Penny stock cannabis company PotNetwork Holdings Inc. (POTN) reversed its recent decision to become a fully reporting SEC company on Sunday. Just a days ago on July 16, PotNetwork said it had filed a Form 10 with the Securities and Exchange Commission (SEC) to become a fully reporting company.
At that time the company stated, “These actions are fundamental to the Company’s goal of heightened transparency for its investors and are expected to bring the Company greater visibility and credibility before global financial markets and investors. The Company also intends to uplist to the OTCQB.”
Yesterday, PotNetworks asked the SEC to withdraw its Form 10 after the company learned that its auditing firm East-West Accounting Services, LLC, Princeton, Florida, had lost its PCAOB certification as a result of a PCAOB disciplinary order specific to deficiencies in an audit conducted in 2015 for an unrelated Dallas, Texas company.
PotNetworks hired the accounting firm in August of 2017. “We believe that the timing for this action is now. In consideration of the amount of momentum built up over the past 6 months, coupled with reported revenues of $5,077,625 for the first 6 months of fiscal 2017, the only logical next step was to initiate the auditing process, whereby the market can recognize the significance and legitimacy of the Company’s recent growth,” stated Gary Blum, Chief Executive Officer, PotNetwork Holding, Inc.
Yet, earlier that year in February, the PCAOB issued a report inspecting East West for its 2016 work. It wrote, “The auditor issued an opinion without satisfying its fundamental obligation to obtain reasonable assurance about whether the financial statements were free of material misstatement.” Yet, the company hired them anyway.
New Cannabis Ventures analyst Alan Brochstein dug through the company’s Form 10 and discovered numerous discrepancies. He wrote, “We have found what appear to be errors in both the company’s Cash Flow Statement and its Income Statement.”
PotNetworks said that it plans to file a revised registration statement as soon as possible. In an apparent attempt to assure shareholders, the company sent out a new press release on Monday stating, “With over $10 million in sales of its Diamond CBD products during the first five months of 2018 compared to sales of $5,077,625 during the first six months of 2017, the Company continues to strengthen its position in the hemp-derived CBD Industry.” The company acts as a middleman for online sales at the website Diamond CBD.
PotNetworks is also planning on changing its name to BioTech Hemp as it believes this name more accurately reflects the business of the company. This is one of just many names changes for Potnetworks. According to the OTC Markets, the company has had the following name changes: