “article” that has been approved as a drug under section 505 of the FDCA. The term “dietary supplement” also excludes “an article” if (1) it has been authorized for investigation as a new drug; (2) substantial clinical investigations have been instituted on the article and their existence made public; and (3) it was not marketed as a food or dietary supplement prior to being authorized for investigation as a new drug. For purposes of this exclusion, the FDA has interpreted “authorized for investigation as a new drug” to mean that an Investigational New Drug application (“IND”) has been submitted for the active ingredient or active moiety.

FDA has taken the position that hemp-derived CBD cannot be marketed as dietary supplement because a CBD isolate has been approved as a drug, Epidiolex, and prior to approval, was subject to substantial clinical investigations under an IND. Further, FDA has stated that it has not been provided with the evidence needed to overcome this exclusion. The FDA asserts this same position with regard to products marketed as food under a separate, but identical, statutory provision applicable to “food” broadly. As such, FDA takes the position that hemp-derived CBD products intended for ingestion may be adulterated.

~~That~~7 ~~being~~Table ~~said, FDA has yet to take enforcement action against CBD products and has initiated a regulatory process to determine whether there is a regulatory pathway to permit the marketing~~ of these products. Indeed, FDA in recognizing the significant increase in hemp-derived CBD products on the market, the Agency held a public meeting on May 31, 2019, requesting scientific information and data regarding the safety, manufacturing, product quality, marketing, labeling, and sale of products containing hemp-derived CBD. It further requested that comments be filed with the agency by July 2, 2019. This meeting and request for comments signaled FDA’s intent to consider various regulatory options for CBD products, including but not limited to (1) requiring companies to seek approval to market such product; (2) issuing regulations setting forth the conditions which such products may be marketed in food and dietary supplements; or (3) prohibiting the use of hemp-derived CBD in foods and dietary supplements. With that said, there is significant regulatory uncertainty around this category which makes it difficult to predict the likely outcome of this process FDA has initiated. Contents

That being said, FDA has yet to take enforcement action against CBD products and has initiated a regulatory process to determine whether there is a regulatory pathway to permit the marketing of these products. Indeed, FDA in recognizing the significant increase in hemp-derived CBD products on the market, the Agency held a public meeting on May 31, 2019, requesting scientific information and data regarding the safety, manufacturing, product quality, marketing, labeling, and sale of products containing hemp-derived CBD. It further requested that comments be filed with the agency by July 2, 2019. This meeting and request for comments signaled FDA’s intent to consider various regulatory options for CBD products, including but not limited to (1) requiring companies to seek approval to market such product; (2) issuing regulations setting forth the conditions which such products may be marketed in food and dietary supplements; or (3) prohibiting the use of hemp-derived CBD in foods and dietary supplements. With that said, there is significant regulatory uncertainty around this category which makes it difficult to predict the likely outcome of this process FDA has initiated. As of the date of this Report, the FDA has not issued subsequent regulatory guidelines.

d. Hemp-derived CBD products are subject to regulation on the state level.

Although the AIA provided clarity regarding the status of hemp-derived CBD under the federal CSA, the AIA did not address the myriad of state laws and regulations governing such products. For example, hemp-derived CBD still meets the definition of a controlled substance under certain laws.

FDA Warning Letter

On March 28, 2019, PotNetwork Holdings received a Warning Letter from the U.S. Food and Drug Administration ~~on March 28, 2019~~ related to ~~the~~its marketing of CBD products ~~by Diamond CBD, a subsidiary of the Company~~.

~~First,~~(i) The FDA alleged that some claims made byon the Diamond CBD ~~on its~~ website ~~established that the products were unapproved new drugs. Specifically, FDA stated that the claims~~ suggested that the products were intended to cure, mitigate, treat, or prevent disease, the definition of a drug under section 201(g)(1)(B) of the FDCA, and as such, the Company was establishing said products as unapproved new drugs. These claims included references to clinical studies on CBD demonstrating health benefits for patients with certain diseases, including Alzheimer’s and diabetes. Based on these claims, the FDA considered the products to be unapproved new drugs in violation of the FDCA.

~~Next,~~(ii) The FDA alleged that ~~the~~an ~~products~~such product cannot lawfully be marketed as a dietary supplement because the ~~Agency~~FDA has concluded that CBD is excluded from the definition of a dietary supplement. Specifically, the section 201(ff)(3)(B)(i) and (ii) of the FDCA excludes from the definition of “dietary supplement” articles that are active ingredients in drugs or for which substantial investigations as a drug have commenced if the substances were not marketed as food or dietary supplements prior to the approval of the drug or commencement of the investigation. Since CBD isolate is the active ingredient in the approved drug, Epidiolex, and substantial clinical investigations have been conducted under IND. FDA has taken the position that there is no evidence that CBD was marketed as a food and dietary supplement prior to the approval or investigation of these drugs and, therefore, ~~the~~any hemp-derived CBD ~~products~~product dodoes not meet the definition of a dietary supplement. Consequently, based on their analysis, any such products may violate the FDCA.

~~Finally~~(iii), 301(ll) of the FDCA prohibits food from containing an approved drug or drug for which substantial clinical investigations have been instituted unless such drug was marketed as food prior to the approval of the drug or institution of the clinical investigation. As discussed, FDA has taken the position that there is no evidence that CBD was ~~not~~ marketed as food prior to substantial clinical investigations on CBD conducted under IND were made public. ~~The~~Moreover, the Warning Letter states that the Diamond CBD products containing a Nutrition Facts panel are not appropriately marketed because the presence of CBD excludes the product from being marketed as a food. Consequently, such products may violate the FDCA.

8In ~~Table~~2019, the Company took significant steps to respond to FDA concerns enumerated in its Warning Letter. The Company removed all claims from its Diamond CBD website that were referenced in the Warning Letter that suggested or implied that any of ~~Contents~~its CBD products is intended to be used as a drug. The Company also acted swiftly and removed other claims in an effort to ensure compliance with the FDCA and be responsive to FDA’s concerns.

~~PotNetwork~~Additionally, ~~has~~on ~~taken~~April ~~significant~~30, ~~steps~~2019 toindependent ~~respond~~counsel tofor ~~FDA~~the ~~concerns~~Company ~~enumerated~~provided ina ~~the~~written ~~March~~response ~~28,~~to ~~2019~~the Warning Letter. ~~Diamond~~identifying ~~CBD has removed all claims from~~ the ~~website~~changes ~~that~~implemented ~~are~~by ~~referenced in~~ the ~~Warning~~Company ~~Letter~~and ~~has~~responding ~~suggesting~~to ~~that~~ the ~~hemp-derived~~allegations ~~CBD~~related ~~products are intended~~ to beCBD ~~used~~prohibition asin a ~~drug~~dietary supplement. ~~PotNetwork~~As ~~also~~of ~~retained~~date ~~Venable~~of ~~LLP~~this ~~to serve as regulatory counsel. At counsel’s instruction~~filing, ~~Diamond~~the ~~CBD~~Company has ~~also~~not ~~acted~~received ~~swiftly~~any ~~and~~response ~~removed~~from ~~other~~the ~~claims~~Agency. inNor anhas ~~effort~~it tobeen ~~ensure compliance with~~ the ~~FDCA~~subject ~~and~~of beany ~~responsive~~other toenforcement ~~FDA’s concerns~~action.

Additionally, counsel provided a written response to the Warning Letter on April 30, 2019 identifying the changes implemented by Diamond CBD and responding to the allegations related to CBD prohibition in a dietary supplement. As of date of this filing, PotNetwork has not received a response from the Agency. Nor has it been the subject of any other enforcement action.

Importantly, the Warning Letter did not state or imply any consumer or other complaint relating to any of Company’s products in terms of their purity, quality, or safety.

Emerging Growth Company Status

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (JOBS Act). For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more; (ii) the last date of the fiscal year following the fifth anniversary of the date of the first sale of common stock under this registration statement; (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. We will be deemed a large accelerated filer on the first day of the fiscal year after the market value of our common equity held by non-affiliates exceeds $700 million, measured on January 1^st.

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We cannot predict if investors will find our common stock less attractive to the extent, we rely on the exemptions available to emerging growth companies. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

A Company that elects to be treated as an emerging growth company shall continue to be deemed an emerging growth company until the earliest of (i) the last day of the fiscal year during which it had total annual gross revenues of $1,000,000,000 (as indexed for inflation), (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common stock under this registration statement; (iii) the date on which it has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv) the date on which is deemed to be a ‘large accelerated filer’ as defined by the SEC, which would generally occur upon it attaining a public float of at least $700 million.

~~ITEM~~Item 1A. RISK FACTORS

An investment in our common stock involves a high degree of risk. Our business and results of operations could be seriously harmed by any of the following risks described herein or as may arise during the course of business.

~~Our~~We ~~industry~~are ~~may~~unable ~~become subject~~ to ~~expanded~~predict ~~regulation and increased enforcement by~~ the ~~Food~~ongoing ~~and~~impact ~~Drug~~of ~~Administration~~COVID-19 ~~(FDA)~~on ~~and~~our ~~the Federal Trade Commission (FTC)~~Company.

The ~~FDA~~overall ~~under~~effect of the ~~Federal~~travel ~~Food,~~and ~~Drug,~~other ~~and~~restrictions ~~Cosmetic~~in ~~Act~~place ~~regulates~~to stop the ~~formulation,~~spread ~~manufacturing,~~of ~~packaging,~~COVID-19 ~~labeling~~has had, and ~~distribution~~continues ofto ~~food~~have, ~~dietary~~a ~~supplements,~~significant ~~drugs,~~impact ~~cosmetic,~~on ~~medical~~the ~~devices,~~overall ~~biologics~~economy, ~~and~~on ~~tobacco~~retail ~~products.~~sales, ~~Our~~consumer ~~hemp-derived~~discretionary ~~CBD~~spending ~~products~~and ~~are~~our ~~not~~business. ~~intended~~Throughout tocalendar ~~be drugs. Accordingly~~2020, wethe ~~have~~Company ~~not~~experienced ~~been~~chronic ~~required~~business toand ~~obtain~~supply ~~FDA~~chain ~~approval~~interruptions ~~for~~which ~~our~~negatively ~~existing~~impacted ~~hemp-derived~~business ~~CBD~~results ~~products~~and profitability. Moreover, ~~the~~a ~~regulatory~~portion ~~status~~ of ~~hemp-derived~~our ~~CBD~~business ~~products~~plan is inrelated ato ~~state~~the ofdistribution ~~flux~~and assale ~~FDA~~of ~~attempts~~our products to ~~determine~~retail ~~the~~shops ~~appropriate manner in~~ which tohave ~~regulate~~been ~~these~~negatively ~~products.~~impacted ~~Thus,~~by the ~~regulatory~~COVID-19 ~~approach~~pandemic. isTo ~~still~~date ~~evolving~~in 2021, ~~and~~ we ~~may~~continue ~~be required~~ to ~~seek~~experience ~~FDA’s~~business ~~approval~~and tosupply ~~market~~chain ~~food~~interruptions ~~and~~as ~~dietary~~well ~~supplements~~as ~~containing~~strictures ~~hemp-derived~~on ~~CBD.~~retail Itdistribution isand ~~also~~sales. ~~possible~~Going ~~that~~forward ~~FDA~~for ~~may~~2021 ~~simply~~and ~~issue~~beyond, awe ~~regulation~~cannot ~~setting~~predict ~~forth~~what the ~~conditions~~ongoing innegative ~~which~~impact ~~such~~of ~~products~~the ~~may~~COVID-19 bepandemic ~~marketed~~will be, ornor ithow ~~may~~long ~~simply~~such ~~prohibit~~effects ~~these~~will ~~products~~last. ~~However~~Additionally, because ~~FDA’s~~of ~~regulatory~~the ~~process~~COVID-19 ispandemic’s ineffect ~~its~~on ~~infancy,~~capital ~~we cannot predict the likely outcome. In addition~~markets, the ~~FTC~~Company ~~under~~may ~~the~~find ~~Federal~~it ~~Trade~~difficult ~~Commission~~to ~~Act~~raise ~~(“FTC~~additional ~~Act”)~~funds ~~requires~~as ~~that~~needed ~~product~~on ~~advertising~~terms isacceptable ~~truthful,~~to ~~substantiated~~us ~~and~~which ~~non-misleading.~~we Wewill ~~believe~~be ~~that~~need ~~our advertising meets these requirements. However, the FTC may bring a challenge at any time~~ to ~~evaluate~~execute our ~~compliance~~overall, ~~with~~ongoing ~~the~~business ~~FTC Act~~plan.

9The ~~Table~~continuing COVID-19 pandemic presents an ongoing risk to the Company’s ability to continue as a going concern. Moreover, the risk of ~~Contents~~illness from COVID-19 or its variants to our officers and directors, management and accounting personnel, creates a risk to the efficiency of our existing internal control system and processes, and therefore, increases the risk of material misstatement in the preparation and presentation of our financial data and statements.

AsOur ~~disclosed~~industry ~~herein,~~may ~~our~~become ~~Company~~subject ~~received~~to aexpanded ~~Warning~~regulation ~~Letter from the FDA~~ and ~~the~~increased ~~FTC~~enforcement ~~regarding~~by the ~~advertising~~Food and ~~labeling~~Drug ~~claims~~Administration ~~for our products.~~ (FDA) ~~also takes the position that certain ingestible products containing CBD may only be marketed if approved as a “drug.” Although we dispute the issues identified by FDA~~ and ~~FTC, we have adjusted~~ the ~~advertising~~Federal ~~and~~Trade ~~labeling~~Commission ~~claims raised in the letter to be in material compliance with the FDCA and the~~ (FTC ~~Act.~~ )

~~Despite~~The ~~our~~FDA ~~corrective~~under ~~actions~~the inFederal ~~response~~Food, toDrug, and Cosmetic Act regulates the ~~Warning~~formulation, ~~Letter~~manufacturing, aspackaging, alabeling, ~~Company~~and ~~regulated~~distribution byof ~~the~~food, ~~FDA~~dietary supplements, drugs, cosmetic, medical devices, biologics, and ~~the~~tobacco ~~FTC~~products. Our CBD products are not intended to be drugs. Accordingly, we ~~may~~have benot ~~subject~~been required to ~~enforcement~~obtain ~~actions~~FDA byapproval ~~either~~for ~~agency~~our existing CBD products. ~~Enforcement~~Moreover, ~~actions~~the byregulatory ~~FDA~~status ~~may~~of ~~include~~CBD products is in a ~~seizure~~state of ~~our~~flux ~~products,~~as anFDA ~~injunction~~attempts ~~issued~~to bydetermine athe ~~federal~~appropriate ~~court~~manner ~~preventing~~in uswhich ~~from~~to ~~selling~~regulate ~~our~~these products. Thus, ~~civil~~the ~~monetary~~regulatory ~~penalties,~~approach oris still evolving, inmeaning ~~egregious~~we ~~circumstances~~may be required to seek FDA’s approval to market food, ~~criminal~~dietary ~~prosecution~~supplements and other products containing CBD. ~~The~~It ~~potential~~is ~~enforcement~~also ~~actions~~possible that FDA may besimply ~~taken~~issue bya ~~the~~regulation ~~FTC~~setting ~~include~~forth anthe ~~injunction~~conditions in awhich ~~Federal~~such ~~District~~products ~~Court~~may be marketed, anor ~~Administrative~~it ~~Cease~~may ~~and~~simply ~~Desist~~prohibit ~~Order~~certain of these products. However, orbecause ~~civil~~FDA’s ~~monetary~~regulatory ~~penalties~~process development is in its infancy, we cannot predict the likely outcome. ~~Finally~~In addition, itthe FTC under the Federal Trade Commission Act (“FTC Act”) requires that product advertising is ~~possible~~truthful, substantiated and non-misleading. We believe that ~~FDA~~our ~~may~~advertising ~~decide~~meets tothese ~~prohibit~~requirements. However, the ~~use~~FTC ofmay ~~hemp-derived~~bring ~~CBD~~a inchallenge ~~foods~~at ~~and/or~~any ~~dietary~~time ~~supplements. Similar~~to ~~action~~evaluate ~~could~~our ~~likewise~~compliance ~~occur~~with ~~through~~the ~~state~~FTC ~~proceedings~~Act.

WeAs ~~have~~disclosed herein, our Company received a ~~limited~~Warning ~~operating~~Letter ~~history~~from the FDA and ~~operate~~the inFTC regarding the advertising and labeling claims for our products. FDA also takes the position that certain ingestible products containing CBD may only be marketed if approved as a ~~new~~“drug.” ~~industry,~~Although we dispute the issues identified by FDA and FTC, we ~~may~~have ~~not~~adjusted ~~succeed~~the advertising and labeling claims raised in the letter to be in material compliance with the FDCA and the FTC Act.

~~The~~9 ~~consumer~~Table ~~products~~of ~~business is a highly competitive and risky business, and such competition from companies much bigger than us could adversely affect our operating results.~~Contents

WeDespite ~~compete~~our ~~with~~corrective ~~many~~actions ~~national,~~in ~~regional~~response ~~and~~to ~~local~~the ~~businesses.~~Warning WeLetter, ~~could~~as ~~experience~~a ~~increased~~Company ~~competition~~regulated ~~from~~by ~~existing~~the orFDA ~~new~~and ~~companies~~the inFTC, ~~our~~we ~~channel,~~may ~~which~~be ~~could~~subject ~~create~~to ~~increasing~~enforcement ~~pressures~~actions toby ~~grow~~either ~~ours~~agency. IfEnforcement weactions ~~are~~by ~~unable~~FDA tomay ~~maintain~~include ~~our~~a ~~competitive~~seizure ~~position~~of our products, wean ~~could~~injunction ~~experience~~issued ~~downward~~by ~~pressure~~a onfederal ~~prices,~~court ~~lower~~preventing ~~demand~~us ~~for~~from selling our products, ~~reduced~~civil ~~margins~~monetary penalties, ~~the~~or, ~~inability~~in toegregious ~~take~~circumstances, ~~advantage~~criminal ofprosecution. ~~new~~The ~~business~~potential ~~opportunities~~enforcement ~~and~~actions that may be taken by the ~~loss~~FTC ofinclude ~~channel~~an ~~share,~~injunction ~~which~~in ~~would~~a ~~have~~Federal District Court, an ~~adverse~~Administrative ~~effect~~Cease onand ~~our~~Desist ~~operating~~Order, ~~results~~or civil monetary penalties. ~~Other~~Finally, ~~factors~~it is possible that FDA may decide to prohibit the use of CBD in foods and/or dietary supplements. Similar action could ~~affect~~likewise ~~our~~occur ~~business~~through ~~are:~~state proceedings.

·We ~~Consumer~~have ~~tastes~~a ·limited ~~National,~~operating ~~regional~~history ~~or local economic conditions · Disposable purchasing power · Demographic trends;~~ and ·operate ~~The~~in ~~price~~a ofnew ~~special~~industry, ~~ingredients that are utilized for our products~~ and ~~other~~we ~~price~~may ~~fluctuation~~not ~~in costs to manufacture our products~~succeed.

~~Increases~~The inconsumer ~~the~~products’ ~~cost~~business ofis ~~ingredients,~~a ~~labor~~highly competitive and ~~other~~risky ~~costs~~business, and such competition from companies much bigger than us could adversely affect our operating results.

~~Our~~We ~~principal~~compete ~~products~~with ~~contain~~many ~~hemp-derived~~national, ~~CBD~~regional ~~oil.~~and ~~Increases~~local inbusinesses. ~~the~~We ~~cost~~could ofexperience ~~ingredients~~increased incompetition ~~our~~from ~~products~~existing ~~could~~or ~~have~~new acompanies ~~material~~in ~~adverse effect on~~ our ~~operating results. Significant price increases~~channel, ~~market~~which ~~conditions,~~could ~~weather,~~create ~~acts~~increasing ofpressures ~~God~~to ~~and~~grow ~~other~~ours. ~~disasters~~If ~~could~~we ~~materially~~are ~~affect~~unable ~~our~~to ~~operating~~maintain ~~results. An increase in~~ our ~~operating~~competitive ~~costs~~position, we could ~~adversely~~experience ~~affect~~downward ~~our~~pressure ~~profitability.~~on ~~Factors such as inflation~~prices, ~~increased~~lower ~~labor~~demand ~~and~~for ~~employee~~our ~~benefit~~products, ~~costs~~reduced ~~and~~margins, ~~increased~~the ~~energy~~inability ~~costs~~to ~~may~~take ~~adversely~~advantage ~~affect~~of ~~our~~new ~~operating~~business ~~costs.~~opportunities ~~Many~~and of the ~~factors~~loss ~~affecting~~of ~~costs~~channel ~~are~~share, ~~beyond~~which ~~our~~would ~~control~~have ~~and~~an weadverse ~~may~~effect ~~not~~on beour ~~able~~operating toresults. ~~pass~~Other ~~along~~factors ~~these~~that ~~increased~~could ~~costs~~affect to our ~~customers.~~business are:

We● doConsumer ~~not~~tastes ~~have~~● ~~long-term~~National, ~~contracts~~regional ~~with~~or ~~many~~local ofeconomic ~~our~~conditions ~~suppliers,~~● Disposable purchasing power ● Demographic trends; and as● aThe ~~result~~price ~~they~~of ~~could~~special ~~seek~~ingredients tothat ~~increase~~are ~~prices~~utilized orfor ~~fail~~our products and other price fluctuation in costs to ~~deliver~~manufacture our products.

WeIncreases typically do not rely on written contracts or long-term arrangements with our suppliers. Although we have not experienced significant problems with our suppliers, our suppliers may implement significant price increases or may not meet our requirements in athe ~~timely~~cost ~~fashion, if at all. The occurrence~~ of ~~any~~ingredients, oflabor ~~the~~and ~~foregoing~~other costs could ~~have~~adversely aaffect ~~material adverse effect on~~ our operating results.

~~Any~~Our ~~prolonged~~principal ~~disruption~~products contain CBD oil and its derivatives. Increases in the ~~operations~~cost of ~~any~~ingredients in our products could have a material adverse effect on our operating results. Significant price increases, market conditions, weather, acts of God and other disasters could materially affect our ~~packaging~~operating ~~facilities~~results. An increase in our operating costs could ~~harm~~adversely affect our ~~business~~profitability. Factors such as inflation, increased labor and employee benefit costs and increased energy costs may adversely affect our operating costs. Many of the factors affecting costs are beyond our control and we may not be able to pass along these increased costs to our customers.

~~Any~~We ~~prolonged~~do ~~disruption~~not inhave ~~the~~long-term ~~operations~~contracts ofwith ~~any~~many ~~facilities~~of ~~that perform~~ our ~~packaging~~suppliers, ~~whether~~and ~~due~~as toa ~~technical~~result orthey ~~labor~~could ~~difficulties,~~seek ~~destruction or damage~~ to ~~the~~increase ~~facility,~~prices ~~real estate issues~~ or ~~other~~fail ~~reasons,~~to ~~could result in increased costs and reduced revenues and our profitability and business results could be harmed~~deliver.

~~Loss~~We oftypically ~~key~~do ~~personnel~~not rely on written contracts or long-term arrangements with our ~~inability~~suppliers. toAlthough ~~attract~~we ~~and~~have ~~retain~~not ~~new~~experienced ~~qualified~~significant ~~personnel~~problems ~~could~~with ~~hurt~~our suppliers, our ~~business~~suppliers ~~and~~may ~~inhibit~~implement significant price increases or may not meet our ~~ability~~requirements toin ~~operate~~a ~~and~~timely ~~grow~~fashion, ~~successfully~~if at all. The occurrence of any of the foregoing could have a material adverse effect on our operating results.

~~Our~~Any ~~ability~~prolonged todisruption ~~successfully~~in ~~grow~~the ~~our~~operations ~~brand~~of ~~depends~~any onof our ~~ability~~supplier’s topackaging ~~attract~~facilities ~~and~~could ~~retain~~harm ~~professionals with talent, integrity, enthusiasm and loyalty to~~ our ~~corporate team~~business. ~~If we are unable to attract or retain key personnel, our profitability and growth potential could be harmed.~~

10Any ~~Table~~prolonged disruption for any reason to the operations of ~~Contents~~any of our supplier’s facilities that perform our packaging, whether due to technical or labor difficulties, destruction or damage to the facility, real estate issues or other reasons, could result in increased costs and reduced revenues and our profitability and business results could be harmed.

WeLoss ~~may~~of ~~not~~key bepersonnel ~~able~~or our inability to ~~adequately~~attract ~~protect~~and ~~our~~retain ~~intellectual~~new ~~property,~~qualified ~~which~~personnel could ~~harm~~hurt ~~the value of~~ our ~~brand~~business and ~~branded~~inhibit ~~products~~our ~~and~~ability ~~adversely~~to ~~affect~~operate ~~our~~and ~~business~~grow successfully.

WeOur ~~depend~~ability ~~in large part on our brand and branded products as well as on our proprietary processes and believe that they are very important~~ to ~~our~~successfully ~~business.~~grow ~~We rely on a combination of trademarks, copyrights, trade secrets and similar intellectual property rights to protect~~ our ~~brand~~brands ~~and branded products. The success of our business~~ depends on our ~~continued~~ ability to ~~use~~attract ~~our existing trademarks in order to increase brand awareness~~ and ~~further~~retain ~~develop~~professionals ~~our~~with ~~branded products in both domestic and international markets. We have registered~~talent, ~~or will register~~integrity, ~~certain~~enthusiasm ~~trademarks in the United States~~ and ~~may~~loyalty ~~elsewhere, but may face difficulty with the U.S. Patent and Trademark Office because of the nature of the products. We may not be able~~ to ~~adequately protect~~ our ~~trademarks~~corporate ~~and our use of these trademarks may result in liability for trademark infringement, trademark dilution or unfair competition~~team. WeIf ~~may~~we ~~from~~are ~~time~~unable to ~~time~~attract ~~be required to institute litigation to enforce our trademarks~~ or ~~other~~retain ~~intellectual~~key ~~property rights~~personnel, ~~or to protect~~ our ~~trade~~profitability ~~secrets. Such litigation could result in substantial costs~~ and ~~diversion~~growth ofpotential ~~resources and~~ could ~~negatively~~be ~~affect our sales, profitability and business results regardless of whether we are able to successfully enforce our rights~~harmed.

~~Our~~We ~~annual~~may ~~and~~not ~~quarterly~~be ~~financial~~able ~~results~~to ~~are~~adequately ~~subject~~protect toour ~~significant~~intellectual ~~fluctuations~~property, ~~depending~~which oncould ~~various~~harm ~~factors,~~the ~~many~~value of ~~which~~our ~~are~~brand ~~beyond~~and ~~our~~branded ~~control,~~products ~~which~~and ~~could~~ adversely affect our ~~ability to satisfy our debt obligations as they become due~~business.

~~Our~~We ~~sales~~depend in large part on our brands and ~~operating~~branded ~~results~~products ~~can~~as ~~vary~~well ~~significantly~~as ~~from~~on ~~quarter~~our proprietary processes and believe that they are vital to ~~quarter~~our business. We rely upon copyrights and ~~year~~trade secrets and other intellectual property rights to ~~year~~protect ~~depending~~our brands and individual branded products. The success of our business depends on ~~various~~our ~~factors~~continued ability to use our existing intellectual property rights in order to increase brand awareness and further develop our brands sales in the markets we serve. We have successfully registered one trademark, ~~many~~“PotNetwork” in the United States but have faced difficulty with the U.S. Patent and Trademark Office in our attempts at additional registrations due to the legal status of ~~which~~products ~~are~~we ~~beyond~~have sought to register. As a result, we may not be able to adequately protect our ~~control~~intellectual property from liability connected to a third-party claim of trademark infringement, trademark dilution or unfair competition. ~~These~~We ~~factors~~may ~~include:~~from time to time be required to institute litigation to enforce our intellectual property rights including for our trade secrets. Such litigation could result in substantial costs and diversion of resources and could negatively affect our sales and results of operations.

·10 ~~Variations~~Table ~~in the timing and volume~~ of our sales · The timing of expenditures in anticipation of future sales · Sales promotions by us and our competitors · Changes in competitive and economic conditions generally · Foreign currency exposureContents

~~Consequently,~~Our ~~our~~annual ~~results of operations may decline quickly~~ and ~~significantly~~quarterly infinancial ~~response to changes in order patterns or rapid decreases in demand for our products. We anticipate that fluctuations in operating~~ results ~~will~~are ~~continue~~subject ~~in the future. The Company’s operating results may vary. We may incur net losses. The Company expects~~ to ~~experience~~significant ~~variability~~fluctuations independing ~~its~~on ~~revenues~~various ~~and~~factors, ~~net~~many ~~profit.~~of ~~While~~which weare ~~intend~~beyond ~~to implement~~ our ~~business plan to the fullest extent we can~~control, wewhich ~~may~~could ~~experience~~adversely ~~net~~affect ~~losses.~~our ~~Factors~~ability ~~expected~~ to ~~contribute~~satisfy toour ~~this~~debt ~~variability~~obligations ~~include,~~as ~~among~~they ~~other~~become ~~things:~~due.

·Our ~~The~~sales ~~general~~and ~~economy~~operating ·results ~~The~~can ~~regulatory~~vary ~~environment~~significantly ~~pertaining~~from quarter to ~~our~~quarter ~~products~~and ·year ~~Climate,~~to ~~seasonality~~year ~~and~~depending ~~environmental~~on various factors, ·many ~~Consumer~~of ~~demand~~which ·are ~~Transportation~~beyond ~~costs~~our ·control. ~~Competition~~These infactors ~~products~~include:

~~You~~● ~~should~~Variations ~~further consider, among other factors, our prospects for success~~ in ~~light of~~ the ~~risks~~timing and ~~uncertainties~~volume ~~encountered~~of byour ~~companies~~sales ~~that,~~● ~~like~~The ~~us,~~timing ~~are~~of inexpenditures ~~their early stages. For example, unanticipated expenses, problems, and technical difficulties may occur and they may result~~ in ~~material~~anticipation ~~delays in the operation~~ of ~~our~~future ~~business,~~sales in● ~~particular~~Sales ~~with~~promotions ~~respect~~by tous ~~our new products. We may not successfully address these risks~~ and ~~uncertainties or successfully implement~~ our ~~operating~~competitors ~~strategies.~~● IfChanges wein ~~fail~~competitive ~~to do so, it could materially harm our business to the point of having to cease operations~~ and ~~could~~economic ~~impair~~conditions ~~the~~generally ~~value~~● ofBusiness ~~our common stock to the point investors may lose their entire investment.~~disruptions

WeConsequently, our results of operations may ~~require~~decline ~~additional~~quickly ~~capital~~and significantly in response to ~~finance~~changes in order patterns or rapid decreases in demand for our ~~operations~~products. We anticipate that fluctuations in operating results will continue in the future,. ~~but~~The ~~that~~Company’s ~~capital~~operating results may ~~not~~vary. beWe ~~available~~may ~~when~~incur itnet islosses. ~~needed~~The Company expects to experience variability in its revenues and ~~could~~net beprofit. ~~dilutive~~While we intend to ~~existing~~implement ~~stockholders~~our business plan to the fullest extent we can, we may experience net losses. Factors expected to contribute to this variability include, among other things:

We● ~~may~~The ~~require~~general ~~additional~~economy ~~capital~~● ~~for~~The ~~future~~regulatory ~~operations.~~environment Wefor ~~plan~~our toproducts ~~finance~~● ~~anticipated~~Climate, ~~ongoing~~seasonality ~~expenses~~ and ~~capital~~environmental ~~requirements~~factors ~~with~~● ~~funds~~Consumer ~~generated~~demand ~~from~~● ~~the~~Transportation ~~following~~costs ~~sources:~~● Competition in products

·You ~~Cash~~should ~~provided~~further consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by ~~operating~~companies ~~activities~~that, ·like ~~Available~~us, ~~cash~~are in their early stages. For example, unanticipated expenses, problems, and ~~cash~~technical ~~investments~~difficulties ·may ~~Capital~~occur ~~raised~~and ~~through~~they ~~debt~~may result in material delays in the operation of our business, in particular with respect to our new products. We may not successfully address these risks and ~~equity~~uncertainties ~~offerings~~or successfully implement our operating strategies. If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of our common stock to the point investors may lose their entire investment.

11We ~~Table~~may ofrequire ~~Contents~~additional capital to finance our operations in the future, but that capital may not be available when it is needed and could be dilutive to existing stockholders.

~~Current~~We ~~conditions in the capital markets are such that traditional sources of capital~~ may ~~not~~require ~~be available to us when needed or may be available only on unfavorable terms. Our ability to raise~~ additional capital, iffor ~~needed,~~future ~~will depend on conditions in the capital markets, economic conditions and a number of other factors, many of which are outside our control~~operations. ~~Accordingly,~~We weplan ~~cannot assure you that we will be able~~ to ~~successfully~~finance ~~raise~~anticipated ~~additional~~ongoing ~~capital~~expenses atand ~~all or on terms that are acceptable to us. If we cannot raise additional~~ capital ~~when~~requirements ~~needed,~~with itfunds ~~may~~generated ~~have~~from ~~a material adverse effect on our liquidity, financial condition, results of operations and prospects. Further, if we raise capital by issuing stock,~~ the ~~holdings~~following ~~of our existing stockholders will be diluted.~~sources:

If● weCash ~~raise~~provided ~~capital~~ by ~~issuing~~operating ~~debt~~activities ~~securities,~~● ~~such~~Available ~~debt~~cash securities would rank senior to our common stock upon our bankruptcy or liquidation. In addition, we may raise capital by issuing equity securities that may be senior to our common stock for the purposes of dividend and ~~liquidating~~cash ~~distributions,~~investments ~~which~~● ~~may~~Capital ~~adversely~~raised ~~affect~~through ~~the market price of our common stock. Finally, upon bankruptcy or liquidation, holders of our~~ debt ~~securities~~ and ~~shares of preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common stock. Additional~~ equity offerings ~~may dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both.~~

~~Our~~Current ~~stock~~conditions ~~price~~in ~~has~~the ~~been~~capital ~~extremely~~markets ~~volatile,~~are ~~and~~such ~~our~~that ~~common~~traditional ~~stock~~sources isof capital may not ~~listed~~be available to us when needed or may be available only on aunfavorable ~~national~~terms. ~~stock~~Our ~~exchange;~~ability asto raise additional capital, if needed, will depend on conditions in the capital markets, economic conditions and a ~~result~~number of other factors, ~~stockholders~~many ~~may~~of ~~not~~which are outside our control. Accordingly, we cannot assure you that we will be able to ~~resell~~successfully ~~their~~raise ~~shares~~additional capital at all or ~~above~~on terms that are acceptable to us. If we cannot raise additional capital when needed, it may have a material adverse effect on our liquidity, financial condition, results of operations and prospects. Further, if we raise capital by issuing stock, the ~~price~~holdings ~~paid~~of ~~for~~our ~~them~~existing stockholders will be diluted.

~~The~~If ~~market~~we ~~price~~raise ofcapital ~~our~~by ~~common~~issuing ~~stock~~debt ~~has~~securities, ~~been~~such ~~historically~~debt ~~volatile~~securities ~~and~~would ~~could~~rank besenior ~~subject~~ to ~~significant~~our ~~fluctuations~~common ~~due~~stock toupon ~~changes~~our inbankruptcy ~~sentiment~~or inliquidation. ~~the~~In ~~market~~addition, ~~regarding~~we ~~our~~may ~~operations~~raise orcapital ~~business~~by ~~prospects,~~issuing ~~among~~equity ~~other~~securities ~~factors.~~that ~~Further,~~may be senior to our common stock isfor ~~not~~the ~~listed~~purposes onof adividend ~~national~~and ~~stock~~liquidating ~~exchange;~~distributions, wewhich ~~intend~~may toadversely ~~list~~affect the ~~common~~market ~~stock~~price onof aour ~~national~~common stock. ~~exchange~~Finally, ~~once~~upon webankruptcy ~~meet~~or ~~the~~liquidation, ~~entry~~holders ~~criteria.~~of Anour ~~active~~debt ~~public~~securities ~~market~~and ~~for~~shares ~~our~~of ~~common~~preferred stock ~~currently~~and ~~exists~~lenders onwith ~~the~~respect ~~OTC~~to ~~Markets~~other ~~(www.otcmarkets.com),~~borrowings ~~but~~will ~~may~~receive ~~not~~a bedistribution ~~sustained~~of our available assets prior to the holders of our common stock. ~~Therefore,~~Additional ~~stockholders~~equity offerings may ~~not~~dilute bethe ~~able~~holdings toof ~~sell~~our ~~their~~existing ~~shares~~stockholders at or ~~above~~reduce the market price ~~they~~of ~~paid~~our ~~for~~common ~~them~~stock, or both.

~~Among~~11 ~~the~~Table ~~factors~~of ~~that could affect our stock price are:~~Contents

·Our ~~Industry~~stock ~~trends~~price ~~and~~has ~~the~~been ~~business~~extremely ~~situation~~volatile, ~~of our suppliers · Actual or anticipated fluctuations in our quarterly financial~~ and ~~operating results and operating results that vary from the expectations of~~ our ~~management~~common orstock ofis ~~securities~~not ~~analysts~~listed ~~and~~on ~~investors~~a ·national ~~Failure~~stock toexchange; ~~meet~~as ~~the~~a ~~expectations of the investment community and changes in investment community recommendations or estimates of our future operating results · Announcements of strategic developments~~result, ~~acquisitions,~~stockholders ~~dispositions,~~may ~~financings,~~not ~~product~~be ~~developments~~able ~~and~~to ~~other~~resell ~~materials~~their ~~events~~shares byat us or ~~our~~above ~~competitors~~the ·price ~~Regulatory~~paid ~~and~~for legislative developments · Litigation and other legal or administrative issues · General market conditions · Other domestic and international macroeconomic factors unrelated to our performance · Changes in key personnelthem.

~~Sales~~The bymarket price of our ~~stockholders~~common ofstock ahas ~~substantial~~been ~~number~~historically ofvolatile ~~shares~~and ofcould be subject to significant fluctuations due to changes in sentiment in the market regarding our operations or business prospects, among other factors. Further, our common stock inis not listed on a national stock exchange; we intend to list the common stock on a national stock exchange once we meet the entry criteria. An active public market ~~could~~for ~~adversely~~our ~~affect~~common stock currently exists on the OTC market but may not be sustainable. Therefore, stockholders may not be able to sell their shares at or above the price ofthey ~~our~~paid ~~common~~for ~~stock~~them.

AAmong ~~substantial portion of our total outstanding shares of common stock may be sold into~~ the ~~market~~factors at any time, or a substantial portion of our total outstanding shares of preferred stock may be converted to common stock and sold into the market at any time. Some of these shares are owned by the management of the Company, and we believe that such holders have no current intention to either convert their preferred stock into common stock or to sell a significant number of shares of their common stock into the market. If all of the major stockholders were to decide to sell large amounts of stock over a short period of time such sales could ~~cause~~affect ~~the market price of~~ our ~~common~~ stock toprice ~~drop significantly, even if our business is performing well.~~are:

~~Our~~● Industry trends and the business situation of our suppliers ● Actual or anticipated fluctuations in our quarterly financial ~~statements~~and ~~may~~operating ~~not~~results beand ~~comparable~~operating results that vary from the expectations of our management or of securities analysts and investors ● Failure to ~~those~~meet the expectations of the investment community and changes in investment community recommendations or estimates of our future operating results ● Announcements of strategic developments, acquisitions, dispositions, financings, product developments and other ~~companies.~~materials events by us or our competitors ● Regulatory and legislative developments ● Litigation and other legal or administrative issues ● General market conditions ● Other domestic and international macroeconomic factors unrelated to our performance ● Changes in key personnel

~~Pursuant~~Sales toby ~~Section~~our ~~107(b)~~stockholders of ~~the~~a ~~JOBS~~substantial ~~Act,~~number ~~we have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2)~~ of ~~The~~shares ~~JOBS Act. This election allows us to delay the adoption~~ of ~~new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result,~~ our ~~financial~~common ~~statements~~stock ~~may~~in ~~not~~the ~~be comparable to companies that comply with~~ public ~~company~~market ~~effective~~could ~~dates,~~adversely ~~and~~affect ~~our~~the ~~stockholders~~market ~~and~~price ~~potential~~of ~~investors may have difficulty in analyzing~~ our ~~operating~~common ~~results if comparing us to such companies~~stock.

12A ~~Table~~substantial portion of ~~Contents~~our total outstanding shares of common stock may be sold into the market at any time, or a substantial portion of our total outstanding shares of preferred stock may be converted to common stock and sold into the market at any time. Some of these shares are owned by the management of the Company, and we believe that such holders have no current intention to either convert their preferred stock into common stock or to sell a significant number of shares of their common stock into the market. If all of the major stockholders were to decide to sell large amounts of stock over a short period of time such sales could cause the market price of our common stock to drop significantly, even if our business is performing well.

~~The~~Our ~~success~~financial ofstatements ~~our~~may ~~new~~not ~~and~~be ~~existing~~comparable ~~products~~to ~~and~~those ~~services~~of isother ~~uncertain~~companies.

WePursuant ~~have~~to ~~committed,~~Section ~~and~~107(b) ~~expect~~of tothe ~~continue~~JOBS ~~to commit~~Act, ~~significant~~we ~~resources~~have ~~and~~elected ~~capital~~ to ~~develop~~use ~~and~~the ~~market~~extended ~~existing~~transition ~~product~~period ~~enhancements~~for ~~and~~complying with new ~~products.~~or Werevised ~~cannot~~accounting ~~assure~~standards ~~you~~under ~~that~~Section we102(b)(2) ~~will achieve market acceptance for all~~ of ~~our~~The ~~products,~~JOBS orAct. ofThis ~~new~~election ~~products~~allows ~~that~~us weto ~~may~~delay ~~offer in~~ the ~~future.~~adoption ~~Moreover,~~of ~~these~~ new ~~products~~or ~~may~~revised beaccounting ~~subject~~standards tothat ~~significant~~have ~~competition~~different ~~with~~effective ~~offerings~~dates byfor ~~new~~public and ~~existing~~private ~~competitors.~~companies Inuntil ~~addition,~~those ~~new~~standards ~~products~~apply ~~and~~to ~~enhancements~~private ~~may~~companies. ~~pose~~As a ~~variety~~result, ofour ~~challenges~~financial ~~and~~statements ~~require~~may usnot tobe ~~attract~~comparable ~~additional~~to ~~qualified~~companies ~~employees.~~that ~~The~~comply ~~failure~~with topublic ~~successfully~~company ~~develop~~effective dates, and ~~market~~our ~~these~~stockholders ~~new~~and ~~products~~potential orinvestors ~~enhancements~~may ~~could~~have ~~seriously~~difficulty ~~harm~~in analyzing our ~~business,~~operating ~~financial~~results ~~condition~~if ~~and~~comparing ~~results~~us ofto ~~operations~~such companies.

~~Our~~The ~~business~~success isof ~~dependent~~our ~~upon~~new ~~continued~~and ~~market~~existing ~~acceptance~~products byand ~~consumers~~services is uncertain.

We ~~are~~cannot ~~substantially~~assure ~~dependent~~you onthat ~~continued~~we will achieve market acceptance for all of our products, byor ~~consumers.~~of ~~Although~~new weproducts ~~believe~~ that ~~our~~we ~~products~~may offer in the ~~United~~future. ~~States~~Moreover, ~~are~~these ~~gaining~~new ~~increasing~~products ~~consumer~~may ~~acceptance~~be subject to significant competition with offerings by new and existing competitors. In addition, wenew ~~cannot~~products ~~predict~~and ~~that~~enhancements ~~this~~may ~~trend~~pose ~~will~~a ~~continue~~variety inof ~~the~~challenges ~~future~~and require us to attract additional qualified employees. The failure to successfully develop and market these new products or enhancements could seriously harm our business, financial condition and results of operations.

AsOur webusiness ~~expand~~is ~~our~~dependent ~~operations,~~upon wecontinued ~~may~~market beacceptance ~~unable~~by ~~to successfully manage our future growth~~consumers.

~~Since~~We ~~inception,~~are ~~our~~substantially ~~business~~dependent ~~has~~on ~~grown.~~continued ~~This~~market ~~growth~~acceptance ~~has~~of ~~placed substantial strain on~~ our ~~management,~~products ~~operational,~~by ~~financial and other resources~~consumers. IfAlthough we ~~are~~believe ~~able~~that ~~to continue expanding~~ our ~~operations~~products in the United States ~~and~~are ingaining ~~other~~increasing ~~countries~~consumer ~~where we believe our products will be successful~~acceptance, ~~as planned,~~ we ~~may~~cannot ~~experience~~predict ~~periods~~that ofthis ~~rapid~~trend ~~growth, which~~ will ~~require~~continue ~~additional~~in resources. Any such growth could place increased strain on our management, operational, financial and other resources, and we will need to train, motivate, and manage employees, as well as attract management, sales, finance and accounting, international, technical, and other professionals. In addition, we will need to expand the ~~scope of our infrastructure and our physical resources~~future. Any failure to expand these areas and implement appropriate procedures and controls in an efficient manner and at a pace consistent with our business objectives could have a material adverse effect on our business and results of operations.

~~Any~~12 ~~future~~Table ~~litigation could have a material adverse impact on our results~~ of operations, financial condition and liquidity, particularly since we do not currently have director and officer (“D&O”) insurance. Our lack of insurance may also make it difficult for us to retain and attract talented and skilled directors and officers. While we intend to apply for D&O insurance, we cannot guarantee that such application will be accepted.Contents

~~Despite~~We ~~our significant efforts in product quality control, we face risks of litigation from customers and others in the ordinary course of business, which~~ may ~~divert~~be ~~our~~unable ~~financial~~to ~~and~~successfully ~~management~~manage ~~resources.~~future ~~Any adverse litigation or publicity may negatively impact our financial condition and results of operations~~growth.

~~Claims~~The growth of ~~illness~~any orbusiness ~~injury~~places ~~relating~~substantial tostrain ~~product~~on ~~quality~~managerial, oroperational, ~~handling~~financial and other resources. If we are ~~common~~able into ~~the~~continue ~~consumer~~expanding ~~products~~our ~~industry~~operations, such growth will require additional resources. ~~While~~In weaddition ~~believe~~to ~~our~~such ~~processes~~growth ~~and~~placing ~~high~~increased ~~standards~~strain ofon ~~quality~~our ~~control~~management, ~~will~~operations, ~~minimize~~financial ~~these~~and ~~instances~~other resources, ~~there~~such isgrowth ~~always~~will arequire ~~risk~~that ofwe ~~occurrence~~train, motivate, and somanage ~~despite~~additional ~~our~~employees ~~best~~and ~~efforts~~other professionals. Moreover, we will need to ~~regulate~~expand ~~quality~~the ~~control,~~scope ~~litigation~~of ~~may~~our ~~occur~~infrastructure and our physical resources. In ~~that~~the event, ~~our~~of ~~financial~~such ~~condition~~growth, ~~operating~~any ~~results~~failure to expand these areas and ~~cash~~implement ~~flows~~appropriate procedures and controls in an efficient manner and at a pace consistent with our business objectives could behave ~~harmed~~a material adverse effect on our business and results of operations.

~~From~~Any ~~time~~future ~~to time we may be subject to~~ litigation, ~~including~~could ~~potential~~have ~~stockholder~~a ~~derivative~~material ~~actions.~~adverse ~~Risks~~impact ~~associated~~on ~~with~~our ~~legal~~results ~~liability~~of ~~are~~operations, ~~difficult~~financial tocondition ~~assess~~ and ~~quantify~~liquidity, ~~and~~particularly ~~their~~since ~~existence~~we ~~and~~do ~~magnitude~~not ~~can~~currently ~~remain unknown for significant periods of time. To date, we~~ have nodirector ~~directors~~ and ~~officers~~officer ~~liability~~ (“D&O”) insurance. toOur ~~cover~~lack ~~such~~of ~~risk exposure for our directors and officers. Such~~ insurance ~~generally~~may ~~pays~~also ~~the~~make ~~expenses~~it ~~(including~~difficult ~~amounts~~for ~~paid~~us to ~~plaintiffs,~~retain ~~fines,~~ and ~~expenses~~attract ~~including~~talented ~~attorneys’~~and ~~fees)~~skilled ofdirectors ~~officers~~ and ~~directors who are the subject of a lawsuit as a result of their service to the Company~~officers. While we intend to ~~attempt~~apply tofor obtain such insurance, there can be no assurance that we will be able to do so at reasonable rates or at all, or in amounts adequate to cover such expenses should such a lawsuit occur. While neither Colorado law nor our articles of incorporation or bylaws require us to indemnify or advance expenses to our officers and directors involved in such a legal action, we expect that we would do so to the extent permitted by Colorado law. Without D&O insurance, ~~the amounts~~ we ~~would~~cannot ~~pay~~guarantee tothat ~~indemnify~~such ~~our~~application ~~officers~~will ~~and directors should they~~ be ~~subject to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity~~accepted. ~~Further, our lack of D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which could adversely affect our business.~~

~~Our~~Despite ~~prior~~our ~~operating~~significant ~~results~~efforts ~~may~~in ~~not~~product bequality ~~indicative~~control, we face risks of litigation from customers and others in the ordinary course of business, which may divert our ~~future~~financial and management resources. Any adverse litigation or publicity may negatively impact our financial condition and results of operations.

~~You~~Claims ~~should~~of ~~not~~illness ~~consider~~or ~~prior~~injury ~~operating~~relating ~~results with respect~~ to ~~revenues,~~product ~~net~~quality ~~income~~ or ~~any~~handling ~~other~~are ~~measure~~common toin bethe ~~indicative~~consumer ofproducts ~~our~~industry. ~~future~~While ~~operating~~we ~~results.~~believe ~~The~~our ~~timing~~processes and ~~amount~~high standards of ~~future~~quality ~~revenues~~control will ~~depend~~minimize ~~almost~~these ~~entirely~~instances, onthere ~~our~~is ~~ability~~always toa ~~sell~~risk of occurrence, and so despite our ~~products~~best efforts to ~~new~~regulate ~~customers~~quality control, litigation may occur. ~~Our~~In ~~future~~that event, our financial condition, operating results ~~will~~and ~~depend~~cash ~~upon~~flows ~~many~~could ~~other~~be ~~factors, including:~~harmed.

·From ~~The~~time ~~level~~to oftime ~~product~~we ~~and~~may ~~price~~be ~~competition~~subject to litigation, ·including ~~Our~~potential ~~success~~stockholder inderivative ~~expanding~~actions. ~~our~~Risks ~~distribution~~associated ~~network~~with legal liability are difficult to assess and ~~managing~~quantify, ~~our~~and ~~growth~~their existence and magnitude can remain unknown for significant periods of time. To date, ·we ~~Our~~have ~~ability~~no directors’ and officers’ liability (“D&O”) insurance to ~~develop~~cover ~~and~~such ~~market~~risk ~~product~~exposure ~~enhancements~~for our directors and ~~new~~officers. ~~products~~Such insurance generally pays the expenses (including amounts paid to plaintiffs, ·fines, ~~The~~and ~~timing~~expenses including attorneys’ fees) of ~~product~~officers ~~enhancements~~and directors who are the subject of a lawsuit as a result of their service to the Company. While we intend to attempt to obtain such insurance, ~~activities~~there can be no assurance that we will be able to do so at reasonable rates or at all, or in amounts adequate to cover such expenses should such a lawsuit occur. While neither Colorado law nor our articles of incorporation or bylaws require us to indemnify or advance expenses to our officers and ~~acquisitions~~directors byinvolved ~~competitors~~in such a legal action, ·we ~~The~~expect ~~ability~~that we would do so to ~~hire~~the ~~additional~~extent ~~qualified~~permitted ~~employees~~by Colorado law. Without D&O insurance, the amounts we would pay to indemnify our officers and ·directors ~~The~~should ~~timing~~they ofbe ~~such~~subject ~~hiring~~to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Further, our ~~ability~~lack of D&O insurance may make it difficult for us to ~~control~~retain ~~costs~~and attract talented and skilled directors and officers, which could adversely affect our business.

13Our ~~Table~~prior operating results may not be indicative of ~~Contents~~our future results.

~~Our~~You ~~current~~should ~~Board~~not consider prior operating results with respect to revenues, net income or any other measure to be indicative of ~~Directors~~our ~~consists~~future operating results. The timing and amount of ~~only~~future ~~two~~revenues ~~individuals~~will depend almost entirely on our ability to sell our products to new customers. Our future operating results will depend upon many other factors, including:

~~Gary~~● ~~Blum~~The level of product and ~~Kevin~~price ~~Hagen~~competition, ~~are~~● Our success in expanding our ~~members~~distribution network and managing our growth, ● Our ability to develop and market product enhancements and new products, ● The timing of ~~the~~product ~~Board~~enhancements, activities of ~~Directors.~~and acquisitions by competitors, ● The ability to hire additional qualified employees, and ● The timing of such hiring and our ability to control costs.

WeOur ~~only~~current ~~have~~Board ~~one~~of ~~outside~~Directors ~~Director~~consists ~~which could create a conflict~~ of ~~interests~~only ~~and~~two ~~pose a risk from a corporate governance perspective.~~individuals

~~Our~~Gary ~~Board of Directors consists of only two directors~~Blum, ~~only one of whom is an outside or independent director~~Esq. The lack of independent directors may prevent the Board from being independent from management in its judgments and decisions and its ability to pursue the Board responsibilities without undue influence. For example, an independent board can serve as a check on management, which can limit management taking unnecessary risks. Furthermore, the lack of independent directors creates the potential for conflicts between management and ~~the~~Lee ~~diligent independent decision-making process of the Board. Furthermore~~Lefkowitz, our ~~lack~~President ~~of outside directors deprives our company of the benefits of various viewpoints~~ and ~~experience~~CEO, ~~when~~are ~~confronting~~ the ~~challenges~~sole wemembers ~~face.~~of ~~With only a single independent director sitting on~~ the Board of Directors~~, it will be difficult for the Board to fulfill its traditional role as overseeing management~~.

~~Requirements~~We ~~associated~~only ~~with~~have ~~being~~one aoutside ~~reporting~~Director ~~public~~which ~~company~~could ~~require~~create ~~significant~~a ~~company~~conflict ~~resources~~of interests and ~~management~~pose ~~attention~~a risk from a corporate governance perspective.

WeOur ~~have~~Board ~~filed~~of aDirectors ~~Form~~consists 10of ~~registration~~only ~~statement~~two ~~with~~directors, ~~the~~only ~~U.S.~~one ~~Securities~~of ~~and~~whom ~~Exchange~~is ~~Commission~~an ~~(“SEC”).~~outside ~~Since~~or ~~the~~independent ~~Form~~director. 10The ~~became~~lack ~~effective,~~of weindependent ~~have~~directors ~~been~~may ~~subject~~prevent to the ~~reporting~~Board ~~requirements~~from ofbeing ~~the~~independent ~~Exchange~~from ~~Act~~management ~~and~~in ~~the~~its ~~other~~judgments ~~rules~~ and ~~regulations~~decisions ofand ~~the~~its ~~SEC~~ability ~~relating~~ to ~~public~~pursue ~~companies.~~the WeBoard ~~are~~responsibilities ~~working~~without ~~with~~undue ~~independent~~influence. ~~legal~~For example, ~~accounting~~an ~~and~~independent ~~financial~~board ~~advisors~~can toserve ~~identify~~as ~~those~~a ~~areas~~check inon management, which ~~changes~~can ~~should~~limit bemanagement ~~made~~taking tounnecessary ~~our~~risks. ~~financial~~Furthermore, ~~and~~the ~~management~~lack ~~control~~of ~~systems~~independent todirectors ~~manage~~creates ~~our~~the ~~growth~~potential ~~and~~for ~~our~~conflicts ~~obligations~~between asmanagement anand ~~SEC~~the ~~reporting~~diligent ~~company.~~independent ~~These~~decision-making ~~areas~~process ~~include~~of ~~corporate~~the ~~governance,~~Board. ~~internal control~~Furthermore, ~~internal~~our ~~audit,~~lack ~~disclosure~~of ~~controls~~outside ~~and~~directors ~~procedures~~deprives ~~and~~our ~~financial~~company ~~reporting~~of ~~and~~the ~~accounting~~benefits ~~systems.~~of Wevarious ~~have~~viewpoints ~~made,~~ and ~~will~~experience ~~continue~~when toconfronting ~~make,~~the ~~changes~~challenges inwe ~~these and other areas, including our internal control over financial reporting~~face. ~~However,~~With weonly ~~cannot~~a ~~provide~~single ~~assurances~~independent ~~that~~director ~~these~~sitting ~~and~~on ~~other~~the ~~measures~~Board weof ~~may~~Directors, ~~take~~it will be ~~sufficient~~difficult tofor ~~allow~~the usBoard to ~~satisfy~~fulfill ~~our~~its ~~obligations~~traditional role as anoverseeing ~~SEC reporting company on a timely basis~~management.

In13 ~~addition,~~Table ~~compliance with reporting and other requirements applicable to SEC reporting companies will create additional costs for the Company and will require the time and attention~~ of management and may require the hiring of additional personnel and legal, audit and other professionals. We cannot predict or estimate the amount of the additional costs we may incur, the timing of such costs or the impact that our management’s attention to these matters will have on our business.Contents

~~Our~~Requirements ~~preferred~~associated ~~shareholders~~with ~~have~~being ~~voting~~a ~~control~~reporting public company require significant company resources and management attention.

~~The~~We ~~holders~~filed ofa ~~our~~Form ~~Series~~10 Aregistration ~~Preferred~~statement ~~Stock~~with the U.S. Securities and Exchange Commission (“SEC”). Since the Form 10 became effective, we have ~~voting~~been ~~control~~subject ~~over~~to the ~~Company~~reporting requirements of the Exchange Act and the other rules and regulations of the SEC relating to public companies. AsWe aare ~~result~~working with independent legal, ~~they~~accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as an SEC reporting company. These areas include corporate governance, internal control, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We have ~~the~~made, ~~ability~~and will continue to make, changes in these and other areas, including our internal control ~~substantially~~over ~~all~~financial ~~matters~~reporting. ~~submitted~~However, we cannot provide assurances that these and other measures we may take will be sufficient to allow us to satisfy our ~~stockholders~~obligations ~~for~~as ~~approval~~an ~~including:~~SEC reporting company on a timely basis.

