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BOOM-CHA-CA-LA-KA. BOOM KONA LAKA!!! Whether this goes up or down a few pennies, it is headed up and up over the next few years. You have heard it over and over here..... KNOW WHAT YOU OWN!!!
One huge thing that sucks is that the MMs have loaded up again on the stock and will be doing their best to drive it down further. Am I wrong on this?
I believe the Yield Sign gaffe due to management reporting, and the low 3rd quarter projections are causing this downward trend over the last few days. I have continued buying under .095. I even bought at .124 thinking we were going to jump.
The way I look at it is that I have less shares than I could have had. This stock will definitely be over .20, .30, .40 or quite more in a relatively short time. In any case I will make a ton of money even at .15 or .20.
Management owes us on this mistake causing the Yield Sign warning. Time to release the damn audit so that we know it is real. Uplist would follow shortly after giving more access to investor eyes.
Thanks for the feedback. I guess they're off my buy list for now. I missed the Caveat Emptor. Too bad they are playing games over there. They missed the big picture.
Well we know they posted on time with OTC. The warning also includes "....or is late in their filing obligations with the SEC."
That may be a good thing like Knife alluded to. Let's hope.....
OTC Markets has posted a Caveat Emptor on POTN. How long has that been in effect?
You say the KGKG filings are up to date. Yet the OTC website has given a warning on the stock.
"This company has posted limited financial disclosure through the OTC Disclosure & News Service or is late in their filing obligations with the SEC."
I hope you angle is right on a big reveal. The audit should have been completed and released. Maybe it is waiting for the up-list. It has been a long time since they disclosed information on an audit.
Nuts right? Ask's are coming in at $100 to $500 increments. The volume is low. This stock needs new eyes looking at it. Up-list already!!!
In any case, we'll get there. I have a feeling it is going to have a plus 100-150% run in her before checking back in the .12 - .15 range.
I never understand the flippers causing taxable events for themselves. The risk of getting caught having to sell positions to cover taxes later seems too great on a stock like this one. It doesn't seem worth it.
The pps is being dragged down in $500 increments. This is being manipulated. Take advantage. It will be back over .12 within a week and then some. It will spike to new highs very soon and we will settle at a new "floor".
Relax. It will bounce back and advance nicely. I am frustrated as well as I just bought the other day at.124 thinking it was going to run up.
And it will. I just have less shares than if I waited but hindsight is 20/20. KGKG long.
I am a big proponent of CBD. I take CBD oil every night and it has caused my chronic knee pains to go away. I am looking forward to Storm and the HighDrates are a normal staple in my diet. Not sure that the CBD in those drinks are enough to make a difference, but all I do know is that I feel a lot better after drinking them. Long and strong with KGKG.
As long as the company is not adding loads of debt along with the dilution, I am less concerned than I would be otherwise. Seeing the company grow month by month so quickly has exceeded expectations. I don't think management is in this for the short term. They have had opportunities to pump and dump and they have not. There have been more positive signs than negative. My only concern is the audit and up-list that has been spoken about, but not yet released and completed.
I agree that it will be interesting, very interesting. There are a number of pot stocks out there with massive, I mean massive losses, compared to revenue and they are trading in the dollar range. Go figure. This company as a publicly traded company is a beauty. Clean financial statements and you can see the growth through social media. It seems to be such a no-brainer as an investment. Buy and hold. Every year will be new highs with new higher floors. Absent government shut down of CBD and hemp, this company will only increase in value. I say that only as long as current management stays in place. They have a good thing going and they seem to know it.
With the majority of the cannabis sector down substantially since March, I think the 10 range as a "floor" is pretty impressive. Most stocks do not maintain their highs before checking back for profit taking before advancing again. I think within 30 days we will hit a new high and then settle back with a new floor around 13 cents. I agree with some of the others on the board that we will hit 20 cents by the end of the year and that may be the floor going into 2020.
I have been trading in the cannabis industry since late 2016. Since that time I have made some nice dough. My first position in KGKG was early 2017. I have added KGKG around 65 times since my first purchase. I have luckily purchased at the lows wherever the "floor" set. I don't have one losing position in KGKG.
Gains from the sale of other cannabis stocks have been all reinvested. Most now are in KGKG. If I would have reinvested all along in KGKG upon sale of other pot stocks, I would have an additional 33% in my portfolio. If I would have never found KGKG and invested elsewhere, the summer cannabis sector would probably have me at break even.
KGKG..... golden! Hold long. You won't regret it.
They're going to need tractors to sell to some of those new locations. Know anyone with a tractor for sale? Enjoy.....
I completely agree Luho.
POTN is not an appropriate comparison. It boils down to management and none of the things below can be attributed to KGKG. Though directed towards POTN, read it and question whether KGKG management did anything remotely similar. Come to your own conclusions. My thoughts are that KGKG management has been transparent as they come. Growth is all over FB and you can see all the distributors coming on.
POTN audited FS are atrocious They hired a new firm. The old firm was a 1 guy operation. He was from India based in Florida. They hired a new firm that is large but based in India. I am not sure why they hired a company form India when based in Florida.
Their 10k filing was mistake ridden. An embarrassment.They found some success in spite of themselves. Diamond CBD was their saving grace.
POTN was dealing with lawsuits. Management was not responding to bad news on the street.
Here are additional items with POTN:
Potnetwork Holdings (OTC: POTN) filed its Form 10 with the SEC on July 13th, a move that qualified the company to be included in the New Cannabis Ventures Public Cannabis Company Revenue Tracker. The company, which reported Q1 sales from CBD products of $6.28 million, plans to rename itself to BioTech Hemp, Inc., continuing a string of name changes. When it first began trading as a cannabis stock in 2014, the company was United Treatment Centers and was positioning itself to be “the premier worldwide news and content provider for the Cannabis industry.” It abandoned the industry, changing its name to SND Auto Group in May 2016 before completing an acquisition in March 2017 that brought it back to the cannabis industry. Here is the complete list of changes over the past 22 years
Missing Details
Potnetwork Holdings acquired First Capital Venture Co. (FCV) in March 2017. It operates FCV as a wholly owned subsidiary, though little details are available about the history of the company, which has a wholly-owned subsidiary, Diamond CBD, a marketer of hemp-derived CBD products under 15 brand names. The company claims that it has a network of over 550 distributors and resellers that “sell to thousands of brick-and-mortar retailers and online merchants.” It also sells on its own website. The company itself reports 13 full-time employees. Its website claims that its products “are legal across all fifty states, USA-made, and produced with federally-legal Cannabidiol (CBD)” and that it works with farms from Kentucky, Colorado and Scandinavia.
The company reports information on FCV only from the time of the acquisition, and the structure and financial reporting make it very difficult to assess the underlying operations of the subsidiary itself. For example, it’s not possible to assess the inventory of the company, since it doesn’t carry inventory: “This Company has arranged to buy the exact quantity from the suppliers, based on the customer orders and thereby has eliminated the need for holding inventory on hand at any point of time.” Investors can see the cost of goods (40% gross margin in Q1, 35.7% gross margin in 2017), but there is no ability to assess this important factor. Further, the company doesn’t disclose the supplier beyond it’s risk-factor statement that warns “our suppliers may implement significant price increases or may not meet our requirements in a timely fashion, if at all.” It is quite unorthodox for a retailer to not carry some inventory, and investors are not seeing the entire picture here.
Another area where the company failed to provide adequate information is in its share-count. At the end of Q1, it reported shares outstanding of approximately 596 million, but the share-count as of July 9, 2018 was approximately 465 million, a reduction of 131 million shares. The Form 10 provided no disclosure of any subsequent events at all, nor was there any language in the filing that would explain this rather substantial change.
Hidden and Unexplained Aspects of the Capital Structure
Potnetwork Holdings clearly states that there are 464.9 million shares outstanding as of July 9, 2018, but investors should read the fine print to better understand the potential dilution ahead. The company has 44,227 Class A preferred stock shares as of July 9, 2018, with “each share of Class A preferred stock is convertible into 0.0018% of the total number of outstanding shares of common stock at the time of conversion.” The conversion of these shares to common would not only explode the share-count now, increasing it by 79.6% from 464.9 million to 835 million shares, it could add even more shares over time due to the conversion being based upon the number of shares outstanding at the time of conversion.
While it discloses this source of potential dilution to common shareholders, the company’s Form 10 does a poor job of defining other sources, including warrants and convertible notes. The company has historically relied upon convertible notes and, according to its filing, still has several outstanding.
Historically, there have been many conversions detailed in its OTC filings, but the Form 10 not only fails to disclose the terms of the convertible notes but also doesn’t include that history. One can look back to its annual filing on the OTC from April to learn more, though the disclosure never conveys the price of the conversions:
“On January 18, 2017 the company issued 2,314,814 common shares to upon the conversion of indebtedness owed. “
“On January 24, 2017 the company issued 4,000,000 common shares to upon the conversion of indebtedness owed.”
“On February 2, 2017 the company issued 2,800,000 common shares to upon the conversion of indebtedness owed. “
“On February 14, 2017 the company issued 1,707,800 common shares to upon the conversion of indebtedness owed. “
“On March 23, 2017 the company issued 39,000,000 common shares to upon the conversion of indebtedness owed.”
“On July 1, 2017 the company issued 42,000,000 common shares to upon the conversion of indebtedness owed.”
“On September 27, 2017 the company issued 40,000,000 common shares to upon the conversion of indebtedness owed. “
Investors were left in the dark completely by the Form 10, and the prior filings are inadequate in how they describe convertible debt redemptions totaling 131.8 million shares. Additionally, the Q1 OTC filing suggests that this continued, though the Form 10 made no mention: “On February 27, 2018 the Company issued 25,000,000 common shares to upon the conversion of indebtedness owed. ”
Further, the Form 10 fails to include important details as it describes some capital structure transactions: “In 2017, this Company exchanged $1,200,000 in convertible promissory notes, net of accrued interest, in exchange for a fixed price stock conversion. In the first quarter of 2018, the same was re-negotiated for the issuance of a common stock purchase warrant at a fixed prepaid price.” The Form 10 makes no mention of the amount of warrants outstanding or the terms, including the expiration date and exercise price. These are important details that the company doesn’t convey adequately.
Investors should also be aware of outstanding legal issues with two convertible note lenders that the company suggests could add shares: “Though this Company is likely to win in this case, the Company may end up issuing more shares for this conversion.” There is no range of estimates provided should that be the case.
Without understanding the capital structure, shareholders are likely to be surprised by future dilution. The company needs to better detail the terms for the outstanding convertible notes and warrants.
Red Flag: Questionable Accounting Statements
We have found what appear to be errors in both the company’s Cash Flow Statement and its Income Statement. With respect to the Cash Flow Statement, the company reported positive Cash from Operations in Q1, reporting it as $821,000 on Net Income of $193,000:
A key component driving the reported cash flow is Accounts Receivable, which the company claimed boosted cash by $608K. In fact, this should not have been added but rather subtracted, as Accounts Receivable increased during the quarter:
Compounding this error, the amount of the increase in Accounts Receivable was actually $1.254 million, which is more than double the $608K the financial statement suggested (when it used the wrong sign). This is a red flag and suggests that investors can’t rely upon the company’s accounting statements, which were prepared by East West Accounting Services. We conclude based on the filings that cash flow from operations was negative rather than positive as the company suggests.
Another substantial error is that the company has not properly reported its fully-diluted shares when calculating its EPS:
As discussed above, the company has convertible Class A preferred shares, so the diluted share-count should exceed the basic share-count. The company also has warrants (not properly detailed) that would further boost the diluted share-count. By not properly reporting the fully-diluted shares, the company has overstated the EPS.
Inability to Scale Operations
While Potnetwork Holdings reported very strong revenue growth of 238% in Q1, one area where it has failed has been in its ability to drive improvement in the bottom-line. Despite an improved gross margin, increasing from 35.6% to 40.0%, the operating gain of $193K grew only 25.3% as operating expenses soared 355.6%. The company didn’t adequately explain this ballooning expense, which was driven by a 574.4% gain in Sales and Marketing to $2.084 million. The operating margin declined from 8.3% to 3.1%.
Sky-High Valuation
Using the shares outstanding and adjusting for the Convertible Preferred, there are 835 million fully-diluted shares, though this excludes potential shares issued from warrants and convertible notes that the company didn’t properly detail. At the closing price of $0.3113 on July 13th, the market cap, then, would be approximately $260 million on a fully-diluted basis. One can use many metrics to evaluate the market cap. Compared to book value as of March 31, 2018, the stock trades at 241X. Compared to trailing 12-month sales of $18.9 million, the stock trades at 13.8X.
There are two really good comparisons that suggest the stock is quite expensive. CV Sciences (OTC: CVSI) has generated sales of $25 million over the past four quarters, producing an 8.3% operating margin in Q1. With a fully-diluted market cap of $221 million, CVSI trades less expensively than POTN, at 8.8X trailing sales. The price to book value metric is also lower at 12.3X. Charlotte’s Web Holdings is in the process of going public in Canada, with an expected IPO range of C$6-7 on 101 million fully-diluted shares. The company, which produced an operating margin of 31.9% in Q1, has generated sales of $46 million over the past year through March 31, 2018. At C$7, which is equivalent to US$5.32, the price-to-trailing sales ratio for this POTN competitor would be 11.7X. Based on a C$6.50 IPO, the company would trade at 7.2X book value.
Bottom-line
While Potnetwork Holdings has finally fulfilled its promise to file with the SEC and has reported very strong sales over the past year, the Form 10 filing reveals errors in the financial statements and omits important information that investors should have about the capital structure and the operations of the company. Additionally, the company has expanded its sales and marketing at an inexplicably faster rate of growth than sales, resulting in a declining profit margin. Even overlooking the issues raised, investors would be well advised to consider the company’s publicly-traded peers, which trade at lower valuations.
The new flavors on the website had to occur since the weekend because I checked then and there was nothing there in regards to the new flavors.
Closed green. Must be those Disney rumors.
Learn something. If it ain't green, it's red. Sometimes in the red a few days in a row. .04's here we come. Figure it out on your own! I'm smarter than you. Long term holding fools! Haha...fooled you, buying your shares. Here comes Skynet, the futuristic something or another going to buy something out. Let’s talk later if KGKG can beat yesterday’s 4.25% red day! Or not if it's green. It doesn't matter who's wrong or right. Just beat it, beat it. Just beat it, beat it. There's your financial advice. Enjoy...
Figure it out on your own! Hire a financial consultant to assist your decision making if needed! The “strive for five” consecutive red days is alive and well on this futuristic billion dollar buyout candidate! Let’s talk later if KGKG can beat yesterday’s 4.25% red day! If it does, some positive posts should surface from other board members to help with decision making! Enjoy...
Has anyone been following FCEL the last few days? I was in and out yesterday using some KGKG sell and buy back. Doubled my money ($3k). Wish I would have stayed in. Looking forward to KGKG doing that type of activity again. Funny thing is I don't see what is driving the activity over there. Everything seems so logical with KGKG with its steady, yet quick growth. I have never come across a more clean and transparent company. LOL, but damn it.... I want it nooooowwwwww! The whole uplist thing is really bugging me.
It has been like this every summer for the last few years with the cannabis industry. I thought this summer would be different.
Isn't that the truth. Still in the group to absorb other information but the tractors in there are nauseating.
Nice day for me. Sold some short term positions in KGKG, doubled my money in FCEL, and back into KGKG lower than when I sold. Yup, in love with KGKG and right back where I started. I am certain where KGKG is going, not sure about other stocks. LOL, was sick for a few hours wondering if I made the right decision.
I agree Luho. I lost out myself after one run up waiting for price to go back down to .03. This stock is going to only go up overall and nice to lock in long term gains versus paying Uncle Sam at higher rate. Also no fun selling stocks at inopportune times to cover taxes. Will this stock be volatile. Of course, we all know that.
Is there truth that HighDrate has been put on hold because the government is going to regulate how much CBD can go into the products? Saw something in regards to this on FB.
I am ready to buy at .045 again. Enjoy....
Just noticed today’s trading action. A new low would probably be somewhere under a penny so I am rather positive that won't happen even though its red right now. Thinking damn, that would be a really really really cheapie zone. Volume would be off the charts. The bounce would be insane. Enjoy...
It's Friday. Looking forward to today’s action. “Friday’s Fun”, let's call it. Enjoy...
NOT COOL!
No way! Did you really sell it at .12483726!? You rock! I tried to sell it at .12483727 and just missed. I think I may sell everything I have at the open and wait to buy back at that inevitable .04. Enjoy.
Does anyone know whether the topical CBD or oral CBD works better? Youwish, what was the name of the oil brand you mentioned? I'm ready to give it a try. I so far like a company called Dickens. I use the 1200 mg.
Where the hell is the audit!
I was just replying to what you posted. I know you meant .095 but I started dreaming about .95, lol. At .095 I am buying, but I don't think it will go under .10.
I'm selling a million shares at.95!
Nice going Cabo. I unfortunately am in liquidation mode of other stocks to start paying off debt used for cannabis sector investing. So many damn opportunities right now and selling at lower share prices than I expected at this time. I thought this year would skip the sector trend of repressed share prices over the summer. I shouldn't complain as I have made decent returns. But dang.... it takes money to make money. Holding all KGKG until 2020 to avoid any additional taxes in 2019.
I fully understand why they did not have the audit conducted in the past. The damn process cost more than the revenue that came in. But now it is hard to understand with their prior news release regarding the audit nearing completion. It has to be done by now.
Whether someone in the next few weeks buys at .14, .13, .12 or .10, they will double, maybe triple their money by this same time next year. Still want to see their audit which is starting to bother me, but they appear to be the most transparent company out there.