Potnetwork Holdings Inc. (fka POTN)

[Alan Brochstein]

You are wrong on the share-count. The filing very clearly states the common shares outstanding and the number of preferred shares.

https://www.sec.gov/Archives/edgar/data/1746563/000147793218003494/0001477932-18-003494-index.htm

As of July 9, 2018, we had 464,921,254 common shares outstanding.

(this is page 17)

As of July 9, 2018 we had 44,227 shares of Class A Preferred Stock issued and outstanding. 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. Class A Preferred Stock shall be entitled to a number of votes equal to the sum obtained by using the following quotient: (x) the sum of all outstanding shares of common stock, plus the sum of the number of votes of all other outstanding shares of stock, including any preferred stock that may be outstanding, plus the sum of the votes of all other financial instruments outstanding which may be entitled to vote on any such matter, divided by (y) 0.9. Class A shareholders are not entitled to dividends paid to common shareholders and are not entitled to any assets of the Company upon liquidation.

(this is page 23)


It's simple math! You add 465 million to 44,227*(.0018*465 million). That last part is 370 million. Adding 465 and 370 is 835. There are at least 835 million shares outstanding on a fully-diluted basis based upon the information the company has provided.

What it doesn't say is the terms of the convertible notes or the warrants. These would increase the fully-diluted shares.

I review literally hundreds of filings a year. It is very odd that the company doesn't disclose the issuance of shares more completely. They say how many shares were created by the convertible notes being converted, but they don't say the amount of debt paid off. I don't blame them. It's very embarrassing to suffer such low conversion prices relative to the current trading price. I am surprised that such a high-revenue company hasn't been able to find alternative financing to pay these b.s. notes off. I guess they are unable to raise capital.

It looks to me like one of the kids of the accountants at East West did the accounting at Potnetwork Holdings. I hope the company got a nice reduction on the price of the services.