·In ~~Election~~addition, ofcompliance ~~our~~with ~~board~~reporting ofand ~~directors;~~other ·requirements ~~Removal~~applicable ofto ~~any~~SEC ofreporting ~~our~~companies ~~directors;~~will ·create ~~Amendment~~additional ofcosts ~~our~~for ~~articles~~the ofCompany ~~incorporation~~and orwill ~~bylaws;~~require the time and ·attention ~~Adoption~~of management and may require the hiring of ~~measures~~additional ~~that~~personnel ~~could~~and ~~delay~~legal, oraudit ~~prevent~~and aother ~~change~~professionals. inWe ~~control~~cannot predict or ~~impede~~estimate athe ~~merger~~amount of the additional costs we may incur, ~~takeover~~the timing of such costs or ~~other~~the ~~business~~impact ~~combination~~that ~~involving~~our usmanagement’s attention to these matters will have on our business.

InOur ~~addition, each share of Class A~~ preferred ~~stock is convertible into 0.01% of the total number of shares of Common Stock outstanding at the Conversion Time. On any matter presented to the~~ shareholders ofhave ~~the~~voting Corporation for their action or consideration at any meeting of shareholders of the Corporation (or by written consent of shareholders in lieu of meeting), each holder of outstanding shares of Series A Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock held by such holder are convertible as of the record date for determining shareholders entitled to vote on such mattercontrol. ~~Except as provided by law or by the other provisions of the Articles of Incorporation, holders of Series A Preferred Stock shall vote together with the holders of Common Stock as a single class.~~

~~Based~~The onholders ~~the preceding and upon a total quantity~~ of ~~issued~~our ~~and~~Series ~~outstanding shares of common stock as of July 20, 2020 of 751,836,384, each share of Class~~ A ~~preferred~~Preferred ~~stock~~Stock ishave ~~convertible~~voting ~~into~~control ~~75,184~~over ~~shares~~the ~~of common stock~~Company. As a result, ifthey ~~each~~have of the ~~two~~ability ~~Class~~to Acontrol ~~preferred~~substantially ~~shareholders~~all ~~listed~~matters ~~were~~submitted ~~able~~ to ~~convert~~our ~~100%~~stockholders offor ~~each’s~~approval Class A preferred stock, Kevin Hagen, who holds 20,742 Class A preferred shares, would receive 1,559,466,528 shares of common stock; and Elinor Taieb, who holds 13,547 Class A preferred shares, would receive 1,018,517,648 shares of common stock.including:

14● ~~Table~~Election of ~~Contents~~our board of directors; ● Removal of any of our directors; ● Amendment of our articles of incorporation or bylaws; and ● Adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

~~Our~~In addition, each share of Class A preferred stock ~~may~~is ~~have~~convertible ~~rights~~into ~~senior~~0.01% of the total number of shares of Common Stock outstanding at the Conversion Time. On any matter presented to ~~those~~the shareholders of ~~our~~the ~~common~~Corporation ~~stock~~for their action or consideration at any meeting of shareholders of the Corporation (or by written consent of shareholders in lieu of meeting), each holder of outstanding shares of Series A Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which ~~could~~the ~~adversely~~shares ~~affect~~of Series A Preferred Stock held by such holder are convertible as of the record date for determining shareholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Articles of Incorporation, holders of ~~common~~Series ~~stock~~A Preferred Stock shall vote together with the holders of Common Stock as a single class.

~~Our~~Based ~~articles~~on ~~of incorporation give our Board of Directors~~ the ~~authority~~preceding toand ~~issue~~upon ~~additional series of preferred stock without~~ a ~~vote~~total orquantity ~~action~~of byissued ~~our~~and ~~stockholders.~~outstanding ~~The~~shares ~~Board~~as ~~also~~of ~~has~~September ~~the~~27, ~~authority~~2021 ~~to determine the terms~~ of ~~preferred stock~~909, ~~including price~~974,924, ~~preferences~~each ~~and~~share ~~voting~~of ~~rights.~~Class ~~The~~A ~~rights granted to holders of~~ preferred stock inis ~~the~~convertible ~~future~~into ~~may~~90,997 ~~adversely~~shares ~~affect the rights~~ of ~~holders of our~~ common stock. ~~Any~~As ~~such authorized class of preferred stock may have~~ a ~~liquidation~~result, ~~preference~~if -each aof ~~pre-set distribution in~~ the ~~event~~two ofClass aA ~~liquidation~~preferred -shareholders ~~that~~listed ~~would~~were ~~reduce~~able ~~the~~to ~~amount~~convert ~~available~~100% ~~for~~of ~~distribution~~each’s toClass ~~holders~~A ofpreferred ~~common~~ stock, orKevin ~~superior~~Hagen, ~~dividend~~who ~~rights~~holds ~~that~~20,742 ~~would~~Class ~~reduce~~A ~~the~~preferred ~~amount~~shares, ofwould ~~dividends~~receive ~~that could be distributed to common stockholders. In addition~~1,887,459,774 anshares ~~authorized class~~ of ~~preferred~~common stock; ~~may~~and ~~have~~Elinor ~~voting~~Taieb, ~~rights~~who ~~that~~holds ~~are~~13,547 ~~superior~~Class toA ~~the~~preferred ~~voting~~shares, ~~right~~would ofreceive ~~the~~1,232,736,359 ~~holders~~shares of ~~our~~ common stock.

WeOur ~~are~~preferred anstock ~~emerging~~has ~~growth~~rights ~~company~~senior ~~and,~~to asthose ~~a result~~ of ~~the~~our ~~reduced~~common ~~disclosure~~stock ~~and~~which ~~governance~~could ~~requirements~~adversely ~~applicable~~affect toholders ~~emerging~~of ~~growth companies, our~~ common stock ~~may be less attractive to investors~~.

WeOur ~~are~~articles anof ~~emerging~~incorporation ~~growth~~give ~~company,~~our asBoard ~~defined~~of inDirectors the ~~JOBS~~authority ~~Act, and we are eligible~~ to ~~take~~issue ~~advantage~~additional series of ~~certain~~preferred ~~exemptions~~stock ~~from~~without ~~various~~a ~~reporting~~vote ~~requirements~~or ~~applicable~~action toby ~~other~~our ~~public~~stockholders. ~~companies,~~The ~~but~~Board ~~not~~also tohas ~~emerging~~the ~~growth~~authority ~~companies, including, but not limited~~ to, adetermine ~~requirement~~the toterms ~~present only two years~~ of ~~audited~~preferred ~~financial statements~~stock, anincluding ~~exemption from the auditor attestation requirement of Section 404 of the Sarbanes-Oxley Act~~price, ~~reduced~~preferences ~~disclosure~~and ~~about~~voting ~~executive~~rights. ~~compensation~~The ~~arrangements~~rights ~~pursuant~~granted to ~~the~~holders ~~rules~~of ~~applicable~~preferred tostock ~~smaller~~in ~~reporting~~the ~~companies~~future ~~and~~may noadversely ~~requirement~~affect tothe ~~seek~~rights ~~non-binding~~of ~~advisory~~holders ~~votes~~of onour ~~executive~~common ~~compensation~~stock. orAny ~~golden~~such ~~parachute~~authorized ~~arrangements,~~class ~~although some~~ of ~~these~~preferred ~~exemptions~~stock ~~are~~may ~~available~~have ~~to us as~~ a ~~smaller~~liquidation ~~reporting~~preference ~~company~~- ~~(i.e.~~ a ~~company~~pre-set ~~with~~distribution ~~less~~in ~~than~~the ~~$75~~event ~~million~~ of ~~its~~a ~~voting~~liquidation ~~equity~~- ~~held~~that bywould ~~affiliates).~~reduce Wethe ~~have~~amount ~~elected~~available tofor ~~adopt~~distribution ~~these~~to ~~reduced~~holders ~~disclosure~~of ~~requirements. We cannot predict if investors will find our~~ common stock ~~less~~or ~~attractive~~superior asdividend arights ~~result~~that ofwould ~~our~~reduce ~~taking~~the ~~advantage~~amount of ~~these~~dividends ~~exemptions.~~that Ifcould ~~some~~be ~~investors~~distributed ~~find~~to ~~our~~ common ~~stock~~stockholders. ~~less~~In ~~attractive~~addition, asan aauthorized ~~result~~class of ~~our~~preferred ~~choices,~~stock ~~there~~ may behave avoting ~~less~~rights ~~active~~that ~~trading~~are ~~market~~superior ~~for~~to ~~our~~the ~~common~~voting ~~stock~~right ~~and~~of ~~our~~the ~~stock~~holders ~~price~~of ~~may~~our becommon ~~more volatile~~stock.

We doare ~~not~~an ~~expect~~emerging togrowth ~~pay~~company ~~any~~and, ~~cash~~as ~~dividends~~a inresult of the ~~foreseeable~~reduced ~~future~~disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.

We ~~intend~~are toan ~~retain~~emerging ~~our~~growth ~~future earnings~~company, ifas ~~any,~~defined in ~~order~~the toJOBS ~~reinvest~~Act, inand ~~the~~we ~~development~~are ~~and~~eligible ~~growth~~to take advantage of ~~our~~certain ~~business~~exemptions ~~and~~from various reporting requirements applicable to other public companies, ~~therefore~~but not to emerging growth companies, doincluding, but not ~~intend~~limited to, ~~pay~~a ~~dividends~~requirement onto ~~our~~present ~~common~~only ~~stock~~two ~~for~~years of audited financial statements, an exemption from the ~~foreseeable~~auditor ~~future.~~attestation ~~Any~~requirement ~~future~~of ~~determination~~Section to404 ~~pay~~of ~~dividends~~the ~~will~~Sarbanes-Oxley beAct, atreduced disclosure about executive compensation arrangements pursuant to the ~~discretion~~rules ofapplicable ~~our~~to ~~board~~smaller ofreporting ~~directors~~companies and ~~will~~no ~~depend~~requirement to seek non-binding advisory votes on ~~our~~executive ~~financial~~compensation ~~condition,~~or ~~results~~golden ofparachute ~~operations~~arrangements, ~~capital~~although ~~requirements,~~some ~~and~~of ~~such~~these ~~other~~exemptions ~~factors~~are available to us as ~~our~~a ~~board~~smaller reporting company (i.e. a company with less than $75 million of ~~directors~~its ~~deems~~voting ~~relevant~~equity held by affiliates). ~~Accordingly,~~We have elected to adopt these reduced disclosure requirements. We cannot predict if investors ~~may~~will ~~need~~find toour ~~sell~~common ~~their~~stock ~~shares~~less attractive as a result of our taking advantage of these exemptions. If some investors find our common stock toless ~~realize~~attractive as a ~~return~~result onof ~~their~~our ~~investment~~choices, ~~and~~there ~~they~~ may ~~not~~ be ~~able~~a toless ~~sell~~active ~~such~~trading ~~shares~~market atfor orour ~~above~~common ~~the~~stock and our stock price ~~paid~~may ~~for~~be ~~them~~more volatile.

We14 ~~can~~Table ~~sell additional shares~~ of common stock without consulting stockholders and without offering shares to existing stockholders, which would result in dilution of existing stockholders’ interests in the Company and could depress our stock price.Contents

~~Our~~We ~~Articles~~do ofnot ~~Incorporation,~~expect as amended on February 5, 2020, authorize 1,500,000,000 shares of common stock, of which 751,836,384 are outstanding on July 20, 2020; 50,000 shares of series A preferred stock, of which 34,289 are outstanding on July 10, 2020. Moreover, our Board of Directors is authorized to ~~issue~~pay ~~additional~~any ~~shares~~cash ofdividends ~~our common stock and preferred stock. Although our Board of Directors intends to utilize its reasonable business judgment to fulfill its fiduciary obligations to our then existing stockholders~~ in ~~connection with any future issuance of our capital stock,~~ the ~~future~~foreseeable issuance of additional shares of our common stock or preferred stock convertible into common stock would cause immediate, and potentially substantial, dilution to our existing stockholders, which could also have a material effect on the market value of the sharesfuture.

~~Because~~We weintend ~~are~~to ~~subject~~retain our future earnings, if any, in order to ~~“penny~~reinvest ~~stock”~~in ~~rules~~the development and growth of our business and, therefore, do not intend to pay dividends on our common stock for the ~~level~~foreseeable future. Any future determination to pay dividends will be at the discretion of ~~trading~~our ~~activity~~board inof directors and will depend on our financial condition, results of operations, capital requirements, and such other factors as our board of directors deems relevant. Accordingly, investors may need to sell their shares of our common stock to realize a return on their investment, and they may not be ~~reduced~~able to sell such shares at or above the price paid for them.

~~Broker-dealer~~We ~~practices~~can insell ~~connection~~additional ~~with~~shares ~~transactions in “penny stocks” are regulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price~~ of ~~less~~common ~~than $5.00 (other than securities registered on some national securities exchanges). The penny~~ stock ~~rules~~without ~~require~~consulting astockholders ~~broker-dealer to deliver to its customers a standardized risk disclosure document that provides information about penny stocks~~ and ~~the~~without ~~nature~~offering ~~and~~shares ~~level of risks in the penny stock market prior~~ to ~~carrying~~existing ~~out a transaction in a penny stock not otherwise exempt from the rules. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock~~stockholders, ~~the~~which ~~compensation~~would ofresult ~~the broker-dealer and its salesperson~~ in ~~the~~dilution ~~transaction,~~of ~~and,~~existing ~~if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer~~stockholders’s ~~presumed~~interests ~~control over the market, and monthly account statements showing the market value of each penny stock held~~ in the ~~customer’s~~Company ~~account. In addition, broker-dealers who sell these securities to persons other than established customers~~ and ~~“accredited~~could ~~investors”~~depress ~~must~~our ~~make a special written determination that the penny~~ stock ~~is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction~~price. ~~Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules.~~

15Our ~~Table~~Articles of ~~Contents~~Incorporation, as amended on February 5, 2020, authorize 1,500,000,000 shares of common stock, of which 909,974,924 are outstanding as of September 27, 2021. Our Articles of Incorporation, as amended on February 5, 2020, also authorize 50,000 shares of series A preferred stock, of which 34,289 are outstanding on September 27, 2021. Moreover, our Board of Directors is authorized to issue additional shares of our common stock and preferred stock. Although our Board of Directors intends to utilize its reasonable business judgment to fulfill its fiduciary obligations to our then existing stockholders in connection with any future issuance of our capital stock, the future issuance of additional shares of our common stock or preferred stock convertible into common stock would cause immediate, and potentially substantial, dilution to our existing stockholders, which could also have a material effect on the market value of the shares.

~~Financial~~Because ~~Industry~~we ~~Regulatory~~are ~~Authority~~subject ~~(FINRA)~~to ~~sales~~“penny ~~practice~~stock” ~~requirements~~rules, ~~may~~the ~~also~~level ~~limit~~of ~~your~~trading ~~ability~~activity toin ~~buy and sell~~ our stock, ~~which~~may ~~could~~be ~~depress our share price~~reduced.

~~FINRA~~Broker-dealer ~~rules~~practices ~~require~~in ~~that~~connection with transactions in ~~recommending~~“penny anstocks” ~~investment~~are toregulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a ~~customer,~~price of less than $5.00 (other than securities registered on some national securities exchanges). The penny stock rules require a broker-dealer ~~must~~to ~~have~~deliver ~~reasonable~~to ~~grounds~~its ~~for~~customers ~~believing~~a standardized risk disclosure document that provides information about penny stocks and the ~~investment~~nature isand ~~suitable~~level ~~for~~of ~~that~~risks ~~customer.~~in ~~Prior~~the penny stock market prior to ~~recommending~~carrying ~~speculative~~out ~~low-priced~~a ~~securities~~transaction toin ~~their~~a ~~non-institutional~~penny ~~customers,~~stock not otherwise exempt from the rules. The broker-~~dealers~~dealer also must ~~make~~provide ~~reasonable~~the ~~efforts~~customer towith ~~obtain~~current ~~information~~bid ~~about~~and ~~the~~offer ~~customer’s~~quotations ~~financial~~for ~~status,~~the ~~tax~~penny ~~status~~stock, ~~investment~~the ~~objectives~~compensation ~~and~~of ~~other~~the ~~information.~~broker-dealer ~~Under~~and ~~interpretations~~its ofsalesperson ~~these~~in ~~rules~~the transaction, ~~FINRA~~and, ~~believes~~if ~~that~~the ~~there~~broker-dealer is athe ~~high~~sole ~~probability~~market ~~that~~maker, ~~speculative~~the ~~low~~broker-~~priced~~dealer ~~securities~~must ~~will~~disclose ~~not~~this befact ~~suitable~~and ~~for~~the atbroker-dealer’s ~~least~~presumed ~~some~~control ~~customers.~~over ~~FINRA~~the ~~requirements~~market, ~~make~~and itmonthly ~~more~~account ~~difficult~~statements ~~for~~showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to ~~recommend~~persons ~~that~~other ~~their~~than established customers ~~buy~~and ~~our~~“accredited ~~common~~investors” must make a special written determination that the penny stock, ~~which~~is ~~may~~a ~~limit~~suitable ~~your~~investment ~~ability~~for tothe ~~buy~~purchaser and ~~sell~~receive ~~our~~the ~~stock~~purchaser’s ~~and~~written ~~have~~agreement anto ~~adverse~~the transaction. Consequently, these requirements may have the effect onof reducing the level of trading activity, if any, in the secondary market for ~~our~~a ~~shares,~~security ~~depressing~~subject ~~our~~to ~~share~~the ~~price~~penny stock rules.

WeFinancial ~~are~~Industry ~~unable~~Regulatory Authority (FINRA) sales practice requirements may also limit your ability to ~~predict~~buy ~~the~~and ~~impact~~sell ofour ~~COVID-19~~stock, onwhich could depress our ~~company~~share price.

~~The~~FINRA ~~overall~~rules ~~effect~~require ofthat in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the ~~travel~~investment ~~and~~is ~~other~~suitable ~~restrictions~~for inthat ~~place~~customer. Prior to ~~stop~~recommending ~~the~~speculative ~~spread~~low-priced ofsecurities ~~COVID~~to their non-19institutional iscustomers, ~~having~~broker-dealers amust ~~significant~~make ~~impact~~reasonable onefforts ~~the~~to ~~overall~~obtain ~~economy~~information ~~and~~about ~~a particular~~the ~~effect~~customer’s onfinancial ~~retail~~status, ~~sales~~tax status, investment objectives and ~~discretionary~~other ~~spending~~information. AUnder ~~portion~~interpretations of ~~our~~these ~~business~~rules, ~~plan~~FINRA believes that there is ~~related~~a tohigh ~~the~~probability ~~distribution~~that ofspeculative ~~products~~low-priced tosecurities ~~retail~~will ~~stores~~not be suitable for ~~sale~~at ~~and~~least ~~this~~some ~~could~~customers. ~~impact~~FINRA ~~our~~requirements ~~ability~~make it more difficult for broker-dealers to ~~execute~~recommend onthat ~~this~~their ~~portion~~customers ofbuy our ~~business.~~common ~~Additionally~~stock, ~~our~~which ~~business~~may ~~plan~~limit ~~requires~~your usability to ~~raise~~buy ~~additional~~and ~~funds~~sell ~~which~~our ~~may~~stock beand ~~more~~have ~~difficult~~an ~~because~~adverse ofeffect on the ~~COVID-19~~market ~~pandemic’s~~for ~~effect~~our onshares, ~~capital~~depressing ~~markets~~our share price.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES

The Company uses offices provided by its ~~CEO~~Kevin Hagen, Esq., a principal shareholder, and incurs no charge for their use.

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ITEM 3. LEGAL PROCEEDINGS

~~The~~First ~~Company~~Capital isVenture ~~involved~~Co. inv. Thunder Energies Corporation, f/k/a Thunder Fusion Corporation, CCJ ACQUISITION CORP d/b/a the ~~following~~Hemplug, ~~legal~~the ~~proceedings~~Hemplug, ~~each~~LLC, Nature Consulting, LLC, et al., Case No. CACE 20-019111. On November 3, 2020, First Capital Venture d/b/a Diamond CBD, Ltd., filed its 5-count verified Complaint seeking injunctive and declaratory relief as well as damages against Defendants. Specifically, the verified Complaint alleges the Defendants violated Florida’s Uniform Trade Secrets Act as well as allegations that the Defendants tortiously interfered with a contractual or business relationship of First Capital Venture. On February 17, 2021, Defendants filed their answer and affirmative defenses. On March 5, 2021, First Capital Venture filed its Motion for Order to Show Cause in which isit ~~specific~~seeks sanctions for Defendants’ failure to ~~each~~comply ~~plaintiff~~with ~~suing~~the Court’s Order compelling Defendants to provide responses to Plaintiff’s discovery requests. At a hearing on March 29, 2021, the ~~Company~~judge ~~based~~deferred ~~upon~~ruling on First Capital Venture’s Motion for Order to Show Cause. Immediately following the ~~convertibility~~Show ofCause Hearing, the Defendants filed response to Plaintiff’s Motion for Order to Show Cause and the Plaintiff filed a ~~promissory~~memorandum ~~note~~in support. InPrior ~~each~~to ~~case~~the Motion for Order to Show Cause, on February 17, 2021, Defendants furnished a request for production of documents to Plaintiff. Within the ~~Company~~time isprescribed ~~contesting~~by the ~~validity~~Florida Rules of Civil Procedure to respond to the Defendants’ request for ~~conversion~~production, Plaintiff filed a motion for extension of ~~shares~~time ~~pursuant~~to respond to ~~each~~the ~~such~~request ~~note~~for ~~(each~~production ~~referred~~of documents on March 16, 2021. Defendants filed a motion to compel the responses for the Defendants’ Request for Production of Documents to Plaintiffs, however, there is no pending Order compelling the Plaintiff to provide the discovery as aof ~~“Note”)~~the date of this report. ~~The~~On ~~following~~April ~~are~~28, 2021, the ~~case~~Judge ~~references~~signed an Order which compelled the Defendants, Yogev Shvo and Orel Ben Simon, before the Honorable Court to ~~each~~show ~~case~~cause ~~filed~~as byto ~~each~~why the Defendants should not be held in contempt of ~~the~~Court ~~plaintiffs~~for ~~(collectively~~failure to properly respond to outstanding discovery. On May 10, 2021, a special set hearing occurred in which the ~~“Plaintiffs”):~~Judge deferred ruling on the Motion for Order to Show Cause. The case remains ongoing.

·First ~~Mammoth~~Capital ~~West~~Venture ~~Corporation~~Co. v. ~~PotNetwork~~T1 ~~Holdings~~Payments, ~~Inc~~LLC et al., Case No. 17CACE-20-006914, CHUCN ~~778~~062020CA006914AXXXCE, ~~19th~~17th Judicial Circuit ~~Court~~in ofand ~~Lake~~for Broward County, ILFlorida. ~~Filed~~On ~~May~~April 2622, ~~2017.~~2020, ·First ~~Southridge~~Capital ~~Partners~~Venture, IIa ~~Limited~~subsidiary ~~Partnership~~of ~~vs.~~the ~~SND~~Company ~~Auto~~filed ~~Group,~~an ~~Inc.,~~8-count ~~Case~~Complaint ~~No.~~against ~~3:17-cv-01925~~the USits ~~District~~previous ~~Court~~merchant ~~for~~processor seeking the ~~District~~return of ~~Connecticut~~$649,311.73 ~~filed~~being ~~January~~held 5,by ~~2018.~~the ·merchant Jprocessor and for damages related to this processor ceasing to accept MasterCard payments from the Company’s customers for the purchase of the Company’s products. PThe Company is seeking declaratory relief as well as damages against the Defendant. ~~Carey~~Specifically, ~~Limited~~the ~~Partners~~Complaint alleged the Defendant breached the contract between the parties, ~~L.P.~~sought vviolations of Florida Statute § 772.11 ~~PotNetwork~~(Civil ~~Holdings~~Remedy for Theft), ~~Inc.~~replevin, ~~Case~~and Nofraud.~~3:18-CV-00873-WWE~~ On August 4, US2020, ~~District~~the Court ~~for~~granted a motion to transfer the ~~District~~case ofto ~~Connecticut,~~Nevada where it will be filed ~~May~~per 24the merchant processing agreement. As a result, ~~2018~~the lawsuit was dismissed without prejudice to be filed in the appropriate jurisdiction per the processing agreement.

~~Each~~Therefore, ~~Plaintiff~~on ~~filed~~May a14, ~~civil~~2021, ~~complaint~~First ~~with~~Capital ~~regard~~Venture toCo., ~~their~~filed ~~rights~~an toeight-count ~~convert~~complaint aagainst ~~specific~~T1 ~~convertible~~Payments, ~~promissory Note. In each case~~LLC, ~~the~~Donald ~~Note~~Kasdon ~~was~~and ~~issued~~Does ~~not~~1 bythrough ~~the Company~~10, ~~but~~in byDistrict ~~its~~Court, ~~predecessor~~Clark ~~issuer~~County, ~~SND~~Nevada, ~~Auto~~under ~~Company~~case ~~Inc~~number: A-21-834626-B. ~~(which~~The ~~predecessor~~8-count ~~issuer~~Complaint ~~had~~against ~~changed~~the ~~its~~previous ~~name~~merchant ~~before~~processor ~~changing~~seeks itthe ~~back~~return toof ~~SND Auto Group~~$649, ~~Inc~~311.).73 ~~Each~~being ~~Note~~held ~~was issued~~ by ~~SND~~the ~~Auto~~merchant ~~Company~~processor ~~Inc.,~~and ~~respectively~~seeks ondamages ~~June~~related ~~13, 2016~~ to ~~Mammoth~~this ~~West~~processor ~~Corporation~~ceasing ~~and~~to onaccept ~~July~~MasterCard ~~18,~~payments ~~2016~~from tothe ~~Southridge~~Company’s ~~Partners~~customers ~~II Limited Partnership,~~ for ~~money~~the ~~paid~~purchase toof ~~SND~~the ~~Auto~~ Company’s ~~Inc~~products., atThe ~~a time when SND Auto~~ Company ~~Inc.~~is ~~was~~seeking ~~the~~declaratory ~~public~~relief ~~entity,~~as ~~with~~well ~~sole~~as ~~operations~~damages inagainst the ~~automotive industry~~Defendants. ~~(Plaintiff~~Specifically, ~~J. P. Carey Limited Partners, L.P., on March 1, 2018, was a subsequent purchaser of a portion of~~ the ~~Southridge~~Complaint ~~Partners~~alleged ~~II Limited Partnership Note and conversion rights connected to~~ the ~~amount~~Defendants ~~purchased,~~breached ~~which it then attempted to convert on~~ the ~~pre-reorganization~~contract ~~terms~~between ~~and conditions of~~ the ~~Note~~parties, asfraud, ~~more~~conversion ~~fully~~and ~~defined~~unjust ~~below~~enrichment.) ~~Subsequent~~To tohelp expediate the ~~issuance~~litigation of ~~the~~this ~~Notes~~case, ~~on March 14, 2017, SND Auto~~ Company’s ~~Inc.~~counsel ~~engaged~~sought in a ~~holding~~more ~~company~~specialized ~~reorganization~~type ~~whereby~~of ~~SND~~proceeding ~~Auto~~by ~~Company~~requesting ~~Inc.,~~the ~~became~~matter abe ~~subsidiary~~heard ofin ~~the~~business ~~public entity~~court. The ~~holding~~Company ~~company~~is ~~reorganization~~continuing ~~was~~to anwork ~~express~~with ~~condition~~counsel ofin aCalifornia ~~private~~and ~~company,~~Nevada ~~First~~to ~~Capital~~resolve ~~Venture~~this ~~Holdings Co~~matter., ~~whose acquisition was the principal reason for the reorganization.~~

Dr. Bomi Joseph v. PotNetwork Holdings, Inc. et al, Case No. 19STCV15296, Superior Court of California – Los Angeles County for Los Angeles Judicial District. Plaintiff alleges that defendants published a report on or about February 22, 2019, about him on its website, www.potnetworkcom, without his consent, acknowledgement and approval, which report is of concern to the Plaintiff. Moreover, the report was picked up and re-published on numerous other websites without permission of the defendants. The Plaintiff alleges that the report defamed him and that it continues to be published by third party websites although already retracted and taken down by the defendants. The Plaintiff and the Company have entered into settlement negotiations.

Potter v. PotNetwork Holdings, Inc., Diamond CBD, Inc., and First Capital Venture Co., CASE NO.: 19-24017-CV-SCOLA, US District Court for the Southern District of Florida. Plaintiff alleged that she purchased certain products from Diamond CBD that contained levels of CBD that were less than the amount stated on the packaging and sought class action status. The Company and its subsidiaries settled the matter at mediation on July 14, 2020. The parties completed the final documentation of the settlement and the case was dismissed on August 27, 2020. Pursuant to the settlement agreement the Company agreed to issue a $10 voucher to purported class members, pay the named plaintiff $5,000 and pay the law firms that brought the suit $200,000 in legal fees to be paid over 30 months, secured by a pledge of shares of the common stock of PotNetwork Holdings, Inc.

Viral Vapes, LLC, v. CBD, LLC, CASE NO.: 20-C-07896-S6, filed in the State Court of Gwinnett County, Georgia, on February 2, 2021. Plaintiff alleges that the Defendant breached a contract for the resale of its goods which were returned to the Defendant for credit. Plaintiff seeks compensatory damages in an amount to be proved at trial, but not less than $34,825, the purchase price of the goods purchased and returned, plus interest and reasonable attorney’s fees incurred in prosecuting this claim. The Company is contesting the allegations. The case is ongoing.

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~~The~~In ~~original~~addition ~~two~~to ~~Plaintiffs had invested in 2016 in an automotive company and not in~~ the ~~subsequent business of the post reorganization company. As of December 31~~above, ~~2017, SND Auto~~ Company ~~Inc.,~~had ~~not the post reorganization Company, owed Mammoth West Corporation $7,280 and Southridge Partners II Limited Partnership $26,000, on each of the Notes, which obligations have never~~ been ~~disputed~~involved byin ~~SND Auto Company Inc. The Company has maintained that these Notes were not debts of~~ the ~~post~~following ~~reorganization~~legal ~~Company~~proceedings, ~~and~~each ~~the~~since ~~holding~~dismissed ~~Company~~as ~~reorganization was undertaken in order to isolate said debt from~~ the ~~new~~result ~~business~~ of ~~the post reorganization public Company, its subsidiary, SND Auto Company Inc., being~~ a ~~separate~~respective ~~and~~settlement ~~distinct legal entity. However~~agreement, ~~on February 7, 2018, the Company~~ and ~~its~~each ~~predecessor~~of ~~issuer,~~which ~~SND~~is ~~Auto~~specific ~~Company Inc., unwound the March 14, 2017 holding company reorganization for reasons unrelated~~ to ~~the~~each ~~disputed~~plaintiff ~~obligations~~suing of the ~~Notes. As a consequence of that unwinding, the~~ Company, ~~the~~based ~~public~~upon ~~entity, may have become liable for these SND Auto Group, Inc. Notes, but in~~ the ~~Company’s~~convertibility ~~opinion, such liability only became effective as~~ of ~~the~~a ~~February~~promissory ~~7, 2018, the date of the rewinding, not prior~~note. AtIn ~~this point,~~ each ~~dispute~~case ~~between~~ the Company ~~and~~had ~~each~~contested ~~Plaintiff has now focused on~~ the ~~specific~~validity ~~conversion~~of ~~price to be allowed by~~ the ~~Company~~request infor ~~any~~ conversion. ~~On March 28, 2017 and on April 24, 2017, each~~ of ~~the~~shares ~~original~~pursuant ~~Plaintiffs respectively issued a conversion notice not~~ to ~~SND Auto Group, Inc.,~~ each ~~Note’s~~such ~~maker,~~note ~~but to the post reorganization Company, for shares of its common stock. The terms of~~ (each ~~Note~~referred ~~entitle the plaintiff~~ to ~~payment~~as ~~in cash or in shares of the maker (SND Auto Group, Inc.), at~~ a ~~discount of 65% of the lowest trading price of the preceding 30 trading days from the date of each conversion notice~~“Note”). ~~Each~~The ~~Plaintiff~~following ~~has~~are ~~sought to convert into shares of~~ the ~~post~~case ~~reorganization~~references ~~Company, at a conversion price of a fraction of a penny per share, based on SND Auto Group, Inc.’s share price prior~~ to ~~the~~each ~~reorganization.~~case Itfiled isby ~~the Company’s position that it is not obligated for~~ each ~~Note until the date~~ of the ~~unwinding~~plaintiffs ~~of the reorganization~~(collectively, ~~February 7, 2018, a time when~~ the ~~Company’s publicly traded stock price was considerably higher than the price pre-reorganization which the~~ “Plaintiffs ~~are attempting to use in each of their conversions.~~”):

~~The~~● ~~relief~~Mammoth ~~sought~~West byCorporation ~~each~~v ~~Plaintiff~~PotNetwork inHoldings ~~each~~Inc., ~~case~~Case isNo. as17 ~~follows~~CH 778, 19th Circuit Court of Lake County, IL. Filed May 26, 2017. ● Southridge Partners II Limited Partnership vs. SND Auto Group, Inc., Case No. 3:17-cv-01925 US District Court for the District of Connecticut, filed January 5, 2018. ● J. P. Carey Limited Partners, L.P. v. PotNetwork Holdings, Inc., Case No.3:18-CV-00873-WWE, US District Court for the District of Connecticut, filed May 24, 2018.

·Each ~~Mammoth~~Plaintiff ~~West~~had ~~Corporation:~~filed ~~Issuance~~a ofcivil ~~the~~complaint ~~shares~~with ~~per~~regard to their rights to convert a specific Note. In each ofcase, ~~its~~the ~~conversion~~Note ~~notices~~was ~~per~~issued not by the ~~original~~Company, ~~terms~~but ofby its ~~Note~~predecessor issuer, ~~reasonable~~SND ~~attorneys’~~Auto ~~fees~~Company ~~and~~Inc. ~~reimbursement~~(which ofpredecessor ~~court~~issuer ~~costs,~~had ~~and~~changed ~~such~~its ~~other~~name ~~and~~before ~~further~~changing ~~relief~~it asback ~~the~~to ~~court~~SND ~~deems~~Auto ~~appropriate~~Group, Inc.). ·Each ~~Southridge~~Note ~~Partners~~was IIissued ~~Limited~~by ~~Partnership:~~SND ~~Damages~~Auto ofCompany atInc., ~~least~~respectively ~~$743,150,~~on ~~interest~~June 13, ~~punitive~~2016 ~~damages~~to Mammoth West Corporation and on July 18, a2016 ~~mandatory~~to ~~injunction~~Southridge ~~seeking~~Partners ~~specific~~II ~~performance~~Limited Partnership, ~~reasonable~~for ~~attorneys’~~money ~~fees~~paid ~~and~~to ~~reimbursement~~SND ofAuto ~~court~~Company ~~costs~~Inc., ~~and~~at ~~such~~a ~~other~~time ~~and~~when ~~further~~SND ~~relief~~Auto asCompany Inc. was the ~~court~~public ~~deems~~entity, ~~appropriate~~with sole operations in the automotive industry. ·(Plaintiff, J. P. Carey Limited Partners, L.P.;, ~~Damages~~on ofMarch ~~at least $573~~1,~~890,~~ ~~interest~~2018, ~~punitive~~was ~~damages,~~a subsequent purchaser of a ~~mandatory~~portion ~~injunction~~of ~~seeking~~the ~~specific~~Southridge ~~performance,~~Partners ~~reasonable~~II ~~attorneys’~~Limited ~~fees~~Partnership Note and ~~reimbursement~~conversion ofrights ~~court~~connected ~~costs~~to the amount purchased, ~~and~~which ~~such~~it ~~other~~then attempted to convert on the pre-reorganization terms and ~~further~~conditions ~~relief~~of the Note, as ~~the~~more ~~court~~fully ~~deems~~defined ~~appropriate~~below.)

~~The~~Subsequent to the issuance of the Notes, on March 14, 2017, SND Auto Company ~~has~~Inc. ~~been~~had ~~and~~engaged ~~continues~~in toa ~~vigorously~~holding ~~defend~~company ~~itself~~reorganization ~~against~~whereby ~~each~~SND ~~claim~~Auto Company Inc., became a subsidiary of the public entity. The holding company reorganization was an express condition of a private company, First Capital Venture Holdings Co., whose acquisition was the principal reason for the reorganization.

~~Potter~~Each v.Plaintiff ~~Potnetwork~~had ~~Holdings~~sought to convert into shares of the post reorganization Company, ~~Inc.~~at a conversion price of a fraction of a penny per share, ~~Diamond~~based ~~CBD~~on SND Auto Group, Inc.,’s ~~and~~share ~~First~~price ~~Capital~~prior ~~Venture~~to ~~Co.,~~the ~~CASE NO~~reorganization.: ~~19-24017-CV-SCOLA,~~The USCompany ~~District~~disputed ~~Court~~the ~~for~~conversion ~~the~~amounts ~~Southern~~presented ~~District~~by ofthe ~~Florida.~~Plaintiffs

Plaintiff Potter has alleged that she purchased certain products from Diamond CBD that contained levels of CBD that were less than the amount stated on the packaging. Potter is seeking class action status. The ~~Company~~relief ~~has filed a motion to dismiss~~ that ~~was~~had ~~granted~~been insought ~~part~~by ~~and~~each ~~denied~~Plaintiff in ~~part.~~each ~~The~~case ~~litigation~~ is ~~continuing~~as ~~and is in the discovery stage. There is no estimate of potential damages at this time.~~ follows:

A● ~~mediation~~Mammoth isWest ~~schedule~~Corporation: ~~for~~Issuance ~~July~~of 14the shares per each of its conversion notices per the original terms of its Note, ~~2020~~reasonable attorneys’ fees and reimbursement of court costs, and such other and further relief as the court deems appropriate. ~~The~~● ~~Company~~Southridge ~~continues~~Partners toII ~~vigorously~~Limited ~~defend~~Partnership: ~~against~~Damages of at least $743,150, interest, punitive damages, a mandatory injunction seeking specific performance, reasonable attorneys’ fees and reimbursement of court costs, and such other and further relief as the ~~action~~court deems appropriate. ● J. P. Carey Limited Partners, L.P.; Damages of at least $573,890, interest, punitive damages, a mandatory injunction seeking specific performance, reasonable attorneys’ fees and reimbursement of court costs, and such other and further relief as the court deems appropriate.

On August 17, 2020, JP Carey Limited Partners L.P. and the Company came to a settlement, whereby the Company agreed to issue 28 million shares of the Company’s common stock to JP Carey, valued at $379,752, subject to certain leak out provisions. The case has subsequently been dismissed.

On August 27, 2020, the Court dismissed the case brought by Southridge Partners II Limited Partnership for failing to obtain counsel to prosecute the case after the Court’s order to do so. Southridge subsequently sought to refile its claim. On January 21, 2021, the Company and Southridge Partners II Limited Partnership came to a settlement, whereby the Company agreed to issue 38 million shares of the Company’s common stock, valued at $296,400, to an affiliate of Southridge Partners II Limited Partnership, Livingston Asset Management, LLC, subject to certain leak out provisions. The case subsequently was dismissed. However, on July 20, 2021, Southridge Partners II Limited Partnership, and Livingston Asset Management, LLC filed a new complaint in the 17^th Judicial Circuit of the State of Florida in and for Broward County Florida, Case CACE-21-014580, claiming default of the settlement reached with the Defendants due the Plaintiff’s inability to deposit their shares. A new settlement is in negotiations.

On October 22, 2020, the Company entered into a settlement agreement with Mammoth Corporation subject to a court approval per a 3(a)10 fairness hearing. On December 11, 2020, the fairness hearing was conducted by the Circuit Court for the Nineteenth Judicial Circuit, Lake County, Illinois, Civil Action No. 17 CH 778. As a result of the court’s approval of the settlement agreement, on December 24, 2020, the Company issued 28,000,000 common shares to Mammoth West Corporation, valued at $315,420, for all indebtedness owed. The case has subsequently been dismissed.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

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~~PART~~Part II

~~ITEM~~Item 5. ~~MARKET~~Market ~~FOR~~for ~~REGISTRANT~~Registrant’Ss ~~COMMON~~Common ~~EQUITY~~Equity, ~~RELATED~~Related ~~STOCKHOLDER~~Stockholder ~~MATTERS~~Matters ~~AND~~and ~~ISSUER~~Issuer ~~PURCHASES~~Purchases OFof ~~EQUITY~~Equity ~~SECURITIES~~Securities.

Market Information

Our common stock is quoted on the OTC Pink Sheets Market, an alternative trading system, under the symbol POTN. For the periods indicated, the following table sets forth the high and low closing prices per share of common stock. The below prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.

	Price Range
Period	High		Low
Year Ending December 31, 2018:	$		$
First Quarter		.0957		.1199
Second Quarter		.413		.194
Third Quarter		.3912		.2206
Fourth Quarter		.2761		.0836
Year Ending December 31, 2019:
First Quarter		.1750		.0980
Second Quarter		.1650		.0577
Third Quarter		.1049	$	.0375
Fourth Quarter		.052		.023
Year Ending December 31, 2020:
First Quarter		.374		.0135
Second Quarter		.0169		.0100
Third Quarter		.0176	$	.0121
Fourth Quarter		.0135		.0050

As of ~~July~~September 1027, ~~2020~~2021 we had 2,289 shareholders of record of our common stock.

Dividends. We have never declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. We expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.

Equity Compensation Plans. We do not have any equity compensation plans.

Penny Stock Considerations

Our shares are considered “penny stocks,” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Thus, our shares will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.

Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt.

In addition, under the penny stock regulations, the broker-dealer is required to:

	·	Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;

	·	Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;

	·	Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value, and information regarding the limited market in penny stocks; and

	·	Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.

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Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities.

Our shares are subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.

~~ITEM~~Item 6. ~~SELECTED~~Selected ~~FINANCIAL~~Financial ~~DATA~~Data.

As a smaller reporting company, we are not required to supply this information.

~~ITEM~~Item 7. ~~MANAGEMENT~~Management’Ss ~~DISCUSSION~~Discussion ~~AND~~and ~~ANALYSIS~~Analysis OFof ~~FINANCIAL~~Financial ~~CONDITION~~Condition ~~AND~~and ~~RESULTS~~Results OFof ~~OPERATIONS~~Operations.

Overview

The primary business of PotNetwork Holdings, Inc. (“POTN”) is conducted through its primary subsidiary, First Capital Venture Co., whose subsidiary, ~~Diamond~~ CBD, ~~Inc.~~LLC (“d/b/a Diamond CBD”) is engaged in the development and sales of hemp-derived CBD oil containing products. The Company also owns and operates PotNetwork Media Group, Inc., operator of the informational website to the cannabis and CBD industry, PotNetwork.com.

Results of Operations

Results of Operations and Nonrecurring Events during the year ended December 31, ~~2019~~2020 as compared to the year ended December 31, ~~2018~~2019.

For the year ended December 31, ~~2019~~2020 and ~~2018~~2019, we had revenues of $159,~~060~~680,~~840~~543 and $2515,~~583~~060,~~761~~840 respectively. This represents a decrease in revenue of $(105,~~522~~380,~~921~~297) or 4135.172%. This decrease in revenue was due to a retail distribution contraction as a result of the ~~FDA~~Covid-19 ~~Warning Letter~~pandemic, ~~along~~and ~~with~~an ~~the~~overall ~~paring~~reduction ~~and~~in ~~streamlining~~direct ofsales ~~the~~activity ~~product~~specific ~~lines~~to inthe ~~mid~~COVID-~~2019~~19 pandemic.

Our Gross Profit from the sale of all products the year ended December 31, ~~2019~~2020 and ~~2018~~2019 was $43,~~816~~428,~~604~~205 and $84,~~959~~816,~~433~~604 respectively, or a decrease of 46$(1,388,399) or 28.283%. ~~Continued~~This ~~growth~~decrease ofwas ~~the~~due ~~overall~~to ~~consumer~~the ~~market~~reduction ~~for CBD products and anticipated increases~~ in ~~competition~~revenue ~~are anticipated to continue to create pressure on gross profit margins~~year-over-year.

Our Net Profit (Loss) for the years ended December 31, ~~2019~~2020 ~~and~~increased ~~2018~~to ~~decreased~~a toLoss of $(5,584,669) from a Loss of $(3,367,831) ~~from~~in 2019. The Loss for 2020 is comprised of three distinct items: a ~~Net~~loss ~~Profit~~on operating activities of $~~242~~(1,~~634~~877,171) ~~respectively~~and losses caused by two nonrecurring extraordinary items totaling $ (3,707,497). (There were no nonrecurring event items in 2019.) The operational loss was primarily caused by a reduction in gross margin attributable to a reduction in revenues. The two nonrecurring extraordinary items were (a) a loss attributable to the ~~decrease~~cost of the issuance of common stock to each of two former debtholders, specific to settlement agreements of long-standing court cases negotiated with each, in ~~gross~~the ~~profit~~amount of $695,048 in total (see “Item 3. Legal Proceedings”), and (b) a loss from the write off of the amount paid to the drop shipper in the amount of $ (3,012,449). This write-off specific to the drop shipper account includes an adjustment for the reduction in value of inventory beyond its expiration date, and for obsolete or unsalable inventory, both events significantly attributable to a decline in consumer demand because of the Covid-19 pandemic. It also represents an impairment of any remaining value in this asset, which is undergoing internal review. (See note "18 - Critical Audit Matters" in the notes to the financial statements.)

Operating expenses for the ~~nine~~twelve-month period ended ~~September~~December 3031, ~~2019~~2020 compared to ~~September~~the 30same period ended December 31, ~~2018~~2019 decreased to $54,~~736~~930,~~099~~753 as compared to $7,~~325~~980,~~012~~296, a decrease of 21$3,049,543, or 38.721% attributable to a decrease in ~~sales~~advertising and marketing expense from $64,~~615~~109,~~125~~951 in the ~~first~~twelve ~~nine~~ months ofended ~~2018~~December 31, 2019 to $51,~~108~~490,~~343~~713 ~~during~~for the same period in ~~2019~~2020.

Total expenses for the year ended December 31, ~~2019~~2020 were $85,~~184~~305,~~434~~376 with interest expense being $~~334~~374,~~139~~623 compared to $8,~~716~~314,~~799~~435 with interest expense of $10334,~~560~~139 for the comparable period of ~~2018~~2019.

Liquidity and Capital Resources

Assets ~~increased~~decreased from $56,~~214~~124,~~529~~894 at the Company’s fiscal year end of December 31, ~~2018~~2019 to $6709,~~124,893~~931 at December 31, ~~2019~~2020. The ~~increase~~decrease in the assets is attributable to an(a) ~~increase~~the inreduction ~~accounts~~over ~~receivable~~the ~~and~~year anof ~~increase~~the deposit in ~~prepaid~~the ~~expenses~~amount of $5,070,696 ~~primarily~~previously anheld ~~increase~~by inour ~~advances~~drop ~~paid~~shipper on December 31, 2019, to $-0- as the result of utilization of the deposit for fulfillment of 2020 orders, and write-offs including for obsolete/outdated/unsalable inventory of the drop shipper driven by the decline in revenues attributable in part to the Covid-19 pandemic.

~~Liabilities~~19 ~~increased~~Table ~~from $4,082,194 as~~ of ~~December 31, 2018 to $5,907,000 as of December 31, 2019. The increase is mainly attributed to loans to the Company for its operating activities.~~Contents

~~Cash~~Total ~~Flow~~Liabilities decreased from ~~Operating~~$5,907,000 ~~Activities~~as of December 31, 2019 to $5,007,338 as of December 31, 2020. The decrease is mainly attributed to a reduction in the amounts of loans due to third parties. Liabilities include two SBA loans: (a) a Paycheck Protection Program (“PPP”) Loan entered into on 5/6/2020 in the amount of $135,404; and (b) an Economic Injury Disaster Loan (“EIDL”) entered into on 6/18/2020 in the amount of $150,000.

~~Net~~Cash ~~cash~~Flow from ~~operations~~Operating ~~for the year ended December 31, 2019 was $(3,599,572) as compared to $(2,636,858) for the same period in 2018.~~Activities

19Net ~~Table~~cash offrom ~~Contents~~operations for the year ended December 31, 2020 was $(1,362,590) as compared to $(3,599,572) for the same period in 2019.

Cash Flow from Investing Activities

Net cash provided by investing activities for the year ended December 31, ~~2019~~2020 was $21,~~453~~069,~~389~~368 as compared to $12,~~255~~453,~~336~~389 for the same period in ~~2018~~2019.

Cash Flow from Financing Activities

Net cash provided by financing activities for the year ended December 31, ~~2019~~2020 was $~~632~~263,~~339~~206 as compared to $1632,~~711,376~~339 for the same period in ~~2018~~2019.

Off-balance sheet arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

~~ITEM~~Item 7A. ~~QUANTITATIVE~~Quantitative ~~AND~~and ~~QUALITATIVE~~Qualitative ~~DISCLOSURES~~Disclosures ~~ABOUT~~About ~~MARKET~~Market ~~RISK~~Risk.

As a smaller reporting company, we are not required to furnish the information required by Item 7A

~~ITEM~~Item 8. ~~FINANCIAL~~Financial ~~STATEMENTS~~Statements ~~AND~~and ~~SUPPLEMENTARY~~Supplementary ~~DATA~~Data.

The financial statements required to be filed are listed in Item 15 of this Annual Report on Form 10-K and incorporated herein by reference.

~~ITEM~~Item 9. ~~CHANGES~~Changes INin ~~AND~~and ~~DISAGREEMENTS~~Disagreements ~~WITH~~with ~~ACCOUNTANTS~~Accountants ONon ~~ACCOUNTING~~Accounting ~~AND~~and ~~FINANCIAL~~Financial ~~DISCLOSURE~~Disclosure.

On July 23, 2018, East West Accounting Services (“East-West”) resigned as the independent registered public accounting firm of the Company. The resignation was accepted by the Board of Directors of the Company. East-West stated that the reason for their resignation was the loss of their PCAOB certification as the result of an unrelated matter connected to an audit inadequacy that occurred in an audit for an unrelated company in 2015.

The audit report of East-West on the Company’s financial statements for the fiscal year ended December 31, 2017, did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.

During the Company’s 2017 fiscal year and through July 23, 2018, (1) there were no disagreements with East-West on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of East-West, would have caused East-West to make reference to the subject matter of the disagreements in connection with its report, and (2) there were no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

As a result of East-West’s resignation, the Company engaged Manohar Chowdhry & Associates (“MCA”), a PCAOB member firm, as the Company’s independent accountant to audit the Company’s financial statements and to perform reviews of interim financial statements. During the fiscal years ended December 31, 2015, December 31, 2016 and December 31, 2017 through July 23, 2018 neither the Company nor anyone acting on its behalf consulted with MCA regarding (i) either the application of any accounting principles to a specific completed or contemplated transaction of the Company, or the type of audit opinion that might be rendered by MCA on the Company’s financial statements; or (ii) any matter that was either the subject of a disagreement with East-West or a reportable event with respect to East-West.

On20 ~~January~~Table ~~14, 2019, the Company discharged MCA. The audit report~~ of MCA on the Company’s financial statements for the fiscal year ended December 31, 2017, did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.Contents

~~During~~On ~~the period of the Company’s engagement with MCA, July 23, 2018 through~~ January 14, 2019, ~~(1)~~the ~~there~~Company ~~were~~discharged ~~no disagreements with~~ MCA. onThe ~~any~~audit ~~matter~~report of ~~accounting~~MCA ~~principles~~on orthe ~~practices,~~Company’s financial ~~statement~~statements ~~disclosure,~~for orthe ~~auditing~~fiscal ~~scope~~year orended ~~procedure~~December 31, ~~which~~2017, ifdid not ~~resolved~~contain toan ~~the~~adverse ~~satisfaction~~opinion ofor ~~MCA,~~a ~~would~~disclaimer ~~have caused MCA to make reference to the subject matter~~ of ~~the disagreements in connection with its report~~opinion, ~~and~~nor ~~(2)~~was ~~there~~it ~~were~~qualified noor ~~“reportable~~modified ~~events”~~ as ~~that~~to ~~term~~uncertainty, isaudit ~~defined~~scope inor ~~Item~~accounting ~~304(a)(1)(v) of Regulation S-K~~principles.

20During ~~Table~~the period of ~~Contents~~the Company’s engagement with MCA, July 23, 2018 through January 14, 2019, (1) there were no disagreements with MCA on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of MCA, would have caused MCA to make reference to the subject matter of the disagreements in connection with its report, and (2) there were no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

On January 14, 2019, Yusufali & Associates, LLC, Short Hills, New Jersey 07078 (“Yusufali”), tobecame be the Company’s independent accountant to audit the Company’s financial statements and to perform reviews of interim financial statements. During the fiscal years ended December 31, 2016, December 31, 2017 and December 31, 2018, through January 14, 2019, neither the Company nor anyone acting on its behalf consulted with Yusufali regarding (i) either the application of any accounting principles to a specific completed or contemplated transaction of the Company, or the type of audit opinion that might be rendered by Yusufali on the Company’s financial statements; or (ii) any matter that was either the subject of a disagreement with East-West or MCA or a reportable event with respect to East-West or MCA.

~~ITEM~~Item 9A. ~~CONTROLS~~Controls ~~AND~~and ~~PROCEDURES~~Procedures.

~~Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2019.~~ The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial ~~officers~~officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The material weaknesses in our disclosure control procedures are as follows:

1.Any ~~Lack~~“material ofweakness” ~~formal~~in ~~policies~~disclosure controls and procedures ~~necessary~~is toa ~~adequately~~deficiency, ~~review~~or ~~significant accounting transactions. We utilize~~ a ~~third-party~~combination ~~independent contractor for the preparation~~ of ~~our~~deficiencies, ~~financial~~in ~~statements.~~internal ~~Although~~control ~~the~~over financial ~~statements and footnotes are reviewed by our management~~reporting, wesuch dothat ~~not~~there ~~have~~is a ~~formal~~reasonable ~~policy~~possibility tothat ~~review~~a ~~significant~~material ~~accounting~~misstatement ~~transactions~~of ~~and~~ the ~~accounting~~Company’s ~~treatment~~annual ofor ~~such~~interim ~~transactions.~~financial ~~The~~statements ~~third-party~~will ~~independent contractor is~~ not ~~involved in our day to day operations and may not~~ be ~~provided~~prevented ~~information~~or ~~from~~detected ~~our management~~ on a timely basis ~~to allow for adequate reporting/consideration of certain transactions~~.

2.A ~~Audit~~material ~~Committee~~weakness ~~and~~means ~~Financial~~there ~~Expert.~~is Wea dorisk ~~not~~that ~~have~~our anfinancial ~~audit~~reports ~~committee~~or ~~with~~other afilings ~~financial~~may ~~expert~~contain ~~and,~~an ~~thus,~~error weor ~~lack~~errors ~~the~~or ~~appropriate~~inaccuracies ~~oversight~~or ~~within~~may ~~the~~not ~~financial~~be ~~reporting~~submitted ~~process.~~on a timely basis.

WeAny ~~intend~~financial tointernal ~~initiate~~control ~~measures~~system, tono ~~remediate~~matter how well designed, will have inherent limitations including the ~~identified~~possibility that the system may have a material ~~weaknesses~~weakness or may not prevent or detect misstatements. Therefore, ~~including~~even when internal control systems are deemed effective, ~~but~~they ~~not~~are ~~necessarily~~essentially limited ~~to,~~in that they can provide only a reasonable assurance of the ~~following:~~validity and reliability of the preparation and presentation of financial statements.

·In ~~Establishing~~accordance awith ~~formal~~U.S. ~~review~~generally ~~process~~accepted ~~of significant~~ accounting ~~transactions~~principles ~~that includes participation of our principal executive officer~~(“USGAAP”), ~~principal~~the ~~financial~~Company’s ~~officer~~internal ~~and~~control ~~corporate~~system ~~legal~~was ~~counsel.~~developed ·in ~~Form~~order anto ~~audit~~provide ~~committee~~the ~~that~~Company’s ~~will~~management ~~establish policies~~ and ~~procedures~~board ~~that will provide our Board~~ of ~~Directors~~directors with areasonable ~~formal~~assurance ~~review~~of ~~process~~the ~~that~~validity ~~will~~and ~~among~~reliability ~~other~~of ~~things,~~the ~~assure~~Company’s ~~that~~financial ~~management~~reports ~~controls~~ and ~~procedures~~any ~~are~~preparation inof ~~place~~financial ~~and~~statements ~~being~~used ~~maintained~~for ~~consistently.~~external purposes

~~This~~The ~~Annual~~Company’s ~~Report~~management onis ~~Form~~responsible ~~10-K~~for ~~does~~establishing ~~not~~and ~~include~~maintaining anadequate ~~attestation report of our registered public accounting firm regarding~~ internal ~~control~~controls over financial reporting. ~~Effective~~In ~~April~~doing 27so, ~~2020,~~management ~~the~~recognizes SEC adopted amendments to the “accelerated filer” and “large accelerated filer” definitions in Rule 12b-2 under the Exchange Act. The amendments exclude from the accelerated and large accelerated filer definitions an issuer that isany ~~eligible~~controls ~~to be a smaller reporting company~~ and that had annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available. We determined that our Company does not meet the accelerated or large accelerated filer definitions as of April 30procedures, ~~2020.~~no ~~For~~matter ashow ~~long~~well asdesigned weand ~~remain a non-accelerated filer~~operated, wecan ~~intend~~provide toonly ~~take~~reasonable ~~advantage~~assurance of ~~the~~achieving ~~exemption~~their ~~permitting~~objectives usand ~~not~~management tonecessarily ~~comply~~applies ~~with~~its ~~the~~judgment ~~requirement~~in ~~under~~evaluating ~~Section 404(b) of~~ the ~~Sarbanes~~cost-~~Oxley~~benefit ~~Act~~relationship of ~~2002~~possible ~~that~~controls ~~our~~and ~~independent registered public accounting firm provide an attestation on the management’s assessment of the effectiveness of our internal control over financial reporting~~procedures.

~~Changes~~Our Chief Executive Officer/Chief Financial Officer and board of directors have each evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the date of the filing of this Report. Based on their summary evaluation, because of the Company’s limited resources and limited number of employees, and absence of an audit committee, the Company has concluded that as of December 31, 2020, its internal control at that time over financial reporting was not effective in ~~Internal~~providing ~~Control~~reasonable ~~Over~~assurance ~~Financial~~regarding ~~Reporting~~the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with USGAAP, which therefore creates a material weakness.

~~There~~The ~~were~~material noweaknesses ~~changes~~ in our ~~internal~~disclosure control ~~over~~procedures ~~financial~~are ~~reporting (~~as ~~defined~~follows: ~~in Rule 13a-15(f) or 15d-15(f)) during the current reporting period that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.~~

~~ITEM~~1. 9BLack of formal policies and procedures necessary to adequately review significant accounting transactions. ~~OTHER~~To ~~INFORMATION~~date, we have utilized third-party independent contractors/accountants for the preparation of our financial statements. Although the financial statements and footnotes are reviewed by our management, we have not had a formal procedure to review significant accounting transactions and the accounting treatment of such transactions. Our third-party independent contractors/accountants are not involved in our day-to-day operations and as a result may not always be provided with relevant financial information on a timely basis that would allow for adequate reporting/consideration of certain transactions.

On21 ~~February~~Table ~~6, 2020 the Company issued 27,000,000 common shares to a note holder upon the conversion~~ of ~~$81,000 of indebtedness owed. The common stock issued in the transaction were issued pursuant to the exemption for registration contained in Section 4(a)(2) of the Securities Act of 1933.~~Contents

212. ~~Table~~Audit Committee and Financial Expert. As of ~~Contents~~the date of this Report, the Company does not have an audit committee with a financial expert and, thus, lacks appropriate professional oversight over the financial reporting process and the internal reports generated.

~~First~~3. ~~Capital~~Lack ~~Venture~~of CoAdequate Processes. VSAs T1of ~~Payments~~December 31, ~~LLC~~2020, etthe ~~al.,~~Company ~~Case~~did ~~No.~~not ~~CACE-20-006914,~~have ~~UCN~~adequate ~~062020CA006914AXXXCE,~~processes ~~17th~~in ~~Judicial~~place ~~Circuit~~to inensure ~~and~~thorough ~~Broward~~timely ~~County,~~reviews ~~Florida.~~of Onaccounting ~~April~~and ~~22,~~financial ~~2020~~reporting matters, ~~First~~which ~~Capital~~deficiency ~~Venture,~~constitutes a ~~subsidiary~~material ofweakness. This deficiency resulted in the Company’s ~~filed~~inability to have a ~~lawsuit~~timely ~~against~~closing ~~its~~process ~~previous~~that ~~merchant~~identifies ~~processor~~all ~~seeking~~required ~~the~~adjustments ~~return~~and disclosures necessary for timely filings of ~~$649,311~~reports.73 ~~being~~In ~~held~~order byto help correct this material weakness, the ~~merchant~~Company ~~processor~~is ~~and~~hiring ~~for~~additional ~~damages~~accounting ~~related~~personnel towith the ~~processor~~requisite ~~ceasing~~incremental knowledge to ~~accept~~improve ~~MasterCard~~the ~~payments~~levels ~~from~~of accuracy, disclosure and timely review of accounting and financial reporting matters. However, the Company’s ~~customers~~may ~~for~~experience a delay in achieving such improvements in its internal control and correction of this material weakness until such additional personnel are fully trained in the Company’s ~~products.~~accounting T1policies ~~Payments~~and ~~has~~procedures. ~~filed~~Until asuch ~~motion~~time, tothis ~~dismiss~~deficiency ~~that~~will ~~has~~continue ~~not~~to ~~yet~~exist ~~been~~and ~~heard~~there bywill ~~the~~be ~~Court~~a ~~and~~continuing ~~the~~risk ~~litigation~~of ~~remains~~material misstatements in ~~its~~the ~~early~~Company’s ~~stages.~~financial statements.

OnThe ~~June~~Company ~~16,~~intends ~~2020,~~to ~~the~~initiate ~~Board~~measures ofto ~~Directors~~remediate ~~approved~~ the ~~Company’s~~preceding ~~subsidiary~~material weaknesses, ~~First Capital Venture~~including, ~~entering~~but ~~into~~not anecessarily ~~Disaster~~limited ~~Relief Loan from the US Small Business Administration in the amount of $150~~to,~~000.~~ ~~The loan is secured by a security interest in all~~ the ~~assets~~following: ~~of First Capital Venture and is for working capital purposes.~~

On● ~~July~~Formation 8,of ~~2020~~an audit committee of the ~~Company~~board ~~issued~~of 24directors which includes a financial expert,~~000~~ that together with management,~~000~~ ~~common~~will ~~shares~~establish tothe apolicies ~~note~~and ~~holder~~procedures ~~upon~~that will provide the ~~conversion~~board of ~~$72,000~~directors ofand ~~indebtedness~~management ~~owed.~~with ~~The~~a ~~common~~formal ~~stock~~monthly ~~issued~~review inprocess ~~the~~that ~~transaction~~will, ~~were~~among ~~issued~~other ~~pursuant~~things, toassure the ~~exemption~~Company ~~for~~and ~~registration~~its ~~contained~~management that adequate controls and procedures are in ~~Section~~place 4(and being maintained and applied consistently on a~~)(2)~~ ofmonthly basis. ● Hire additional accounting personnel with the ~~Securities~~requisite ~~Act~~knowledge ofnecessary ~~1933~~to apply and implement the Company’s policies and procedures specific to internal control such that reporting is performed on a timely basis.

22Exemption ~~Table~~from Attestation Report as required by Section 404(b) of ~~Contents~~the Sarbanes-Oxley Act of 2002

~~PART III~~This Annual Report on Form 10-K does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Effective April 27, 2020, the SEC adopted amendments to the “accelerated filer” and “large accelerated filer” definitions in Rule 12b-2 under the Exchange Act. The amendments exclude from the accelerated and large accelerated filer definitions any issuer that is eligible to be a smaller reporting company and that had annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available. The Company has determined that it does not meet the accelerated or large accelerated filer definitions as stated. For as long as the Company remains a non-accelerated filer, it intends to take advantage of the exemption permitting it not to comply with the requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002 wherein its independent registered public accounting firm provides an attestation on the management’s assessment of the effectiveness of our internal control over financial reporting.

~~ITEM~~Changes ~~10.~~in ~~DIRECTORS,~~Internal ~~EXECUTIVE~~Control ~~OFFICERS~~Over ~~AND~~Financial ~~CORPORATE~~Reporting ~~GOVERNANCE.~~

~~Our~~During ~~directors~~fiscal ~~hold~~year ~~office~~2020, ~~until~~ the ~~next~~Company ~~annual~~did ~~general~~not ~~meeting~~undertake ofany ~~the~~changes ~~stockholders~~in orits ~~until~~internal ~~their~~control ~~successors~~over ~~are~~financial ~~elected~~reporting ~~and~~(as ~~qualified.~~defined ~~Our~~in ~~officers~~Rule ~~are~~13a-15(f) ~~appointed~~or by15d-15(f)) ~~our~~that ~~Board~~have ofmaterially ~~Directors~~affected, ~~and~~or ~~hold~~was ~~office~~reasonably ~~until~~likely ~~the~~to ~~earlier~~materially ofaffect, ~~their~~its ~~death,~~internal ~~retirement,~~control ~~resignation,~~over orfinancial ~~removal~~reporting.

~~The~~Item ~~following~~9B. ~~table~~Other ~~sets forth the names and ages of the members of our Board of Directors and our executive officers and the positions held by each~~Information.

Name	Age	Title
Gary Blum	78	Director
Kevin Hagen	50	CEO, Director
Murugan Venkat	66	CFO

Share Issuances

~~Gary~~On L.February ~~Blum~~6, ~~78,~~2020 ~~has been~~ the ~~Chairman~~Company ofissued ~~PotNetwork Holdings~~27,000,000 ~~Inc.~~common ~~since~~shares ~~November~~to ~~2015 and was its Chief Executive Officer from November 2015 until September 2017. Mr. Blum is also~~ a ~~practicing~~note ~~attorney~~holder ~~since~~upon ~~1979 with~~ the ~~Law~~conversion ~~Offices~~ of ~~Gary L. Blum where his focus is advising a variety of closely held private companies as well as public companies in business~~$81,000 ~~corporate, securities and entertainment law. Mr. Blum has served as a director~~ of ~~Rennova~~indebtedness ~~Health, Inc~~owed. ~~since~~The ~~October~~common ~~2017,~~stock ~~and,~~issued ~~from September 2009 until July 2017, served as the Chairman and CEO of Thunderclap Entertainment, Inc. Mr. Blum received his B.S., Magna Cum Laude,~~ in ~~Mathematics from Loras College in 1962; M.A. in Philosophy from~~ the ~~University~~transaction ofwere ~~Notre~~issued ~~Dame~~pursuant into ~~1966; and his J.D. and M.B.A. degrees from~~ the ~~University~~exemption offor ~~Southern~~registration ~~California~~contained ~~Gould School of Law and Marshall School of Business, respectively,~~ in ~~1978.~~Section ~~He has been~~ 4(a)(2) ~~member~~ of the ~~California~~Securities ~~State~~Act ~~Bar~~of ~~since 1979~~1933.

~~Kevin~~On ~~Hagen,~~July 508, ~~has~~2020 ~~been~~ the ~~Chief~~Company ~~Executive~~issued ~~Officer of PotNetwork Holdings~~24, ~~Inc. since October 25~~000,000 ~~2018,~~common ~~and~~shares ~~previously~~to ~~since~~a ~~its~~note ~~inception~~holder ~~has~~upon ~~been~~ the ~~President~~conversion of ~~First Capital Venture Co.~~$72,000 ~~the parent~~ of ~~Diamond~~indebtedness ~~CBD, Inc~~owed. ~~Mr.~~The ~~Hagen~~common isstock aissued ~~practicing~~in ~~attorney~~the ~~with~~transaction ~~Hagen~~were &issued ~~Hagen,~~pursuant ~~P.A.~~to ~~with~~the ~~more~~exemption ~~than~~for 24registration ~~years~~contained ofin ~~experience.~~Section ~~He is also~~ 4(a)(2) ~~member~~ of the ~~Florida~~Securities ~~Bar~~Act ~~Association as well as a certified Florida Supreme Court mediator and qualified arbitrator. He completed his Bachelor~~ of ~~Science from the University of Florida with honors and received his Juris Doctor from Nova Southeastern University~~1933.

~~Murugan~~22 ~~Venkat,~~Table ~~66, Ph.D., FCA, was appointed Chief Financial Officer~~ of PotNetwork Holdings, Inc. effective June 10, 2018. Dr. Venkat received his Ph.D. in corporate finance from the University of Madras in India. He is a chartered accountant in India. He began his career as an Associate Professor at IFMR, Chennai. Before moving to United States, his past experiences include (a) 9 years in the public sector undertaking as FA&CAO (Financial Advisor and Chief Accounts Officer); (b) 3 years as the Chief Accountant in a sugar factory; and (c) 3 years as the Controller in a private airline. In South Florida, he worked as the corporate controller for 10 years in a manufacturing company. Since 2018, he is the corporate controller for JMJ Group, Dallas, TX.Contents

~~Family~~On ~~Relationships~~August 20, 2020, the Company issued 28,000,000 common shares to J.P. Carey Limited Partners, L.P., a note holder, under the terms and conditions of a settlement agreement, dated August 15, 2020 for all indebtedness owed. The value of the stock issued under the settlement, $379,752, has been booked in 2020 as a nonrecurring extraordinary expense for accounting purposes.

~~There~~On ~~are~~October no1, ~~familial~~2020, ~~relationships~~the ~~among~~Company ~~any~~issued of8,854,782 ~~our~~common ~~officers~~shares orto ~~directors. None of our directors or officers is~~ a ~~director~~note inholder ~~any~~upon ~~other~~the ~~reporting~~conversion ~~companies~~of ~~except~~$75,000 asof ~~disclosed~~indebtedness owed. The ~~Company~~common isstock ~~not~~issued ~~aware~~in ofthe ~~any~~transaction ~~proceedings~~were toissued ~~which~~pursuant ~~any~~to of the ~~Company‚~~exemption ~~officers~~for orregistration ~~directors,~~contained orin ~~any~~Section ~~associate of any such officer or director, is~~ 4(a)(2) ~~party adverse to the Company or any~~ of the ~~Company~~Securities ~~subsidiaries~~Act ~~or has a material interest adverse to it or any~~ of ~~its subsidiaries~~1933.

~~Corporate~~On ~~Governance~~November 23, 2020, the Company issued 19,569,479 common shares to a note holder upon the conversion of $100,000 of indebtedness owed. The common stock issued in the transaction were issued pursuant to the exemption for registration contained in Section 4(a)(2) of the Securities Act of 1933.

~~The~~On ~~Company~~December ~~promotes~~24, ~~accountability~~2020, ~~for~~the ~~adherence~~Company toissued ~~honest~~28,000,000 ~~and~~common ~~ethical~~shares ~~conduct; endeavors~~ to ~~provide~~Mammoth ~~full,~~West ~~fair~~Corporation, ~~accurate,~~a ~~timely~~note ~~and~~holder, ~~understandable~~under ~~disclosure~~the interms ~~reports~~ and ~~documents~~conditions ~~that~~of ~~the~~a ~~Company~~settlement ~~files~~agreement, ~~with~~dated ~~the~~October ~~Securities~~22, ~~and~~2020 ~~Exchange~~for ~~Commission~~all ~~(the~~indebtedness ~~“SEC”)~~owed, ~~and~~which insettlement ~~other~~was ~~public~~approved ~~communications~~on ~~made~~December 11, 2020, by the ~~Company;~~Circuit ~~and~~Court ~~strives~~for tothe beNineteenth ~~compliant~~Judicial ~~with~~Circuit, ~~applicable~~Lake ~~governmental~~County, ~~laws~~Illinois, ~~rules~~in ~~and~~Civil ~~regulations~~Action No. ~~The~~17 ~~Company~~CH ~~has~~778 ~~not~~following ~~formally~~a ~~adopted~~ 3(a) ~~written~~10 ~~code~~fairness ofhearing. ~~business~~The ~~conduct~~value ~~and~~of ~~ethics~~the ~~that~~stock ~~governs~~issued under the ~~Company’s~~settlement, ~~employees~~$315,420, ~~officers~~has ~~and~~been ~~Directors~~booked asin ~~the~~2020 ~~Company~~as isa ~~not~~nonrecurring ~~required~~extraordinary toexpense dofor soaccounting purposes.

InOn ~~lieu~~January of13, ~~an Audit Committee~~2021, the Company’s ~~Board~~issued ~~of Directors~~35,714,286 iscommon ~~responsible~~shares ~~for~~to ~~reviewing~~a ~~and~~note ~~making~~holder ~~recommendations~~upon ~~concerning~~ the ~~selection~~conversion of ~~outside auditors~~$125,000 ~~reviewing the scope, results and effectiveness~~ of ~~the~~indebtedness ~~annual~~owed. ~~audit~~The ofcommon ~~the~~stock ~~Company’s~~issued ~~financial~~in ~~statements and other services provided by~~ the ~~Company’s~~transaction ~~independent~~were ~~public~~issued ~~accountants.~~pursuant ~~The~~to ~~Board of Directors,~~ the ~~Chief~~exemption ~~Executive~~for ~~Officer~~registration ~~and~~contained ~~the~~in ~~Chief~~Section ~~Financial~~4(a)(2) ~~Officer~~ of the ~~Company~~Securities ~~review~~Act ~~the~~of ~~Company’s internal accounting controls, practices and policies~~1933.

23On ~~Table~~February 10, 2021, the Company issued 38,000,000 common shares to an affiliate, Livingston Asset Management, LLC, of ~~Contents~~a note holder, Southridge Partners II Limited Partnership, under the terms and conditions of a settlement agreement, dated January 21,2021 for all indebtedness owed. The value of the stock issued under the settlement, $296,400, will be booked in 2021 as a nonrecurring extraordinary expense for accounting purposes.

~~Committees~~US ofv. ~~the~~Kevin ~~Board~~Hagen

~~Our~~On ~~Company~~April ~~currently~~29, ~~does~~2021, ~~not~~the ~~have~~United ~~nominating,~~States ~~compensation,~~Attorney orfor ~~audit~~the ~~committees~~Northern orDistrict ~~committees~~of ~~performing~~Ohio ~~similar~~file ~~functions~~an ~~nor~~indictment ~~does~~that ~~our~~included ~~Company~~charges ~~have~~against aKevin ~~written nominating~~Hagen, ~~compensation~~the orformer ~~audit~~CEO ~~committee~~of ~~charter.~~the ~~Our~~Registrant ~~Directors~~and ~~believes~~the ~~that~~president itof isFirst Capital Venture Company. (The Company has not ~~necessary~~been tocharged ~~have~~with ~~such~~any ~~committees,~~wrongdoing atand ~~this~~has ~~time,~~not ~~because~~been ~~the~~contacted ~~Directors~~by ~~can~~any ~~adequately~~law ~~perform~~enforcement ~~the~~agency ~~functions~~regarding ofthese ~~such~~charges ~~committees~~and allegations.) The case remains ongoing.

~~Audit~~SBA ~~Committee Financial Expert~~Loans

~~Our~~On ~~Board~~May of5, ~~Directors~~2020, ~~has~~the ~~determined~~Company ~~that~~received wefrom dothe ~~not~~SBA, ~~have~~the asum ~~board~~of ~~member~~$135,404 ~~that~~under ~~qualifies~~the asPaycheck anProtection ~~“audit~~Program, ~~committee~~which ~~financial~~is ~~expert”~~a asloan ~~defined~~and innot ~~Item~~repayable ~~407(D)(5)~~provided ofthe ~~Regulation~~lending ~~S-K,~~bank ~~nor~~certifies dothe weforgiveness ~~have~~prior ato ~~Board~~maturity ~~member~~which ~~that~~is ~~qualifies~~two asyears ~~“independent”~~from asmaking. Interest rate on the ~~term~~loan is ~~used~~1.0000%. inn ~~Item~~an ~~7(d)(3)(iv)(B)~~email ofdated ~~Schedule~~Thursday, ~~14A~~Aug ~~under~~26, 2021, TD bank conveyed to the ~~Securities~~Company ~~Exchange~~that ~~Act~~the ofPaycheck ~~1934,~~Protection asProgram ~~amended~~loan, ~~and~~in asprincipal ~~defined~~value byof ~~Rule~~$138,404, ~~4200(a)(14)~~dated of3/5/2020, ~~the~~had ~~FINRA~~been ~~Rules~~forgiven by the SBA.

WeOn ~~believe~~June ~~that~~16, ~~our~~2020, ~~Director(s)~~the ~~are~~Board ~~capable~~ of ~~analyzing~~Directors ~~and~~approved ~~evaluating~~the ~~our financial statements and understanding internal controls and procedures for financial reporting. The Director(~~Company’s) ofsubsidiary, ~~our~~First ~~Company~~Capital ~~does~~Venture, ~~not~~entering ~~believe~~into ~~that~~a itDisaster isRelief ~~necessary~~Loan tofrom ~~have an audit committee because management believes that~~ the ~~Board~~US ofSmall ~~Directors~~Business ~~can~~Administration ~~adequately~~in ~~perform~~ the ~~functions~~amount of ~~an audit committee. In addition~~$150,000 weat ~~believe that retaining~~ an ~~independent~~interest ~~Director~~rate ~~who~~of ~~would~~3.75%. ~~qualify~~The asloan anis ~~“audit~~secured ~~committee~~by ~~financial~~a ~~expert”~~security ~~would~~interest ~~be overly costly and burdensome and is not warranted~~ in ~~our~~all ~~circumstances given~~ the ~~stage~~assets of ~~our~~First ~~development~~Capital Venture and ~~the~~is ~~fact~~for ~~that~~working wecapital ~~have not generated any positive cash flows from operations to date~~purposes.

~~Involvement~~On inMarch ~~Certain~~10, ~~Legal~~2021, ~~Proceedings~~the Company received from the SBA, the sum of $115,049 under the Paycheck Protection Program, which is a loan and not repayable provided the lending bank certifies the forgiveness prior to maturity which is two years from making. Interest rate on the loan is 1.0000%.

~~Our~~On ~~Directors~~April ~~and~~29, ~~our~~2021, ~~Executive~~the ~~officers~~United ~~have~~States ~~not~~Attorney ~~been~~for ~~involved~~the inNorthern ~~any~~District of Ohio file a superseding indictment that included charges against Kevin Hagen, the ~~following~~former ~~events~~CEO ~~during~~of PotNetwork Holdings, Inc. and the ~~past~~president ~~ten~~of ~~years:~~its subsidiary First Capital Venture Company.

1.The ~~bankruptcy~~Company petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his/her involvement in any type of business, securities or banking activities; or 4. being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been ~~reversed,~~charged ~~suspended,~~with ~~or vacated. 5. Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated~~ any ~~Federal~~wrongdoing ~~or State securities law,~~ and ~~the judgment in such civil action or finding by the Commission~~ has not been ~~subsequently~~contacted ~~reversed, suspended, or vacated; 6. Such person was found~~ by aan ~~court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities~~ law, ~~and~~enforcement ~~the~~agency ~~judgment~~regarding ~~in such civil action or finding by~~ the ~~Commodity~~charges Futures Trading Commission has not been subsequently reversed, suspended or vacated; 7. Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment ,decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:(i) Any Federal or State securities or commodities law or regulation; or(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and~~-desist~~ ~~order, or removal or prohibition order; or(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 8~~allegations. Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

~~Independence~~23 Table of ~~Directors~~Contents

WeInformation ~~are~~Statement; ~~not~~Pending ~~required~~Corporate ~~to have independent members of our Board of Directors, and do not anticipate having independent Directors until such time as we are required to do so.~~Actions

24On ~~Table~~October 27, 2020, by majority vote of ~~Contents~~the shareholders and the majority approval by the Board of Directors of the Company, the Company filed, and mailed to its shareholders on November 20, 2020, an Information Statement (the “Information Statement”) wherein:

~~Code~~(1) The Company would consolidate its number of ~~Ethics~~issued and outstanding shares of common stock via a reverse stock split in the ratio of 10:1, with any resultant fractional shares rounded up to the next nearest share. (The Company’s preferred shares are not subject to said reverse split.)

We(2) ~~have~~Following ~~not adopted a formal Code of Ethics. The Board of Directors evaluated~~ the ~~business~~reverse ofsplit, the Company ~~and~~would ~~the~~amend ~~number~~its Articles of ~~employees~~Incorporation, ~~and~~to ~~determined~~change ~~that since~~ the ~~business~~quantity ~~is operated by a small number~~ of ~~persons,~~its ~~general~~authorized ~~rules~~shares of ~~fiduciary~~common ~~duty~~stock ~~and~~from ~~federal and state criminal~~1,500,000,000 ~~business~~shares ~~conduct~~to ~~and securities laws are adequate ethical guidelines. In the event our operations~~750,000,000 ~~employees~~shares ~~and/or~~with ~~Directors~~no ~~expand~~change in the ~~future,~~number ~~we may take actions to adopt a formal Code~~ of ~~Ethics~~preferred shares.

~~Shareholder~~(3) ~~Proposals~~The Company would offer to its shareholders of record as of November 25, 2020 (“Rights Offering Record Date”), the right to subscribe for new shares of the Company’s common stock, following the reverse split at an offering price per share to be determined by the Board of Directors after the reverse split. For every 100 shares held as of the Rights Offering Record Date, as adjusted for the reverse split, such shareholder shall be entitled to purchase 10,000 shares, with a minimum purchase of 10,000 shares. And shareholders holding less than 100 shares shall be entitled to purchase the minimum number of shares. The primary purpose and intent of the Rights Offering is to raise funds to increase investible assets, allowing the Company to take advantage of opportunities to grow, including the expansion of our product line and the acquisition of other companies in our industry or related markets.

~~Our~~(4) ~~Company~~Shares ~~does~~under ~~not~~the ~~have~~Rights ~~any~~Offering ~~defined~~are ~~policy~~to orbe ~~procedural~~offered ~~requirements~~pursuant ~~for shareholders~~ to ~~submit~~a ~~recommendations~~registration orstatement ~~nominations~~to ~~for~~be ~~Directors.~~filed ~~The~~with ~~Board of Directors believes that, given~~ the ~~stage~~Securities ~~of our development, a specific nominating policy would be premature~~ and ofExchange ~~little~~Commission ~~assistance~~(“SEC”) ~~until~~for ~~our~~up ~~business operations develop~~ to a200,000,000 ~~more advanced level~~shares. ~~Our~~A ~~Company~~preliminary ~~does~~form ~~not currently have any specific or minimum criteria for the election~~ of ~~nominees to~~ the ~~Board~~registration ofstatement ~~Directors~~was ~~and~~filed wewith dothe ~~not~~SEC ~~have~~on ~~any~~form ~~specific~~S-1 ~~process~~on orFebruary ~~procedure~~18, ~~for evaluating such nominees. The Board of Directors will assess all candidates~~2021, ~~whether~~to ~~submitted~~be bycompleted ~~management or shareholders,~~ and ~~make~~filed ~~recommendations~~following ~~for~~the ~~election~~reverse ~~or appointment~~split.

APursuant ~~shareholder~~to ~~who~~Rule ~~wishes~~14c-2 tounder ~~communicate~~the ~~with~~Securities ~~our~~Exchange ~~Board~~Act of ~~Directors~~1934, ~~may~~as doamended, sothe byactions ~~directing~~described above were not to be implemented until a ~~written~~date ~~request~~at ~~addressed~~least 20 days after the date on which this Information Statement has been mailed to ~~our~~the ~~President~~stockholders. As a result, atthe Information Statement became effective on December 10, 2020. As of the ~~address~~date ~~appearing~~of this Report, the reverse split is pending, subject to approval by the Financial Regulatory Authority (“FINRA”) to which it was submitted for processing on November 20, 2020. Consequently, none of the aforementioned corporate actions have been completed since the reverse split is the first ~~page~~step ofthat ~~this~~needs ~~Information~~to ~~Statement~~be untaken.

~~ITEM~~As 11reported on Form 8-K to the SEC on August, 18, 2021, on August 10, 2021, the Company received a letter from the Financial Industry Regulatory Authority (“FINRA”), stating that the Company’s submission to FINRA on November 24, 2020 for the processing and approval of a proposed 1:10 reverse stock split had been denied (the “Stock Split”). ~~EXECUTIVE~~FINRA ~~COMPENSATION~~stated the reason that for the denial was in connection with the Company’s deficiency in fulfilling the requirements of FINRA Rule 6480, including, but not limited to, its delinquency to date in the timely filing with the SEC of its 10K for the fiscal year ending December 31, 2020 and its 10Q for the quarter ending March 31, 2021.

~~The~~As ~~following~~a ~~table~~result ~~sets~~of ~~forth~~this ~~information~~FINRA ~~concerning~~letter, ~~all~~the ~~cash~~Company’s ~~and~~Board ~~non-cash~~of ~~compensation~~Directors ~~awarded~~cancelled tothe proposed Stock Split, ~~earned~~as bywell oras ~~paid~~the toaforementioned ~~our~~corporate ~~chief~~actions ~~executive~~connected ~~officer~~to ~~for~~it ~~services~~and ~~rendered~~described in ~~all~~the ~~capacities~~Information ~~for~~Statement. Since the ~~periods~~Rights ~~set~~Offering ~~forth~~was ~~below.~~hereby cancelled, the Company subsequently withdrew its Registration Statement filed with the SEC on form S-1 on February 18, 2021.

~~Summary~~24 ~~Compensation~~ Table of Contents

													Nonqualified
											Non-Equity		Deferred
Name and							Stock		Option		Incentive Plan		Compensation		All Other
Principal					Bonus		Awards		Awards		Compensation		Earnings		Compensation		Total
Position	Year	Salary			($)		($)		($)		($)		($)		($)		($)
Kevin Hagen,	2019		-0-			-0-		-0-		-0-		-0-		-0-		-0-		-0-
CEO, Director	2018		-0-			-0-		-0-		-0-		-0-		-0-		-0-		-0-
Richard Goulding Former CEO(1)	2018		49,000			-0-		-0-		-0-		-0-		-0-		-0-		49,000
	2017		16,000	(2)		-0-		-0-		-0-		-0-		-0-		-0-		16,000	(2)
	2019		-0-			-0-		-0-		-0-		-0-		-0-		-0-		-0-
Gary Blum	2018		-0-			-0-		2,000,000		-0-		-0-		-0-		-0-		2,000,000
Director	2017		-0-			-0-		-0-		-0-		-0-		-0-		-0-		-0-

PART III

~~__________~~Item 10. Directors, Executive Officers and Corporate Governance.

(1)	Richard Goulding, M.D., resigned as CEO on October 25, 2018 and was replaced by Kevin Hagen, Esq.
(2)	Represents accrued salary attributed to that period in the employment agreement with Dr. Goulding entered into in July 2018.

Members of our Board of Directors hold office until the next annual general meeting of the stockholders or until their successors are elected and qualified. Our officers are appointed by our Board of Directors and hold office until the earlier of their death, retirement, resignation, removal or expiration of any employment agreement that may exist.

~~Employment~~The ~~Agreements~~following table sets forth the names and ages of the members of our Board of Directors and our executive officers and the positions held by each.

The Company entered into an employment agreement with Richard Goulding, M.D., prior CEO, on July 9, 2018 retroactive to September 5, 2017, for a period of one year. He was not engaged by the Company prior to that date. Under the terms of the agreement, Dr. Goulding received a base salary, received an initial common stock grant and common stock options. The agreement was expired and was not renewed.

Name	Age	Title
Gary Blum	80	Director, Chairman of the Board of Directors
Lee Lefkowitz	50	CEO, President/CFO/Director

~~The~~Gary ~~Company~~L. ~~does~~Blum, ~~not~~80, ~~have~~has ~~any~~been ~~employment~~a ~~agreements~~director ~~with~~and ~~any~~the Chairman of ~~our~~PotNetwork ~~officers~~Holdings, Inc. since November 2015 and ~~directors,~~was ~~all~~its Chief Executive Officer from November 2015 until September 2017. Mr. Blum is also a practicing attorney since 1979 with the Law Offices of ~~whom~~Gary ~~have~~L. ~~performed~~Blum ~~services~~where onhis ~~our~~focus ~~behalf~~is ~~for~~advising noa ~~compensation~~variety of closely held private companies as well as public companies in business, ~~including~~corporate, ~~Kevin~~securities ~~Hagen~~and entertainment law. Mr. Blum has served as a director of Rennova Health, ~~Esq~~Inc. since October 2017, and, from September 2009 until July 2017, served as the Chairman and CEO of Thunderclap Entertainment, Inc. Mr. Blum received his B.S., Magna Cum Laude, in Mathematics from Loras College in 1962; M.A. in Philosophy from the University of Notre Dame in 1966; and ~~Murugan~~his ~~Venkat~~J.D. and M.B.A. degrees from the University of Southern California Gould School of Law and Marshall School of Business, ~~CFO~~respectively, in 1978. He has been a member of the California State Bar since 1979.

25Lee ~~Table~~Lefkowitz, age 50, CEO, President, acting CFO, Director. For much of ~~Contents~~his career Mr. Lefkowitz has been a serial entrepreneur owning and operating his own businesses. Most recently he has invested in and co-founded All Natural Way Corp. and B2H LLC, companies operating in areas of CBD business that POTN does not. He also was an early investor in several other startup companies. Prior to 2015 he worked as an accountant, focusing on both domestic and international corporate accounts. Mr. Lefkowitz, in addition, has considerable experience managing multi-faceted accounting functions, and in the private sector has overseen and administered an over $10 million annual budget. He holds a BA in Psychology for the State University of New York as well as an AAS in Business Administration.

~~Compensation~~As reported on Form 8-K on October 27, 2020, Kevin Hagen on October 22, 2020 resigned as Chief Executive Officer, President and a director of PotNetwork Holdings, Inc. Mr. Hagen retains his position as President of First Capital Venture Co., a subsidiary of the Company. Mr. Hagen’s resignation was not the result any disagreement with the Board of Directors of the Company with respect to its operations, policies or practices. He continues to be a significant shareholder of the Registrant.

~~Gary~~On ~~Blum~~November 1, ~~Chairman~~2020, ~~was~~Murugan ~~issued 2~~Venkat,~~000,000~~ ~~shares~~Chief Financial Officer (“CFO”) of ~~restricted~~the ~~common~~Company ~~stock~~resigned indue ~~2019~~to inother ~~recognition~~business ofcommitments. ~~services~~As ~~performed~~a inresult, ~~prior~~until ~~years~~the asBoard ~~sole~~of ~~director~~Directors of the Company hires a replacement CFO for Mr. ~~Kevin~~Venkat, ~~Hagen~~Mr. ~~receives~~Lefkowitz, noCEO, ~~compensation~~on ~~for~~an ~~being~~interim abasis ~~member~~has ofassumed the ~~Board~~responsibilities of ~~Directors~~the CFO position in addition to his position as CEO.

Family Relationships

There are no familial relationships among any of our officers or directors. None of our directors or officers is a director in any other reporting company. The Company is not aware of any proceedings to which any of the Company‚ officers or directors, or any associate of any such officer or director, is a party adverse to the Company or any of the Company subsidiaries or has a material interest adverse to it or any of its subsidiaries.

Corporate Governance

On April 22, 2021, the Company adopted a formal Code of Ethical Conduct. This adoption underscores the Company’s commitment to (i) accountability and the adherence by its employees to honest and ethical behavior; (ii) full, fair, accurate, timely and understandable disclosure in reports and documents filed with the Securities and Exchange Commission as well as any other public communications; and (iii) compliance with all applicable governmental laws, rules and regulations.

The Company’s Board of Directors, is responsible for reviewing and making recommendations concerning the selection of its outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company’s financial statements, and any and all other services provided by the Company’s third-party contractors and/or accountants. Internal accounting controls, policies and practices are reviewed by the Board of Directors, the Chief Executive Officer and the Chief Financial Officer of the Company.

Table of Contents

Committees of the Board

Because of the small size of the Board of Directors, the Company currently does not have nominating, compensation, or audit committees or committees performing similar functions nor does it have a written nominating, compensation or audit committee charter.

Audit Committee Financial Expert

Our Board of Directors has determined that we do not have a board member that qualifies as an “audit committee financial expert” as defined in Item 407(D)(5) of Regulation S-K, nor do we have a Board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the FINRA Rules.

We believe that our Directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The Directors of our Company do not believe that it is necessary to have an audit committee because management believes that the Board of Directors can adequately perform the functions of an audit committee.

Involvement in Certain Legal Proceedings

Except as disclosed below, our Directors and our Executive officers have not been involved in any of the following events during the past ten years:

	1.	bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

	2.	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

	3.	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his/her involvement in any type of business, securities or banking activities; or

	4.	being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

	5.	Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

	6.	Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

	7.	Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment ,decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:(i) Any Federal or State securities or commodities law or regulation; or(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

	8.	Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

As reported on Form 8-K on April 29, 2021, the United States Attorney for the Northern District of Ohio file an indictment that included charges against Kevin Hagen, the former CEO of the Registrant and the president of First Capital Venture Company. (The Company has not been charged with any wrongdoing and has not been contacted by any law enforcement agency regarding these charges and allegations.) The case remains ongoing.

Independence of Directors

We are not required to have independent members of our Board of Directors, and do not anticipate having independent Directors until such time as we are required to do so.

Table of Contents

Code of Ethics

On April 22, 2021, the Company adopted a formal Code of Ethical Conduct. Prior to this date, the Company had not adopted one. This adoption underscores the Company’s commitment to (i) accountability and the adherence by its employees to honest and ethical behavior; (ii) full, fair, accurate, timely and understandable disclosure in reports and documents filed with the Securities and Exchange Commission as well as any other public communications; and (iii) compliance with all applicable governmental laws, rules and regulations.

Shareholder Proposals

Our Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for Directors. The Board of Directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.

A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our President, at the address appearing on the first page of this report.

Item 11. Executive Compensation.

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our chief executive officer for services rendered in all capacities for the periods set forth below.

Summary Compensation Table

									Nonqualified
								Non-Equity	Deferred
Name and					Stock		Option	Incentive Plan	Compensation	All Other
Principal				Bonus	Awards		Awards	Compensation	Earnings	Compensation	Total
Position	Year	Salary		($)	($)		($)	($)	($)	($)	($)
Lee Lefkowitz, CEO (1)	2020		52,000	-0-	-0-		-0-	-0-	-0-	-0-		52,000

Kevin Hagen	2020		135,000	-0-	-0-		-0-	-0-	-0-	-0-		110,000
Former CEO (2)	2019		130,000	-0-	-0-		-0-	-0-	-0-	-0-		130,000
	2018		10,000	-0-	-0-		-0-	-0-	-0-	-0-		10,000

Richard Goulding	2018		49,000	-0-	-0-		-0-	-0-	-0-	-0-		49,000
Former CEO (3)	2017		16,000	-0-	-0-		-0-	-0-	-0-	-0-		16,000

Gary Blum	2020	-0-		-0-	-0-		-0-	-0-	-0-	-0-	-0-
	2019	-0-		-0-	-0-		-0-	-0-	-0-	-0-	-0-
Director	2018	-0-		-0-		170,000	-0-	-0-	-0-	-0-		170,000

(1)	Stated as annual salary for a 12-month period. During 2020 he earned apportionment from Oct 22, 2020 to December 31, 2020, in the amount of $7,400.
(2)	Kevin Hagen resigned as CEO on October 22, 2020 and was replaced by Lee Lefkowitz, as President and CEO.

(3)	Richard Goulding, M.D., resigned as CEO on October 25, 2018 and was replaced by Kevin Hagen, Esq. as CEO.
(4)	Represents accrued salary attributed to that period in the employment agreement with Dr. Goulding entered into in July 2018.

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Employment Agreements

The Company entered into an employment agreement with Richard Goulding, M.D., prior CEO, on July 9, 2018 retroactive to September 5, 2017, for a period of one year. He was not engaged by the Company prior to that date. Under the terms of the agreement, Dr. Goulding received a base salary, received a initial common stock grant and common stock options. The agreement has expired and was not renewed.

The Company entered into an employment agreement with Lee Lefkowitz, President and CEO, on October 23, 2020 for a period of 24 months. He was not engaged by the Company prior to that date. Under the terms of the agreement, Mr. Lefkowitz receives a base salary and is to receive a common stock grant of 1,000,000 shares of restricted common stock during 2021.

The Company does not have, and has not had, any employment agreements with any other officers and directors.

Compensation of Directors

Gary Blum, Director and Chairman of the Board, was issued 2,000,000 shares of restricted common stock in 2019 in recognition of services performed in prior years as a director of the Company. Lee Lefkowitz receives no compensation for being a member of the Board of Directors of the Company. Mr. Blum and Mr. Lefkowitz are the only directors of the Company. As of the date of this Report, the Board of Directors does not have a written policy on director compensation.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

As of ~~July~~September 2027, ~~2020~~2021, we had ~~751~~909,~~836~~974,~~384~~924 common shares outstanding. The following table sets forth certain information regarding our shares of common stock beneficially owned as of ~~September~~this 30date, ~~2019,~~ for (i) each stockholder known to be the beneficial owner of five percent (5%) or more of our outstanding shares of common stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within sixty (60) days through an exercise of stock options or warrants or otherwise. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.

For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within sixty (60) days of the date of this ~~Form~~Report. 10Ownership is determined in accordance with Section 13(d) of the Securities Exchange Act of 1934. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within sixty (60) days of the ~~Closing~~date ~~Date~~of this Report is deemed to be outstanding but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.

AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
Common StockName and Address of Beneficial Owner (2)	Direct		Indirect				Total				Percentageof Class (1)
Common Stock Name and Address of Beneficial Owner (2)	Direct		Indirect		Total				Percentage of Class (1)
Executive Officers and Directors
Gary Blum		2,000,000	-0-	~~-0-~~		2,000,000		~~2,000,000~~		.22	%	~~.27~~	%
Kevin Hagen		27,750,000		-0-				27,750,000				3.69	%
Lee Lefkowitz (3)		1,000,000	-0-			1,000,000				.11	%
Murugan Venkat		-0-		-0-				-0-				-0-	%
Officers and Directors as a Group
Officers and Directors as a Group		29,750,000		-0-				29,750,000				3.96	%
Other 5% Holders (4)
Other 5% Holders (3)
Elinor Taieb		64,651,438	-0-			64,651,438				7.10	%
Elinor Taieb		64,651,438		-0-				64,651,438				8.6	%
Class A Preferred Stock (5)	Direct		Indirect		Total				Percentage of Class
Class A Preferred Stock (4)	Direct		Indirect				Total				Percentageof Class
Kevin Hagen		20,742	-0-			20,742				60.4	%
Kevin Hagen		20,742		-0-				20,742				60.4	%
Elinor Taieb		13,547	-0-			13,597				39.5	%
Elinor Taieb		13,547		-0-				13,597				39.5	%

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____________

(1)	Based on a total of issued and outstanding shares as of ~~July~~September 2027, ~~2020~~2021 of ~~751~~909,~~836~~974,~~384~~924.
(2)	The address of each officer is 3531 Griffin Road, Fort Lauderdale, FL 33312.
(2) (3)	The address of each officer is 3531 Griffin Road, Fort Lauderdale, Florida 33312. Lee Lefkowitz is to be issued 1,000,000 shares of restricted common stock per his employment agreement. Issuance is pending within 60 days of the date of this Report.
(3)	Pursuant to the Convertible Notes that the Company has with Iliad Research, the Company is prohibited from issuing shares to Iliad Research if such issuance would cause Iliad Research to own more than 4.99% of the number of common shares of the Company outstanding at the time of such issuance. Thus, while Iliad Research may convert into an aggregate of 223,000,000 shares, it may not own more than 4.99% of the common shares of the Company at any one time and is therefore not included in the ownership table. Ownership is determined in accordance with Section 13(d) of the Securities Exchange Act of 1934.
(4)	Pursuant to the Convertible Promissory Notes (“Notes”) that the Company has with Sign N Drive Auto Mall, Inc., and Iliad Research and Trading, LP, (“Iliad”), the Company is prohibited from issuing shares to either of these noteholders if such issuance would cause either noteholder individually to own more than 4.99% of the number of common shares of the Company outstanding at the time of such issuance. Thus, while said noteholders may convert their Notes over time into more than 4.99% of the then issued and outstanding shares of common stock of the Company, neither of them may own more than 4.99% of the common shares of the Company at any one time and therefore neither is included in the above table of beneficial ownership. Moreover, as of the date of this Report, either of the aforementioned noteholders hold any shares of any class of stock in the Company.
(4)	Each share of Class A preferred stock is convertible into 0.01% of the total number of shares of Common Stock outstanding at the Conversion Time. On any matter presented to the shareholders of the Corporation for their action or consideration at any meeting of shareholders of the Corporation (or by written consent of shareholders in lieu of meeting), each holder of outstanding shares of Series A Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock held by such holder are convertible as of the record date for determining shareholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Articles of Incorporation, holders of Series A Preferred Stock shall vote together with the holders of Common Stock as a single class. Based on the preceding and upon a total quantity of issued and outstanding shares as of July 20, 2020 of 751,836,384, each share of Class A preferred stock is convertible into 75,184 shares of common stock. As a result, if each of the two Class A preferred shareholders listed were able to convert 100% of each’s Class A preferred stock, Kevin Hagen, who holds 20,742 Class A preferred shares, would receive 1,559,466,528 shares of common stock; and Elinor Taieb, who holds 13,547 Class A preferred shares, would receive 1,018,517,648 shares of common stock.
(5)	Each share of Class A preferred stock is convertible into 0.01% of the total number of shares of Common Stock outstanding at the Conversion Time. On any matter presented to the shareholders of the Corporation for their action or consideration at any meeting of shareholders of the Corporation (or by written consent of shareholders in lieu of meeting), each holder of outstanding shares of Series A Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock held by such holder are convertible as of the record date for determining shareholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Articles of Incorporation, holders of Series A Preferred Stock shall vote together with the holders of Common Stock as a single class. Based on the preceding and upon a total quantity of issued and outstanding shares as of September 27, 2021 of 909,974,924, each share of Class A preferred stock is convertible into 90,997 shares of common stock. As a result, if each of the two Class A preferred shareholders listed were able to convert 100% of each’s Class A preferred stock, Kevin Hagen, who holds 20,742 Class A preferred shares, would receive 1,887,459,774 shares of common stock; and Elinor Taieb, who holds 13,547 Class A preferred shares, would receive 1,232,736,359 shares of common stock. In addition to Class A preferred stock, Kevin Hagen holds 27,750,000 shares of restricted common stock of the Company, equivalent to 3.05% of the total quantity of common shares issued and outstanding as of September 27, 2021 of 909,974,924. Also, during fiscal 2019, Distribution Wholesale, Inc., a Florida corporation, of which Kevin Hagen, is a principal, advanced to the Company $1,626,588.64 (the “Advances”) in the form of payments to several suppliers. The Board of Directors of the Company, in settlement of the debt created by the Advances, issued to Distribution Wholesale, Inc. a Common Stock Purchase Warrant, exercisable over 5 years, for 75,305,030 shares of common stock of the Company at a price per share of $.0216, the closing market price of December 31, 2019 as reported by OTC Markets.

26 Table of Contents

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires officers, directors and persons who own more than 10% of a registered class of our equity securities of a Company that has a class of common stock registered under the Exchange Act to file reports of ownership and changes in ownership with the Securities and Exchange Commission and to furnish us with copies of all forms filed pursuant to Section 16(a).

Based solely on a review of the copies of such reports furnished to us, we believe that our officers and directors and our principal stockholder who are required to file reports pursuant to Section 16(a) of the Exchange Act complied with all of the Section 16(a) filing requirements applicable to them with respect to the last fiscal year.

Related Party Transactions

WePotNetwork ~~maintain~~Holding, ~~our~~Inc. maintains its offices at 3531 Griffin Road, Fort Lauderdale, FL 33312. The space is provided to ~~the~~it ~~Company~~ at no cost by Kevin Hagen, ~~our~~Esq., ~~CEO~~a principal shareholder of the Company and President of our wholly owned subsidiary, First Capital Venture Co.

During fiscal 2019, Distribution Wholesale, Inc., a Florida corporation, of which Kevin Hagen, ~~our CEO and President,~~ is a principal, advanced to the Company $1,626,588.64 (the “Advances”) in the form of payments to several suppliers. On December 31, 2019, the Board of Directors of the Company, in settlement of the debt created by the Advances, issued to Distribution Wholesale, Inc. a Common Stock Purchase ~~warrant~~Warrant, exercisable over 5 years, for 75,305,030 shares of common stock of the Company at a price per share of $.0216, the closing market price of December 31, 2019 as reported by OTC Markets. Consequently, the Advances have been recorded as additional Paid-In Capital on the Balance Sheet of the Company for the year-ended December 31, 2019.

~~ITEM~~29 ~~14.~~Table ~~PRINCIPAL~~of ~~ACCOUNTANT FEES AND SERVICES.~~Contents

~~During~~Item ~~2019 and 2018, the Company’s independent auditors have billed for their services as set forth below~~14. InPrincipal ~~addition,~~Accountant ~~fees~~Fees and services related to the audit of the financial statements of the Company for the period ended December 31, 2019, as contained in this Report, are estimated and included for the fiscal year ended December 31, 2018Services.

	Year ended December 31,
	2019		2018
Audit Fees	$	30,000	$	30,000
Audit-Related Fees	$	-0-	$	-0-
Tax Fees	$	-0-	$	-0-
All Other Fees	$	-0-	$	-0-

During 2020 and 2019, the Company’s independent auditors have billed for their services as set forth below. In addition, fees and services related to the audit of the financial statements of the Company for the period ended December 31, 2020, as contained in this Report, are estimated and included for the fiscal year ended December 31, 2019.

27 Table of Contents

	Year ended December 31,
	2020		2019
Audit Fees	$	43,070	$	30,000

Audit-Related Fees	$	-0-	$	-0-

Tax Fees	$	-0-	$	-0-

All Other Fees	$	-0-	$	-0-

~~PART~~30 IVTable of Contents

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements

The following are filed as part of this report:

Financial Statements

The following financial statements of PotNetwork Holdings Inc. and Report of Independent Registered Public Accounting Firm are presented in the “F” pages of this Report:

(b) Exhibits

Exhibit No.		Description
2.1		Share Exchange Agreement with First Capital Venture Co.*
3.1		Articles of Incorporation*
3.1-1		Amendment to Articles of Inc., February 5, 2020** (1)
3.2		Bylaws*
10.1		Purchase Agreement with PotNetwork Media Group, Inc.*
10.2		Employment Agreement with Richard Goulding*
10.3		Securities Purchase Agreement Dated October 25, 2018*
10.4		Convertible Note Dated October 25, 2018*
10.5		Securities Purchase Agreement Dated February 7, 2019*
10.6		Convertible Note Dated February 7, 2019*
10.7		Common Stock Purchase Warrant dated December 31, 2019**
23.1		Consent of Yusufali & Associates**
10.8		SBA PPP Loan May 6, 2020***
31.1		Certification of Principal Executive Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
10.9		SBA Economic Injury Disaster Loan June 18, 2020***
31.2		Certification of Principal Accounting Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
10.10		SBA PPP Loan March 10, 2021***
32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002**
10,11		Resignation of Kevin Hagen, October 22, 2020***
32.2		Certification of Principal Accounting Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 0f of 2002**
10.12		Information Statement, November 20, 2020***
10,13		BOD Resolution Accepting Hagen Resignation and Lee Lefkowitz Appointment, October 22, 2020***
10,14		Lee Lefkowitz Employment Agreement***
10.15		Code of Ethical Conduct***
23.1		Consent of Yusufali & Associates***
31.1		Certification of Principal Executive Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002***
31.2		Certification of Principal Accounting Officer as required by Rule 13a-14 or 15d-14 of the Exchange Act, as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002***
32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002***
32.2		Certification of Principal Accounting Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002***

_________

*Previously filed on the Company’s Registration Statement on Form 10 on May 9, 2019

**~~Filed~~Previously ~~herewith~~filed as Exhibit 10.7 on Form 10-K on July 23, 2020.

28(1) ~~Table~~Filed ofas ~~Contents~~Exhibit 3.1 on Form 8-K dated February 6, 2020

~~SIGNATURES~~***Filed herewith

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PotNetwork Holdings, Inc.
DATE: July 22, 2020	By:	/s/ Kevin Hagen
DATE: September 27, 2021	By:	/s/ Lee Lefkowitz
		Kevin HagenPresident and CEO
		Lee Lefkowitz
		President and CEO

2932 Table of Contents

Yusufali & Associates, LLC		55 Addison Drive
		Short Hills, NJ 07078
		Telephone: (973) 921-2822

Yusufali & Associates, LLC

Certified Public Accountants & IT Consultants

AICPA, HITRUST, PCAOB, PCIDSS, & ISC2 Registered

55 Addison Drive, Short Hills, NJ 07078

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the board of directors of PotNetwork Holdings Inc.

Opinion: We have audited the accompanying consolidated balance sheets of PotNetwork Holdings Inc. (the “Company”) as of December 31, ~~2019~~2020 and ~~2018~~2019, the related statements of income, stockholders’ equity and cash flows for each of these years in the period then ended, and the related notes (collectively referred as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the company as of the years then ended, and the results of its operations and its cash flows for these years in the period then ended, in conformity with U.S. generally accepted accounting principles.

We have also audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the company’s internal control over financial reporting as of the year then ended, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report of even dated, express an unqualified opinion on the Company’s Internal Control over financial reporting.

Basis of Opinion: These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion ~~onthe~~on the Company’s financial statements based on our audits. We ~~areapublicaccounting~~area ~~firmwith~~public accounting firm with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. Federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with standards of PCAOB, those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters: The management listed the critical audit matters as note 12 in the notes on accounts. They are the matters arising from the current period audit of the financial statements and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. These critical audit matters do not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by referring the critical audit matters, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Yusufali ~~MusajiManaging~~Musaji ~~PartnerYusufali~~Managing Partner Yusufali & Associates, LLC ~~PCAOBregistration~~PCAOB registration # 3313 ~~22nd~~27 ~~July~~September ~~2020~~2021

~~F-1~~33 Table of Contents

POTNETWORK HOLDINGS, INC

BALANCE SHEET

	Dec. 31, 2019			Dec. 31, 2018
	12/31/20			12/31/19
Assets
Current Assets
Cash/Bank Balances	$	7040,~~581~~565		$	~~584~~70,~~425~~581
Accounts Receivable
from Customers	$	~~325~~20,~~305~~054		$	~~119~~325,~~274~~305
from related parties	$	-		$	-
from others	$	649,312		$	649,312
from others	$	649,312		$	-
Total Accounts Receivable	$	669,366		$	974,617
Total Accounts Receivable	$	974,617		$	119,274
Advances - Drop Shipper (Year End Balance)	$	3,012,449		$	5,070,696
Advances - Drop Shipper	$	5,070,696		$	4,289,928
Impairment (see "Notes on Accounts" Note 15)	$	(3,012,449	)	$	-
Prepaid Expenses	$	~~9,000~~-		$	~~220~~9,~~902~~000
Total Current assets	$	6709,~~124,893~~931		$	56,~~214~~124,~~529~~894
TOTAL ASSETS	$	6709,~~124,893~~931		$	56,~~214~~124,~~529~~894
Liabilities
Current Liabilities
Payables	$	1502,~~673,501~~299		$	~~469~~1,~~820~~673,501
Total Current Liabilities	$	1,673,501		$	469,820
Short term loan (Kabbage) with accrued interest	$	8,333
Total Current Liabilities	$	510,632		$	1,673,501
Long-term Liabilities
Loan from 3rd Party with interest	$	40,960		$	38,400
Loan from 3rd Party with accrued interest	$	18,372		$	40,960
Note Payable	$	4,192,539		$	3,573,974
SBA Loans with accrued interest	$	289,342
Total Long-term liabilities	$	4,233,499		$	3,612,374
Note Payable	$	4,188,991		$	4,192,539
Total Liabilities	$	5,907,000		$	4,082,194
Total Long-term liabilities	$	4,496,705		$	4,233,499
Total Liabilities	$	5,007,338		$	5,907,000
Stockholders' Equity
Common: Authorized 1,000,000,000 shares, $ .00001 par value; and 700,836,384 Issued and outstanding as of 31st December 2019 and 569,920,485 shares, Issued and outstanding as of 31st December 2018	$	3,995,840		$	3,169,040
Common: Authorized 1,500,000,000 shares, $ .00001 par value; and 836,260,638 Issued and outstanding as of December 31, 2020 and 700,836,384 shares, Issued and outstanding as of December 31, 2019	$	5,065,208		$	3,995,840
Preferred Stock Class A Authorized - 50,000 shares, $ .00001 Par value; and 34,289 Issued and outstanding, as of 31st December 2019 and 39,839 issued and outstanding as of 31st December 2018	$	400		$	400
Preferred Stock Class A Authorized - 50,000 shares, $ .00001 Par value; and 34,289 Issued and outstanding, as of December 31, 2020 and 34,289 issued and outstanding as of December 31, 2019	$	400		$	400
Additional Paid-in Capital	$	1,626,589		$	-1,626,589
Retained Earnings	$	(510,~~404~~989,~~935~~604	)	$	(25,~~037~~404,~~105~~935	)
Total Stockholders' Equity	$	~~217~~(4,~~893~~297,407	)	$	1217,~~132,335~~894
Total Liabilities & Equity	$	6709,~~124,893~~931		$	56,~~214~~124,~~529~~894

The accompanying notes are an integral part of these financial statements.

~~F-2~~34 Table of Contents

POTNETWORK HOLDINGS, INC

INCOME STATEMENT

	Year Ended			Year Ended
	Dec. 31, 2019			Dec. 31, 2018
	Dec. 31, 2020			Dec. 31, 2019
Revenue
Sales	$	159,~~060~~680,~~840~~543		$	2515,~~583~~060,~~761~~840
Cost of goods sold	$	106,~~244~~252,~~236~~339		$	1610,~~624~~244,~~328~~236
Gross profit	$	43,~~816~~428,~~604~~205		$	84,~~959~~816,~~433~~604
Operating expenses
Research and development	$	-		$	-
Sales & Marketing	$	6,058,456		$	7,894,819
Freight Out and Merchant Account Charges	$	1,891,757		$	1,948,505
General & Administrative Expenses	$	1,791,840		$	811,420
Advertising and Marketing	$	1,490,713		$	4,109,951
Total operating expenses	$	7,850,296		$	8,706,239
General & Admin Expenses (see Note 17)	$	1,405,884		$	1,791,840
Officers' Compensation	$	142,400		$	130,000
Total operating expenses	$	4,930,753		$	7,980,296
Financing expenses
Interest Exp	$	334,139		$	10,560
Interest Expense	$	374,623		$	334,139
Total Financing expenses	$	~~334~~374,~~139~~623		$	10334,~~560~~139
Total expenses	$	85,~~184~~305,~~434~~376		$	8,~~716~~314,~~799~~435
Profit (Loss) before Income Tax	$	(3,367,831	)	$	242,634
Profit (Loss) from continuing operations	$	(1,877,171	)	$	(3,497,831	)
Profit (Loss) from nonrecurring items
Loss from Debt Settlements by share issuances	$	(695,048	)	$	-
Impairment Loss - Advances to Drop Shipper [non-recurring]	$	(3,012,449	)	$	-
Total nonrecurring items	$	(3,707,497	)	$	-
Profit (Loss) from continuing operations and non-recurring items	$	(5,584,669	)	$	(3,497,831	)
Provision for Income Tax	$	-		$	-
Net Profit (Loss)	$	(3,367,831	)	$	242,634
Total Net Profit (Loss)	$	(5,584,669	)	$	(3,497,831	)
Earnings per share	$	(0.0050	)	$	0.0004
Earnings per share (based on Profit (Loss) before Income Tax	$	(0.00224	)	$	(0.00499	)
Basic and diluted	$	(0.0050	)	$	0.0004
Basic and diluted (based on Profit (Loss) before Income Tax	$	(0.00224	)	$	(0.00499	)
Basic and diluted weighted average common shares outstanding		700,836,384			569,364,712
Earnings per share (based on Profit (Loss) After Income Tax	$	(0.00668	)	$	(0.00499	)
Basic and diluted (based on Profit (Loss) After Income Tax	$	(0.00668	)	$	(0.00499	)
Basic and diluted weighted average common shares outstanding		836,260,638			700,836,384

The accompanying notes are an integral part of these financial statements.

~~F-3~~35 Table of Contents

POTNETWORK HOLDINGS, INC

STOCKHOLDERS' EQUITY

	Pref		Preference		Commom					Surplus
	Preferred Shares		Preferred share capital		Commom Shares			Equity		Additional Paid-in Capital			Surplus (Deficit)			Total
	Shares		share		Shares			Equity		(Deficit)			Total
Balance as on Dec. 31, 2018		34,289	$	400		569,364,712			3,169,040					(1,907,104	)	$	1,262,336
Balance as on Dec. 31, 2016		0	$	-		297,389,288		$	87,573	$	(53,935	)	$	(53,935	)
Shares Issued						131,471,672		$	826,800							$	826,800
Triangular Merger		39,839								$	53,935		$	53,935
Additional Paid-in Capital										$	1,626,589					$	1,626,589
Shares Issued - Restricted						309,322,614
Net Profit (Loss)													$	(3,497,831	)	$	(3,497,831	)
Shares Issued - Free						121,000,000		$	363,000				$	363,000
Balance as on Dec. 31, 2019		34,289	$	400		700,836,384		$	3,995,840	$	1,626,589		$	(5,404,935	)	$	217,894
Shares Issued - Reserve						(157,791,417	)
Shares Issued						135,424,254		$	1,069,368							$	1,069,368
Net Profit (Loss)										$	~~301,603~~		$	~~301~~(5,~~603~~584,669	)	$	(5,584,669	)
Balance as on Dec. 31, 2017		39,839	$	400		569,920,485		$	450,573	$	(2,279,739	)	$	(1,828,766	)
Balance as on Dec. 31, 2020		34,289	$	400		836,260,638		$	5,065,208	$	1,626,589		$	(10,989,604	)	$	(4,297,407	)
Shares Issued						215,444,227		$	2,718,467				$	2,718,467
Shares Cancelled						(216,000,000	)						$	(2,323,469	)
Net Profit (Loss)										$	242,634		$	242,634
Balance as on Dec. 31, 2018		39,839	$	400		569,364,712		$	3,169,040	$	(2,037,105	)	$	1,132,335
Shares Issued						131,471,672		$	826,800				$	826,800
Additional Paid-In Capital										$	1,626,589		$	1,626,589
Net Profit (Loss)										$	(3,367,831	)	$	(3,367,831	)
Balance as on Dec. 31, 2019		34,289	$	400		700,836,384		$	3,995,840	$	(3,778,347	)	$	217,893

The accompanying notes are an integral part of these financial statements.

~~F-4~~36 Table of Contents

POTNETWORK HOLDINGS, INC

CASH FLOWS STATEMENT

	Year Ended			Year Ended
	Dec. 31, 2019			Dec. 31, 2018
	Dec. 31, 2020			Dec. 31, 2019
Operations
Net Income (Loss)	$	(35,~~367~~584,~~831~~669	)	$	~~242~~(3,~~634~~497,831	)
Adjustments to reconcile net income (loss)
Advances & Accounts Receivable	$	(12,~~424~~261,~~208~~592	)	$	(31,~~078~~294,~~333~~207	)
Payable	$	1,192,467		$	198,841
Impairment (see "Notes on Accounts" Note 15)	$	3,012,449
Total Adjustments to reconcile net income (loss)	$	(231,742	)	$	(2,879,492	)
Payable	$	(1,051,963	)	$	1,192,467
Net cash from the current year operations	$	(3,599,572	)	$	(2,636,858	)
Total Adjustments to reconcile net income (loss)	$	4,222,079		$	(101,741	)
Net cash from the current year operations	$	(1,362,590	)	$	(3,599,572	)
Investing
Common Stock	$	~~826~~1,~~800~~069,368		$	2826,~~718,467~~800
Preferred A Stock				$	-
Additional Capital	$	~~1,626,589~~		$	(1,~~463~~626,~~131~~589	)
Net cash provided by investing activities	$	21,~~453~~069,~~389~~368		$	12,~~255~~453,~~336~~389
Financing
Third Party Loan	$	2(22,~~560~~589	)	$	~~(206~~2,~~974~~560	)
Notes Payable	$	629,779		$	1,918,350
EIDL Loan from SBA	$	153,051		$	-
Net cash provided by financing activities	$	632,339		$	1,711,376
PPP Loan from SBA	$	136,291		$	-
Net change in cash and cash equivalents	$	(513,845	)	$	329,854
Notes Payable	$	(3,547	)	$	629,779
Cash and cash equivalents, beginning of period	$	584,425		$	254,571
Net cash provided by financing activities	$	263,206		$	632,339
Cash and cash equivalents, end of period	$	70,581		$	584,425
Net change in cash and cash equivalents	$	(30,016	)	$	(513,844	)
Cash and cash equivalents, beginning of period	$	70,581		$	584,425
Cash and cash equivalents, end of period	$	40,565		$	70,581

The accompanying notes are an integral part of these financial statements.

~~F-5~~37 Table of Contents

~~Notes~~PotNetwork onHoldings, ~~accounts to the financial statements~~Inc.

Notes on Accounts for the year ended ~~31st~~ December 31, ~~2019~~2020

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

PotNetwork Holdings, Inc. is a publicly traded holding company trading under the symbol “POTN”. The Company website is www.potnetworkholding.com.

This Company was previously known as:

• SND Auto Group, Inc. until 3-2017 • PotNetwork Holdings, Inc. until 5-2016 • United Treatment Centers, Inc. until 7-2015 • Element Trading Holdings, Inc. until 3-2014 • United Treatment Centers, Inc. until 10-2013 • MyMedicalCD, Ltd. until 6-2008 • Interactive Solutions Corp. until 11-2004

o- State of incorporation changed from ~~Nevada~~Wyoming to ~~Wyoming~~Colorado in 1103-~~2004~~2017

	•	PotNetwork Holdings, Inc. until 5-2016
	•	United Treatment Centers, Inc. until 7-2015
	•	Element Trading Holdings, Inc. until 3-2014
	•	United Treatment Centers, Inc. until 10-2013
	•	MyMedicalCD, Ltd. until 6-2008
	•	Interactive Solutions Corp. until 11-2004

State of incorporation changed from Nevada to Wyoming in 11-2004

	•	Araldica Wineries Ltd. until 2-2000
	•	H P Capital Corp. until 9-1996

The Company has two (2) wholly- owned subsidiaries:

• First Capital Venture Co., a Florida corporation which has as its wholly- owned subsidiary, ~~Diamond~~ CBD, ~~Inc.~~LLC, a ~~Delaware~~Florida ~~corporation~~limited liability company, doing business as Diamond CBD. First Capital Venture Co. was acquired by the Company on January 31, 2017. ~~PotNetwork Media Group, Inc., a Nevada corporation~~

~~Since the acquisition of First Capital Venture Co., the focus of the Company has been the development of the business of Diamond CBD, Inc.~~ PotNetwork Media Group, Inc. ~~is an early stage company~~, ~~which~~a ~~has~~Nevada ~~no bank account and hence did not maintain any books of accounts for the year 2019. Hence, the financial statements reflect principally the business results of Diamond CBD business.~~corporation

~~Diamond~~Since ~~CBD,~~the ~~Inc.~~acquisition ~~focuses~~of onFirst ~~the~~Capital ~~research,~~Venture ~~development~~Co., ~~and~~the ~~multinational~~focus ~~marketing~~ of ~~premium~~the ~~hemp~~Company ~~extracts~~has ~~that~~been ~~contain~~the adevelopment ~~broad range~~ of ~~cannabinoids~~the ~~and~~business ~~natural~~of ~~hemp~~Diamond ~~derivatives~~CBD.

~~Diamond~~PotNetwork ~~CBD’s~~Media ~~catalog~~Group, ~~can~~Inc. beis ~~found~~an ~~in http:~~early-stage company, which does not have its own bank account and hence does not maintain separate books of accounts. Hence, the financial statements reflect principally the business results of First Capital Venture Co. doing business through its subsidiary CBD, LLC, d/b/~~catalog~~a Diamond CBD.~~diamondcbd.com.~~

~~Since the acquisition of First Capital Venture Co. and~~ Diamond CBD ~~on January 31~~, ~~2017, Diamond CBD’s business has become the primary business of this Company~~Inc. ~~Diamond~~focuses ~~CBD~~on ~~is treated as a wholly owned subsidiary of~~ the ~~Company~~development, and ~~the~~marketing ~~accounts~~ of ~~the~~premium ~~subsidiary~~hemp ~~are~~extracts ~~presented~~that incontain ~~the~~a ~~Company’s~~broad ~~consolidated~~range ~~statements eliminating inter-company transactions. In accordance with ASC 805-40-45 the consolidated financial statements represent the continuation~~ of ~~the~~cannabinoids ~~financial~~and ~~statements~~natural ofhemp ~~the wholly owned subsidiary except for its capital structure~~derivatives. ~~The Company, being the legal acquiror, but the accounting acquiror, did not have significant assets or revenues prior to the consolidation.~~

~~F-6~~Diamond ~~Table~~CBD’s ofcatalog ~~Contents~~can be found in http://catalog.diamondcbd.com/

Since the acquisition of First Capital Venture Co. and its Diamond CBD on January 31, 2017, Diamond CBD’s business has become the primary business of this Company. The results of CBD, LLC, d/b/a Diamond CBD, as a subsidiary of First Capital Venture Co., a wholly owned subsidiary of the Company, are presented in the Company’s consolidate statements, eliminating inter-company transactions. In accordance with ASC 805-40-45 the consolidated financial statements represent the continuation of the financial statements of the wholly owned subsidiary except for its capital structure. The Company, being the legal acquiror, but the accounting acquiror, did not have significant assets or revenues prior to the consolidation.

Investment in the wholly owned subsidiary is accounted for in accordance with ASC 810.

Table of Contents

PotNetwork Holdings, Inc.

Notes on Accounts for the year ended December 31, 2020

In February 2018, the Company reversed ab initio the March 17, 2017 holding company reorganization. As a result, the Company re-assumed its prior name, PotNetwork Holdings, Inc. (with an “s” on Holding), while remaining a Colorado corporation. None of the acquisitions or the share capital structure was affected.

In February 2018, the shares issued pursuant to the reorganization were cancelled, no other adjustments had been made.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

➢	BASIS OF PRESENTATIONS: The statements were prepared following generally accepted accounting principles of the United States of America which were consistently applied.

➢	USE OF ESTIMATES: Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.

➢	REVENUE RECOGNITION – DIAMOND CBD BUSINESS: Revenue from the sale of goods is measured at fair value of the consideration received or receivable and is recognized in the statement of comprehensive income of the Company when significant risks and rewards of the ownership of the goods have been transferred to the buyers.

	The Company applies the five-step model of revenue recognition under ASC 606 to the sales orders in the e-commerce platform. The following describes the Company’s process per each step (1-5) of ASC606:

Step 1:	~~Step~~“Identify 1:the contract with a customer”.	~~“Identify the contract with a customer”.~~
A.	AThe Company’s ecommerce website is making the offer to the customer.	~~The company’s ecommerce website is making the offer to the customer.~~
B.	BThe customer chooses the product(s) and quantities of each.	~~The customer chooses the product(s) and quantities of each.~~
C.	CThe customer enters its credit card information.	~~The customer enters its credit card information.~~
D.	DThe contract between the company and the customer is concluded when the authorization is taken via the merchant account which processes the credit card payment.	~~The contract between the company and the customer is concluded when the authorization is taken vis-a-vis the merchant account which processes the credit card payment.~~

	Step 2:	“Identify the performance obligations in the contract”.
		The company ships the merchandise and subsequently records the customer payment
		The Company ships the merchandise and subsequently records the customer payment.
	Step 3:	“Determine the transaction price”.
		The website states each product’s regular price, and applicable sale price which is the amount that the customer pays the company.
		The website states each product’s regular price, and applicable sale price which is the amount that the customer pays the Company.
	Step 4:	“Allocate the transaction price to the performance obligations in the contract”. ~~The company’s e-commerce platform applies any quantity discount or other discount offered by the Company, automatically.~~
		The Company’s e-commerce platform applies any quantity discount or other discount offered by the Company, automatically.
	Step 5:	“Recognize revenue when the entity satisfies a performance obligation”.
		The Company records the sale upon the order’s shipping, identified by a tracking number.

~~F-7~~39 Table of Contents

➢PotNetwork ~~CASH AND CASH EQUIVALENTS: Cash equivalents include short-term~~Holdings, ~~highly liquid investments with maturities of three months or less at the time of acquisition and the balance cash in hand and the balance in bank accounts~~Inc. ➢ ACCOUNTS RECEIVABLE: Accounts Receivable (AR) is the payment which the Company will receive from its customers who have purchased its goods & services in the last month of the year and on credit terms. Usually the credit period is short, approximately a few days.

Notes on Accounts for the year ended December 31, 2020

➢

CASH AND CASH EQUIVALENTS: Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition and the balance cash in hand and the balance in bank accounts.

➢

ACCOUNTS RECEIVABLE: Accounts Receivable (AR) is the payment which the Company will receive from its customers who have purchased its goods and services in the last month of the year and on credit terms. Usually the credit period is short, approximately a few days.

➢	ASSESSMENT OF COLLECTABILITY:

o ~~Receivables~~Receivable’s supervisor is authorized to collect delinquent accounts o The ~~Treasurer~~Chief Financial Officer has the authority to assign accounts to a third party for collection o Recording of Accounts Receivable: All amounts due on physical delivery of the merchandise from the drop- shipper, must be promptly recorded as an accounts receivable. Each account receivable must be recorded and maintained until payment is received or the recorded amount is written off or extinguished. o An adequate provision for doubtful accounts must be established. When all reasonable efforts fail to collect an account receivable and it has been approved for write off, the related provision for doubtful accounts should be reduced. o Control and Subsidiary Accounts: The accounting system incorporates control accounts, where applicable, to ensure the completeness and accuracy of individual accounts. The Receivables supervisor must maintain subsidiary accounts for individual debtors in a manner that discloses, at a given point in time, the aggregate amount owed by each debtor as well as individual amounts making up the aggregate amount. Monthly, the subsidiary accounts for each accounts receivable must be reconciled with the control account. o Checks that are returned from the bank as non-negotiable are assessed a returned ~~cheque~~check charge. If there are 2two ~~cheques~~checks returned from the same customer within a month, no further ~~cheques~~checks will be accepted from the customer unless the ~~cheques~~checkss are certified, until there is an acceptable payment history for a further one-year period.

o Statements to Debtors: Statements must be issued to debtors, on a monthly basis, providing meaningful and concise information on the status of their debts. o Accounts receivable are considered overdue when a debtor does not pay or resolve the debt within 30 days from the invoice date or a written request for payment to the debtor. o All actions taken to collect overdue accounts must be documented. o If there is no response after the initial contact at the 30-day point (within a 30-day period – 60 days from date of invoice), accounts will be forwarded to ~~Treasury~~Chief ~~Staff~~Financial Officer to take prompt and vigorous action to collect overdue accounts receivable. o Accounts receivable, in most cases, should be at least 30 days overdue (i.e., 60 days after invoice notification), before staff advises debtors that their accounts are overdue and that the accounts may be:

~~F-8~~40 Table of Contents

PotNetwork Holdings, Inc.

Notes on Accounts for the year ended December 31, 2020

Accounts receivable, in most cases, should be at least 30 days overdue (i.e., 60 days after invoice notification), before staff advises debtors that their accounts are overdue and that the accounts may be:

	•	turned over to a private collection agency;

	•	subject to legal action

	•	credit privileges will be revoked; and/or account may be suspended.

➢ PREPAID EXPENSES: Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired. The ~~company~~Company’s prepaid expenses is mostly advance payment to the drop shipper ➢ PROPERTY AND EQUIPMENT: As on the date of the financial statements, the Company does not ~~hold~~own any ~~assets~~property or equipment.

➢

PROPERTY AND EQUIPMENT: Property and equipment are stated at the written-down value ~~[that~~9that is, after deducting depreciation from the ~~cost]~~cost0. This Company adapted the depreciation rates as provided in IRS publications, using the Modified Accelerated Cost Recovery System (MACRS). Computers and office equipment are considered as 5-year property. Office furniture and fixtures are 7-year property in MACRS and apply the 200% declining balance method over a GDS recovery period. Wherever possible, section 179 depreciation is also applied. However, the accumulated depreciation shall not exceed the actual cost at any point of time. As on the date of the financial statements, the Company does not hold any assets.

➢

INTANGIBLE ASSETS

	o	Initial Measurement: Intangible asset acquisitions in which the consideration given is cash are measured by the amount of cash paid, which generally includes the transaction costs of the asset acquisition. However, if the consideration given is not in the form of cash (that is, in the form of noncash assets, liabilities incurred, or equity interests issued), measurement is based on either the cost which shall be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is clearer and, thus, more reliably measurable.
	o	Subsequent Measurement: The Company accounts for its intangible assets under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Subtopic (“ASC”) 350-30-35 “Intangibles-- Goodwill and Other--General Intangibles Other than Goodwill-Subsequent Measurement”. Under this method the Company is required to test an indefinite-lived intangible asset for impairment on at least an annual basis. This is done by comparing the asset’s fair value with its carrying amount. If the carrying amount exceeds the asset’s fair value, the difference in those amounts is recognized as an impairment loss.
	•	ASC 350 requires capitalizing any money spent on product development and product improvement. During the current year, money spent on product development is very little and is not significant.

•41 ~~ASC~~Table ~~350~~of ~~requires capitalizing any money spent on product development and product improvement. During the current year, money spent on product development is very little and is not significant.~~Contents

PotNetwork Holdings, Inc.

Notes on Accounts for the year ended December 31, 2020

➢

FINANCIAL INSTRUMENTS: For certain of the Company’s financial instruments, including cash, accrued expenses and short-term debt, the carrying amounts approximate their fair values due to their short maturities. We adopted ASC Topic 820, “Fair Value Measurements and Disclosures”, which requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for current liabilities qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of valuation hierarchy are defined as follows:

F-9 Table of Contents

	Level 1:	Valuations consist of unadjusted quoted prices in active markets for identical assets and liabilities and has the highest priority;
	Level 2:	Valuations rely on quoted prices in markets that are not active or observable inputs over the full term of the asset or liability;
	Level 3:	Valuations are based on prices or third party or internal valuation models that require inputs that are significant to the fair value measurement and less observable and thus have the lowest priority.

➢

Investments in subsidiaries: The ~~March~~entire ~~17,~~amount ~~2017~~of ~~reorganization~~current isyear ~~referred~~profit as(loss) ~~holding~~is ~~Company~~attributable ~~reorganization.~~to ~~The~~the ~~Company~~business ~~did~~generated ~~not~~by ~~make any payment in cash or check in connection with the reorganization.~~ First Capital Venture Co., ~~the~~and ~~parent~~its ~~of Diamond CBD, Inc. is now the~~ wholly owned subsidiary., ~~The~~CBD, ~~entire~~LLC ~~amount~~d/b/a ofDiamond ~~current year profit is attributable to the business generated by this wholly owned subsidiary~~CBD. As required under ASC 810, consolidated accounts are presented in this financial statement.

➢

Redemption Right: In 2017, the Company signed convertible promissory notes for $1,200,000. The convertible notes have a redemption right, which reads as, “Notwithstanding any provision contained herein to the contrary including the conversion rights as set forth in this section, the Company shall be entitled, at any time prior to the expiration of five days from any notice of conversion, to repay this Note in full, plus interest, minus the credit accorded from prior payments, including from prior conversions, and avoid any further Note conversion and thus avoid the issuance of any additional shares of PotNetwork Holdings, Inc.” By this clause, no derivative liability exists. Further, these convertible promissory notes are exchanged for a Common Stock Purchase Warrant, as mentioned supra.

NOTE 3 - GOING CONCERN

The financial statements are prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business.

Since PotNetwork Holdings, Inc. has no uncertainties as on the balance sheet date, the financial statements need no adjustments.

Since Diamond CBD’s business originated in 2015, it is considered as a business with limited operating history. Hence, this business is subject to all risks inherent in a developing business enterprise. Continued success depends on the problems, difficulties, complications, and delays frequently encountered in the competitive and regulatory environment in which it operates.

Since the CBD business is a burgeoning industry, there are no established entities whose business model Diamond CBD can follow or build upon.

Regulatory risk: Hemp-based CBD is often confused with marijuana-based CBD which remains illegal under federal Law; although the Company maintains that its products are legal. Yet, this legal risk cannot be ignored.

Table of Contents

PotNetwork Holdings, Inc.

Notes on Accounts for the year ended December 31, 2020

Although Diamond CBD does not sell any marijuana-based CBD products, its products could be treated as being illegal by federal/state authorities and by consumers.

The Company is involved in a highly competitive industry where it may compete with numerous other companies who offer alternative methods or approaches, who may have far greater resources, more experience, and personnel perhaps more qualified than the Company does. Such resources, experience and personnel may provide a substantial competitive advantage to the competition.

F-10 Table of Contents

NOTE 4 - DEFERRED TAX COMPUTATION

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes”. Under this method, income tax expense is recognized for: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

There was no income tax expense during this ~~quarter~~period. However, the availability of a net operating loss carryforward and the associated deduction, is subject to complex and restrictive federal income tax provisions as codified by Internal Revenue Code section 172 and related Treasury Regulations, all of which are subject to change and the availability of which can never be free from doubt.

The components of the deferred tax assets and liabilities are as follows:

	31st Dec 2019			31st Dec 2018
	31st Dec 2020			31st Dec 2019
Deferred tax assets:
Net operating loss carryovers	$	510,~~404~~989,~~935~~604		$	25,~~037~~404,~~105~~935
Stock-based compensation		-			-
Other temporary differences		-			-
Total deferred tax assets		510,~~404~~989,~~935~~604			25,~~037~~404,~~105~~935
Valuation allowance		(510,~~404~~989,~~935~~604	)		(25,~~037~~404,~~105~~935	)
Net deferred tax asset	$	-		$	-

NOTE 5 - INVENTORY DIAMOND CBD

This Company has arranged to buy the exact or minimum quantity from ~~the~~its suppliers, based on the customer orders and thereby has eliminated the need for holding any significant amount of inventory on hand at any point of time.

~~Otherwise~~During the current period of reporting, this Company ~~values~~wrote ~~the~~off, as a nonrecurring event, non-saleable/obsolete inventory atheld by the ~~lower~~drop ofshipper ~~cost~~due orto ~~market~~a drop in sales in connection with the Covid-19 pandemic.

~~NOTE~~43 6Table -of ~~COMMITMENTS AND CONTINGENCIES: There are no commitments and contingencies that exist at present, other than the legal disputes mentioned supra.~~Contents

PotNetwork Holdings, Inc.

Notes on Accounts for the year ended December 31, 2020

NOTE 6 - COMMITMENTS AND CONTINGENCIES

There are no commitments and contingencies that exist at present

NOTE 7 - BUDGET & INTERNAL CONTROL PROCEDURES

• Internal control procedures for inventory and cash control are being developed and implemented on an ongoing basis to ensure higher levels of performances. • Annual financial budget is reviewed by the Board of Directors. • Quarterly variance reports are reviewed by the Board of Directors.

	•	Based on the Company’s summary evaluation of internal controls over financial procedures, because of the Company’s limited resources and limited number of employees, and absence of an audit committee, the Company has concluded that as of December 31, 2020, its internal control over financial reporting and the preparation of financial statements for external purposes in accordance with US-GAAP, which therefore creates a material weakness

	•	In 2021, Company intends to initiate measures to remediate the preceding material weaknesses

F-11 Table of Contents

NOTE 8 - CAPITAL STOCK

	•	Common Stock: As of December 31, ~~2019~~2020, authorized 1,~~000~~500,000,000 shares, $.00001 par value; and ~~700,~~836,~~384~~260,638 issued and outstanding as on the balance sheet date. Further, this Company is obligated to issue additional shares to the noteholders mentioned here below.
	•	Class A preferred stock: As of December 31, ~~2019~~2020, authorized 50,000 shares, $.00001 par value; and 34,289 Issued and outstanding as on the balance sheet date. Designation details are in Document # 20181127754 filed with the Secretary of State, Colorado on February 13, 2018.

NOTE 9 - LONG TERM LOAN FROM THIRD PARTIES

					8%				8%
			As on		8% interest		As on		8% interest		Settled			As on
					Interest				Interest
Loan Date	Loan		1/1/2019		for 2019		12/31/2019		for 2020		in 2020			12/31/2020
	Loan				2018				2019
7/1/2016	$	25,000	$	30,000	$	2,000	$	32,000	$	2,228	$	(11,400	)	$	18,372
7/1/2016	$	257,000	$	288,~~000~~400	$	~~2,000~~560	$	308,~~000~~960	$	~~2,000~~420	$	32(9,~~000~~380	)	$	0
7/1/2016	$	7,000	$	7,840	$	560	$	8,400	$	560	$	8,960
	$	32,000	$	38,400	$	2,560	$	40,960	$	2,648	$	(20,780	)	$	18,372
			$	35,840	$	2,560	$	38,400	$	2,560	$	40,960

~~NOTE~~Settlements ~~10 -~~in ~~NOTES~~2020 ~~PAYABLE~~reflect share issuances specific to each 3rd party loan, wherein (a) $25,000 had been loaned by Southridge Partners II Limited Partnership, which had sold a portion of their loan which eventually was owned by J.P. Carey Limited Partners, L.P., said portion settled for shares on August 20, 2020; and (b) $7,000 had been loaned by Mammoth West Corporation, which total indebtedness was settled for shares on December 24, 2020.

NOTE 10 - SHORT TERM LOANS

Payee: Kabbage

Principal Value: $8,333.26

Issue date: 1/9/2020

Terms: 12 monthly payments. $1,500 is the interest payable on 1/27/2021 as the next monthly payment due date. 1/27/2021 is the maturity date for this short-term loan

Table of Contents

PotNetwork Holdings, Inc.

Notes on Accounts for the year ended December 31, 2020

NOTE 11 - SBA LOANS

Payee: Small Business Administration (“SBA”)

Program: Paycheck Protection Program

Principal Value: $138,404

Issue date: 3/5/2020

Terms: 1) Maturity date is two years from making of the loan. 2) Interest accrues at 1.000% per year. 3) Loan may be forgiven in whole or in part by the Lender in accordance with SBA terms and conditions, up to the Maturity date when funds received under it are used for approved expenses. Any loan amount remaining following forgiveness will be fully amortized over the remaining term of the Loan. As of the date of this report, forgiveness of this loan has not been applied for, and therefore, has not been granted.

Payee: Small Business Administration (“SBA”)

Program: Economic Injury Disaster Loan

Principal Value: $150,000

Issue date: 6/18/2020

Terms: 1) Maturity date is thirty years from making of the loan. 2) Interest will accrue at the rate of 3.75% interest per year. 3) Installment payments, including principal and interest, of $731 monthly, will begin twelve months from the date of the making of the loan. 4) Loan may be prepaid at any time up to its Maturity date without penalty. 5) The outstanding balance of the loan is securitized by assets of First Capital Venture Co. (the “Collateral”). As long as the loan balance is outstanding, the SBA shall maintain a UCC filing against the Collateral.

As an event after the balance sheet date, TD bank conveyed the PPP Loan Forgiveness details of SBA in the email dated Thursday, Aug 26, 2021 at 2:10 PM and the Company would report the same in the third quarter financials for the next year 2021

NOTE 12 - NOTES PAYABLE

Payee: Sign N Drive

Principal Value: $1,850,000

Issue date: June 2, 2014, amended March 10, 2017

Terms: Interest Free, Fixed Conversion Rate at $.003 per share

Embedded Conversion Option: Given the fixed rate conversion price, no derivative liability calculation for the conversion option was deemed required.

There is no maturity date for this note.

The following table shows the amount of interest waived on annual basis through December 31, ~~2019~~2020:

Year	~~InterestWaived~~Interest Waived
2017	$	7,318
2018		4,351
2019		4,770
2020		4,764

~~F-12~~45 Table of Contents

PotNetwork Holdings, Inc.

Notes on Accounts for the year ended December 31, 2020

The following table sets forth the number of shares of common stock issued pursuant to each conversion under the Note:

	Quantityof Shares		ConversionPrice		AmountConverted
	Quantity of Shares		Conversion Price		Amount Converted
August 13, 2014		161,127,812		0.00032	$	51,561
April 4, 2016		2,750,000		0.004		11,000
August 2, 2016		4,500,000		0.0012		5,400
November 8, 2016		2,500,000		0.00152		3,800
December 22, 2016		10,000,000		0.00088		8,800
July 5, 2017		42,000,000		0.003		126,000
September 27, 2017		40,000,000		0.003		120,000
February 2, 2018		25,000,000		0.003		75,000
May 29, 2018		25,000,000		0.003		75,000
June 5, 2018		25,000,000		0.003		75,000
December 4, 2018		1,550,000		0.003		4,650
December 14, 2018		6,000,000		0.003		18,000
December 20, 2018		12,333,334		0.003		37,000
April 17, 2019		46,050,000		0.003		138,150
June 26, 2019		26,000,000		0.003		78,000
February 2, 2020		27,000,000		0.003		92,529
July 8, 2020		24,000,000		0.003		82,248

Per the above table:

· $246,000 was converted into common stock in 2017; · $284,650 was converted into common stock in 2018; · $216,150 was converted into common stock in 2019; and · $174,777 was converted into common stock in 2020.

$284,650 was converted into common stock in 2018; and

$216,150 was converted into common stock in 2019.

Payee: Iliad Research & Trading LP

On October 25, 2018, the Company issued a Note in the face amount of $5,525,000 which accrues interest at the rate of 10% per annum. The note has an Original Issue Discount (OID) of $500,000. The Note and any interest thereon is convertible at a fixed rate of $0.45 per share of common stock or after 12 months, at a variable conversion rate, the “redemption conversion price” at the lower of the fixed rate of $.45 per share, or a discount to the market price as defined in the Note. The Note is comprised of five (5) tranches (each, a “Tranche”), consisting of (i) an Initial Tranche in an amount equal to $1,400,000.00 and any interest, costs, fees or charges accrued thereon or added thereto under the terms of this Note and the other Transaction Documents (as defined in the Purchase Agreement) (the ‘‘Initial Tranche”), and (ii) four (4) additional Tranches, one (l) in the amount of $1,375,000.00, one (l) in the amount of $550,000.00, and two (2) in the amount of $1,100,000.00, plus any interest, costs, fees or charges accrued thereon or added thereto under the terms of this Note and the other Transaction Documents.

•46 ~~$1,400,000~~Table ~~was~~of ~~received on 10/31/2018 • $825,000 was received on 12/18/2018 • $18,410 is the accrued interest for 2018~~Contents

~~F-13~~PotNetwork ~~Table~~Holdings, ~~of Contents~~Inc.

Notes on Accounts for the year ended December 31, 2020

	•	$1,400,000 was received on 10/31/2018

	•	$825,000 was received on 12/18/2018

	•	$18,410 is the accrued interest for 2018

	•	$222,500 is the accrued interest for 2019

	•	$261,655 is the accrued interest for 2020

On February 8, 2019, the Company issued a Note in the face amount of $3,325,000 which accrues interest at the rate of 10% per annum. The note has an Original Issue Discount (OID) of $300,000. The Note and any interest thereon is convertible at a fixed rate of $0.45 per share of common stock or after 12 months, at a variable conversion rate, the “redemption conversion price” at the lower of the fixed rate of $.45 per share, or a discount to the market price as defined in the Note. The Note is comprised of three (3) tranches (each, a “Tranche”), consisting of (i) an Initial Tranche in an amount equal to $1,125,000.00 and any interest, costs, fees or charges accrued thereon or added thereto under the terms of this Note and the other Transaction Documents (as defined in the Purchase Agreement) (the ‘‘Initial Tranche”), and (ii) two (2) additional Tranches, one (l) in the amount of $500,000.00, and one (l) in the amount of $1,650,000.00, plus any interest, costs, fees or charges accrued thereon or added thereto under the terms of this Note and the other Transaction Documents.

• $1,125,000 was received on 2/17/2019 • $7799,~~794~~555 is the accrued interest ~~through~~in ~~3/31/19 • $84,144 is the accrued interest from 4/1/~~2019 ~~to 6/30/2019~~ • $~~169~~112,~~641~~500 is the accrued interest ~~from~~in ~~7/1/2019 to 12/31/19~~2020

NOTE 11 13 - MANAGEMENT ASSERTIONS ON ~~THE 2~~ COURT CASES ~~REGARDING CONVERTIBLE PROMISSORY NOTES OF PREDECESSOR~~

➢General Mammoth West Corporation [case# 17 CH 778, 19th Circuit Court of Lake County, IL] and Southridge Partners II Limited Partnership [case# 3:17-cv-01925, Connecticut] each filed a civil complaint about its convertible promissory note (each referred to as a “Note”). ➢ In each instance, the Note was issued not by the Company, but by the Company’s predecessor issuer, SND Auto Company Inc. (which predecessor issuer had changed its name before changing it back to SND Auto Group, Inc.). The Note was issued by SND Auto Company Inc., on June 13, 2016 and on July 18, 2016, respectively, for money paid to SND Auto Company Inc., at a time in which SND Auto Company Inc. was the public Company, operating in the automobile industry. However, on March 14, 2017, SND Auto Company Inc. formed the Company and engaged in a holding Company reorganization whereby the Company became the public entity while SND Auto Company Inc., became its subsidiary. The holding Company reorganization was an express condition of First Capital Venture Holdings Co., which is the parent Company to Diamond CBD, Inc. being acquired by the Company and thereby entering the CBD oil business. The acquisition would not have occurred without the holding Company reorganization. Following this acquisition and the holding Company reorganization, and following the Company becoming the public entity, the stock price increased significantly. In other words, the CBD oil company stock price (the Company, i.e., PotNetwork Holdings, Inc.) was much greater than the stock price of the automobile Company (SND Auto Company Inc.). ➢ The plaintiff invested in an automobile Company, not in the CBD oil business. Yet, plaintiff wants to convert its Note issued by the automobile company into shares of the CBD oil Company, which was not the maker of the Note. ➢ As of December 31, 2017, SND Auto Company Inc., not the Company, owed Mammoth West Corporation $7,280 and Southridge Partners II Limited Partnership $26,000, on the Notes, which obligations were never disputed by SND Auto Company Inc. (which SND Auto Group, Inc. agreed to pay each, in full). ➢ The Company has maintained that these were not debts of the Company, and the holding Company reorganization was engaged in to assure as much, not to avoid payment, but instead, to isolate this debt from the new CBD oil business, SND Auto Company Inc. being a separate and distinct legal entity with its own assets and debts. ➢ However, on February 7, 2018, the Company and its predecessor issuer, SND Auto Company Inc., unwound the March 14, 2017 holding Company reorganization.Litigation

FFirst Capital Venture Co. v. Thunder Energies Corporation, f/k/a Thunder Fusion Corporation, CCJ ACQUISITION CORP d/b/a the Hemplug, the Hemplug, LLC, Nature Consulting, LLC, et al., Case No. CACE 20-14019111. ~~Table~~On November 3, 2020, First Capital Venture d/b/a Diamond CBD, Ltd., filed its 5-count verified Complaint seeking injunctive and declaratory relief as well as damages against Defendants. Specifically, the verified Complaint alleges the Defendants violated Florida’s Uniform Trade Secrets Act as well as allegations that the Defendants tortiously interfered with a contractual or business relationship of ~~Contents~~First Capital Venture. On February 17, 2021, Defendants filed their answer and affirmative defenses. On March 5, 2021, First Capital Venture filed its Motion for Order to Show Cause in which it seeks sanctions for Defendants’ failure to comply with the Court’s Order compelling Defendants to provide responses to Plaintiff’s discovery requests. At a hearing on March 29, 2021, the judge deferred ruling on First Capital Venture’s Motion for Order to Show Cause. Immediately following the Show Cause Hearing, the Defendants filed response to Plaintiff’s Motion for Order to Show Cause and the Plaintiff filed a memorandum in support. Prior to the Motion for Order to Show Cause, on February 17, 2021, Defendants furnished a request for production of documents to Plaintiff. Within the time prescribed by the Florida Rules of Civil Procedure to respond to the Defendants’ request for production, Plaintiff filed a motion for extension of time to respond to the request for production of documents on March 16, 2021. Defendants filed a motion to compel the responses for the Defendants’ Request for Production of Documents to Plaintiffs, however, there is no pending Order compelling the Plaintiff to provide the discovery as of the date of this report. On April 28, 2021, the Judge signed an Order which compelled the Defendants, Yogev Shvo and Orel Ben Simon, before the Honorable Court to show cause as to why the Defendants should not be held in contempt of Court for failure to properly respond to outstanding discovery. On May 10, 2021, a special set hearing occurred in which the Judge deferred ruling on the Motion for Order to Show Cause. The case remains ongoing.

➢47 ~~Because~~Table of that unwinding, Company’s counsel agrees that the Company, the public entity, became liable for this SND Auto Group, Inc. Notes, but only as of the February 7, 2018 rewinding, not prior thereto. ➢ So, at this point, the dispute between the parties surrounds the conversion price. ➢ In each case, the terms of the Note entitle the plaintiff, as holder, to convert into shares of the maker’s common stock. ➢ On March 28, 2017 and on April 24, 2017, the conversion notice in each case was issued, not to SND Auto Group, Inc., the maker, but to the Company, for shares of the Company’s common stock. ➢ The terms of the Note entitle the plaintiff to payment in cash or in shares of the maker (SND Auto Group, Inc.), at a discount of 65% of the lowest trading price of the preceding 30 trading days. ➢ Instead, however, the plaintiff has throughout, sought to convert into shares of the Company, at a fraction of a penny per share, or approximately 2,700,000 shares in each instance (as opposed to approximately 56,000 shares in each instance), of the Company, based on SND Auto Group, Inc.’s share price, when SND Auto Group, Inc. was the public Company, and prior to the Company even being in existence, let alone being public. ➢ It is the Company’s position that the Company only became obligated for the Note (which is the obligation of the maker, SND Auto Group, Inc.), upon the unwinding of the reorganization, or as of February 7, 2018, when the Company’s stock price was considerably higher (and therefore obligated to issue far fewer shares in satisfaction of the conversion notice) than it was prior to the holding Company reorganization and the acquisition of First Capital Venture Co. ➢ The Company intends to vigorously defend against this claim. The Company is confident in its position.Contents

~~NOTE~~PotNetwork ~~12 -~~Holdings, ~~CRITICAL AUDIT MATTERS~~Inc.

⮚Notes ~~Under~~on ~~its~~Accounts ~~accounting~~for ~~category, “Marketing Expenses”,~~ the ~~Company~~year ~~paid~~ended ~~$3,065,069~~December ~~to a privately-held~~31, unaffiliated marketing communications agency during 2019 in a series of 177 transactions. The transactions were not conducted under an overall contract but each was paid against an individual invoice. Although requested by the audit, the Company was unable to supply the audit with:2020

·First ~~Copies~~Capital ofVenture ~~the~~Co. ~~177~~v. ~~invoices~~T1 ~~for~~Payments, ~~the~~LLC ~~payments~~et ~~made~~al., toCase ~~the~~No. ~~agency~~CACE-20-006914, ~~during~~UCN ~~2019~~062020CA006914AXXXCE, 17th Judicial Circuit in and for Broward County, Florida. ·On ~~Proof~~April of22, ~~all~~2020, ~~work~~First ~~done~~Capital Venture, ~~including~~a subsidiary of the ~~individual~~Company ~~names,~~filed ~~hourly~~an ~~rates~~8-count ~~and~~Complaint ~~amount~~against the its previous merchant processor seeking the return of ~~time~~$649,311.73 ~~charged~~being held by ~~each~~the ~~professional~~merchant ~~performing~~processor ~~work~~and for damages related to this processor ceasing to accept MasterCard payments from the Company,’s acustomers ~~profile~~for ~~per~~the ~~professional~~purchase ~~performing~~of the ~~work~~Company’s ~~(including~~products. ~~educational~~The ~~qualifications~~Company ~~and~~is ~~past~~seeking ~~experiences)~~declaratory ~~and~~relief aas ~~list~~well ofas damages against the ~~work~~Defendant. ~~done~~Specifically, bythe ~~each~~Complaint ~~professional~~alleged the Defendant breached the contract between the parties, sought violations of Florida Statute § 772.11 (Civil Remedy for ~~other~~Theft), ~~clients~~replevin, and fraud. ·On AAugust ~~comparison~~4, of2020, the ~~rates~~Court ~~charged~~granted bya motion to transfer the ~~agency~~case ~~versus~~to ~~market~~Nevada ~~area~~where ~~rates~~it ~~charged~~will bybe ~~other~~filed ~~firms~~per ~~for~~the ~~similar~~merchant ~~services~~processing agreement. ·As Aa ~~list~~result, ofthe ~~open~~lawsuit ~~invoices~~was asdismissed ofwithout ~~year-end,~~prejudice ~~December~~to ~~31,~~be ~~2019~~filed in the appropriate jurisdiction per the processing agreement.

	⮚	Although requested by the audit, other than copies of the court case filings by the Company for $649,311.73 against T1 Payment, LLC, a merchant services provider, for non-payment of accounts receivable owed to the Company, the Company did not provide the audit with details of the individual transactions supporting its claim against the merchant services provider. (See following paragraph, First Capital Venture Co. VS T1 Payments, LLC et al., Case No. CACE-20-006914, UCN 062020CA006914AXXXCE, 17th Judicial Circuit in and Broward County, Florida.)
	⮚	During 2019, the Company paid $479,331 under its accounting category, Trade Show Materials, and $134,930 under its accounting category, “Trade Show Set Up Expenses”. Although requested by the audit, as it pertains to these expenses, the Company did not provide the following details to the audit:

Therefore, on May 14, 2021, First Capital Venture Co., filed an eight-count complaint against T1 Payments, LLC, Donald Kasdon and Does 1 through 10, in District Court, Clark County, Nevada, under case number: A-21-834626-B. The 8-count Complaint against the previous merchant processor seeks the return of $649,311.73 being held by the merchant processor and seeks damages related to this processor ceasing to accept MasterCard payments from the Company’s customers for the purchase of the Company’s products. The Company is seeking declaratory relief as well as damages against the Defendants. Specifically, the Complaint alleged the Defendants breached the contract between the parties, fraud, conversion and unjust enrichment. To help expediate the litigation of this case, Company’s counsel sought a more specialized type of proceeding by requesting the matter be heard in business court. The Company is continuing to work with counsel in California and Nevada to resolve this matter.

·Dr. ~~The~~Bomi ~~schedule~~Joseph ofv. ~~trade~~PotNetwork ~~shows~~Holdings, ~~their~~Inc. ~~location~~et ~~and~~al, ~~dates~~Case No. 19STCV15296, asSuperior ~~attended~~Court byof ~~the~~California ~~Company~~– Los Angeles County for Los Angeles Judicial District. ·Plaintiff ~~Budgets~~alleges ~~versus~~that ~~summary~~defendants ofpublished ~~actual~~a ~~expenses~~report ~~detailed~~on ~~for~~or ~~each~~about ~~trade~~February ~~show~~22, ~~attended~~2019, ~~and~~about ~~consequently~~him ~~any~~on ~~explanations~~its ~~for~~website, ~~any~~www.potnetworkcom, ~~variances~~without ~~between~~his ~~budget~~consent, ~~versus~~acknowledgement ~~actual~~and ~~expense~~approval, ~~per~~which ~~trade~~report ~~show.~~is ·of ~~Sales~~concern ~~comparisons~~to ~~versus~~the ~~sales~~Plaintiff. ~~expectations~~Moreover, ~~per~~the ~~trade~~report ~~show~~was picked up and ~~any~~re-published ~~supporting~~on ~~documents~~numerous orother ~~worksheets.~~websites ·without permission of the defendants. The ~~amount~~Plaintiff ofalleges ~~discounts~~that ~~earned~~the onreport ~~fees~~defamed ~~per~~him ~~trade~~and ~~show~~that asit ~~the~~continues ~~result~~to ofbe ~~early~~published ~~payment~~by ofthird ~~such~~party ~~fees~~websites although already retracted and taken down by the defendants. The Plaintiff and the Company have entered into settlement negotiations.

FPotter v. PotNetwork Holdings, Inc., Diamond CBD, and First Capital Venture Co., CASE NO.: 19-1524017-CV-SCOLA, ~~Table~~US District Court for the Southern District of ~~Contents~~Florida. Plaintiff alleged that she purchased certain products from Diamond CBD that contained levels of CBD that were less than the amount stated on the packaging and sought class action status. The Company and its subsidiaries settled the matter at mediation on July 14, 2020. The parties completed the final documentation of the settlement and the case was dismissed on August 27, 2020. Pursuant to the settlement agreement the Company agreed to issue a $10 voucher to purported class members, pay the named plaintiff $5,000 and pay the law firms that brought the suit $200,000 in legal fees to be paid over 30 months, secured by a pledge of shares of the common stock of PotNetwork Holdings, Inc.

~~NOTE~~Viral 13 Vapes, LLC, v. CBD, LLC, CASE NO.: 20-C-07896-S6, ~~SUBSEQUENT~~filed ~~EVENTS~~in ~~DECEMBER~~the 31State Court of Gwinnett County, ~~2019~~Georgia, on February 2, 2021. Plaintiff alleges that the Defendant breached a contract for the resale of its goods which were returned to the Defendant for credit. Plaintiff seeks compensatory damages in an amount to be proved at trial, but not less than $34,825, the purchase price of the goods purchased and returned, plus interest and reasonable attorney’s fees incurred in prosecuting this claim. The Company is contesting the allegations. The case is ongoing.

On48 ~~February~~Table ~~6, 2020 the Company issued 27,000,000 common shares to a note holder upon the conversion~~ of ~~$81,000 of indebtedness owed. The common stock issued in the transaction were issued pursuant to the exemption for registration contained in Section 4(a)(2) of the Securities Act of 1933.~~Contents

~~First~~PotNetwork ~~Capital Venture Co. VS T1 Payments~~Holdings, ~~LLC et al~~Inc., Case No. CACE-20-006914, UCN 062020CA006914AXXXCE, 17th Judicial Circuit in and Broward County, Florida. On April 22, 2020, First Capital Venture, a subsidiary of the Company filed a lawsuit against its previous merchant processor seeking the return of $649,311.73 being held by the merchant processor and for damages related to the processor ceasing to accept MasterCard payments from the Company’s customers for the Company’s products. T1 Payments has filed a motion to dismiss that has not yet been heard by the Court and the litigation remains in its early stages.

OnNotes ~~June~~on ~~16,~~Accounts ~~2020,~~for the ~~Board~~year ofended ~~Directors~~December ~~approved the Company’s subsidiary~~31, First Capital Venture, entering into a Disaster Relief Loan from the US Small Business Administration in the amount of $150,000. The loan is secured by a security interest in all the assets of First Capital Venture and is for working capital purposes.2020

OnPotNetwork ~~July~~Holdings ~~8, 2020 the Company issued 24,000,000 common shares to a note holder upon the conversion of $72,000 of indebtedness owed~~Inc. ~~The~~Convertible ~~common~~Promissory ~~stock~~Note ~~issued~~Litigation ~~in the transaction were issued pursuant to the exemption for registration contained in Section 4(a)(2) of the Securities Act of 1933.~~Matters

~~F-16~~In addition to the above, PotNetwork Holdings Inc. has been involved in the following legal proceedings, each since dismissed as the result of a respective settlement agreement or each in renewed settlement negotiations, and each of which is specific to each plaintiff suing the Company based upon the convertibility of a promissory note. In each case the Company had contested the validity of the request for conversion of shares pursuant to each such note (each referred to as a “Note”). The following are the case references to each case filed by each of the plaintiffs (collectively, the “Plaintiffs”):

	•	Mammoth West Corporation v PotNetwork Holdings Inc., Case No. 17 CH 778, 19th Circuit Court of Lake County, IL. Filed May 26, 2017.

	•	Southridge Partners II Limited Partnership vs. SND Auto Group, Inc., Case No. 3:17-cv-01925 US District Court for the District of Connecticut, filed January 5, 2018.

	•	J. P. Carey Limited Partners, L.P. v. PotNetwork Holdings, Inc., Case No.3:18-CV-00873-WWE, US District Court for the District of Connecticut, filed May 24, 2018.

Each Plaintiff had filed a civil complaint with regard to their rights to convert a specific Note. In each case, the Note was issued not by the Company, but by its predecessor issuer, SND Auto Company Inc. (which predecessor issuer had changed its name before changing it back to SND Auto Group, Inc.). Each Note was issued by SND Auto Company Inc., respectively on June 13, 2016 to Mammoth West Corporation and on July 18, 2016 to Southridge Partners II Limited Partnership, for money paid to SND Auto Company Inc., at a time when SND Auto Company Inc. was the public entity, with sole operations in the automotive industry. (Plaintiff, J. P. Carey Limited Partners, L.P., on March 1, 2018, was a subsequent purchaser of a portion of the Southridge Partners II Limited Partnership Note and conversion rights connected to the amount purchased, which it then attempted to convert on the pre-reorganization terms and conditions of the Note, as more fully defined below.)

Subsequent to the issuance of the Notes, on March 14, 2017, SND Auto Company Inc. had engaged in a holding company reorganization whereby SND Auto Company Inc., became a subsidiary of the public entity. The holding company reorganization was an express condition of a private company, First Capital Venture Holdings Co., whose acquisition was the principal reason for the reorganization.

Each Plaintiff had sought to convert into shares of the post reorganization Company, at a conversion price of a fraction of a penny per share, based on SND Auto Group, Inc.’s share price prior to the reorganization. The Company disputed the conversion amounts presented by the Plaintiffs

The relief that had been sought by each Plaintiff in each case is as follows:

	•	Mammoth West Corporation: Issuance of the shares per each of its conversion notices per the original terms of its Note, reasonable attorneys’ fees and reimbursement of court costs, and such other and further relief as the court deems appropriate.

	•	Southridge Partners II Limited Partnership: Damages of at least $743,150, interest, punitive damages, a mandatory injunction seeking specific performance, reasonable attorneys’ fees and reimbursement of court costs, and such other and further relief as the court deems appropriate.

	•	J. P. Carey Limited Partners, L.P.; Damages of at least $573,890, interest, punitive damages, a mandatory injunction seeking specific performance, reasonable attorneys’ fees and reimbursement of court costs, and such other and further relief as the court deems appropriate.

Table of Contents

PotNetwork Holdings, Inc.

Notes on Accounts for the year ended December 31, 2020

NOTE 14 - SETTLEMENT BY SHARE ISSUANCE

	•	On February 6, 2020 the Company issued 27,000,000 common shares to a note holder upon the conversion of $81,000 of indebtedness owed. The common stock issued in the transaction were issued pursuant to the exemption for registration contained in Section 4(a)(2) of the Securities Act of 1933.

	•	On July 8, 2020 the Company issued 24,000,000 common shares to a note holder upon the conversion of $72,000 of indebtedness owed. The common stock issued in the transaction were issued pursuant to the exemption for registration contained in Section 4(a)(2) of the Securities Act of 1933.

	•	On August 20, 2020, the Company issued 28,000,000 common shares to J.P. Carey Limited Partners, L.P., a note holder, under the terms and conditions of a settlement agreement, dated August 15, 2020 for all indebtedness owed. The value of the stock issued under the settlement, $379,628, has been booked in 2020 as a nonrecurring extraordinary expense for accounting purposes.

	•	On October 1, 2020, the Company issued 8,854,782 common shares to a note holder upon the conversion of $75,000 of indebtedness owed. The common stock issued in the transaction were issued pursuant to the exemption for registration contained in Section 4(a)(2) of the Securities Act of 1933.

	•	On November 23, 2020, the Company issued 19,569,479 common shares to a note holder upon the conversion of $100,000 of indebtedness owed. The common stock issued in the transaction were issued pursuant to the exemption for registration contained in Section 4(a)(2) of the Securities Act of 1933.

	•	On December 24, 2020, the Company issued 28,000,000 common shares to Mammoth West Corporation, a note holder, under the terms and conditions of a settlement agreement, dated October 22, 2020 for all indebtedness owed, which settlement was approved on December 11, 2020, by the Circuit Court for th Nineteenth Judicial Circuit, Lake County, Illinois, in Civil Action No. 17 CH 778 following a 3(a) 10 fairness hearing. The value of the stock issued under the settlement, $315,420, has been booked in 2020 as a nonrecurring extraordinary expense for accounting purposes.

Table of Contents

PotNetwork Holdings, Inc.

Notes on Accounts for the year ended December 31, 2020

NOTE 15 - IMPAIRMENT LOSS [ONE-TIME, NON-RECURRING]

As of December 31, 2020, the remaining balance of advances paid to the Drop Shipper was $3,012,449. This remaining balance is unadjusted for:

(a) losses incurred in the value of the inventory held by the drop shipper and therefore in the value of the deposit by the Company, in connected to the Covid-19 pandemic, which disrupted reseller sales and caused a decline in consumer demand, wherein such decline rendered some inventory unsalable due to limitations on shelf-life. In addition, the decline in sales caused some products to be discontinued due to their obsolescence.

(b) amounts included in the asset which were misallocated which should have been either charged to other categories of accounts or allocated to other categories of business expense.

As a result, as of the date of this report the Company is in the process of quantifying the amount of the adjustments required by these factors, and at this time is deducting the full value of this asset, $3,012,449, from its balance sheet as an “impairment” until such time as a full assessment of this asset is completed internally to determine the correct value for this asset on December 31, 2020.

NOTE 16 - SUBSEQUENT EVENTS

In accordance with FASB ASC 855, Subsequent Events, the Company has evaluated subsequent events through May 19, 2021, the date on which these consolidated financial statements were available to be issued. There was material subsequent events that required recognition or additional disclosure in these consolidated financial statements as follows:

	·	On January 13, 2021, the Company issued 35,714,286 common shares to a noteholder upon the conversion of $125,000 of indebtedness owed. The common stock issued in the transaction were issued pursuant to the exemption for registration contained in Section 4(a)(2) of the Securities Act of 1933.

	·	On February 10, 2021, the Company issued 38,000,000 common shares to an affiliate, Livingston Asset Management, LLC, of a note holder, Southridge Partners II Limited Partnership, under the terms and conditions of a settlement agreement, dated January 21,2021 for all indebtedness owed. The value of the stock issued under the settlement, $296,400, will be booked in 2021 as a nonrecurring extraordinary expense for accounting purposes.

	·	On March 10, 2021, the Company received from the SBA, the sum of $115,049 under the Paycheck Protection Program, which is a loan and not repayable provided the lending bank certifies the forgiveness prior to maturity which is two years from making. Interest rate on the loan is 1.0000%.

	·	On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency connected to the COVID-19 strain of coronavirus and the global risks from the virus’ spread. In March 2020, WHO classified the outbreak as a global pandemic. Beginning in February 2020, the continental United States became one of several global epicenters of the pandemic, as the virus and its multiple variants spread state-to-state. As of the date of this Report the pandemic continues. Within the United States, the pandemic’s economic impact has been severe, forcing the shuttering of businesses and shifts in both business and consumer behavior. As such, at this time, the Company cannot forecast the full magnitude that the pandemic will have in 2021 on its industry, suppliers, workforce, financial condition, liquidity, and results of operations. Nor can the Company forecast the pandemic’s impact on its results of operations for the fiscal year ending December 31, 2021. Management continues to monitor the situation and is working to adjust the business’s operations daily.

	·	In an email dated Thursday, Aug 26, 2021, TD bank conveyed to the Company that the Paycheck Protection Program loan, in principal value of $138,404, made on 3/5/2020 had been forgiven by the SBA.

Table of Contents

PotNetwork Holdings, Inc.

Notes on Accounts for the year ended December 31, 2020

NOTE 17 - GENERAL & ADMIN EXPENSES (DETAILS)

	Year Ended		Year Ended
	Dec. 31, 2020		Dec. 31, 2019
Admin Exp
Bank Charges	$	7,774.90	$	15,263.44
Dues & Subscriptions	$	5,285.55	$	73,278.45
Insurance	$	37,019.40	$	35,869.46
Legal & Professional	$	346,268.85	$	612,809.13
Office Supplies & Software	$	67,660.72	$	22,921.54
Other Expenses	$	2,870.55	$	1,408.43
Payroll Expenses	$	890,541.23	$	937,970.22
Repairs & Maintenance	$	419.23	$	1,199.41
Taxes & License	$	5,679.60
Telephone	$	39,534.89	$	68,269.13
Training	$	828.30
Utilities	$	2,001.00	$	22,850.57
	$	1,405,884	$	1,791,840

NOTE 18 - CRITICAL AUDIT MATTERS

During 2020, the Company incurred a non-recurring impairment Loss due to the write-off of advances prepaid in 2019 to the Drop Shipper. The Company has stated that there are two reasons for said impairment: (i) some amounts included in this asset were misallocated and should have been either charged to other categories of accounts or allocated to other categories of business expense; and (ii) during 2020 in connected to the Covid-19 pandemic, the Company incurred losses in the value of the inventory held by the Drop Shipper and therefore in the value of the deposit by the Company. As a result, as of the date of this report the Company is in the process of quantifying the amount of adjustments required by these items, and at this time is deducting the full value of this asset from its balance sheet and income statement as an “impairment” as of December 31, 2020.

Filing Compare · Diamond Wellness Holdings, Inc.