PotNetwork Holdings’ CEO, Kevin Hagen, Provides Letter to Shareholders on 2018’s Achievements and the Year Ahead

FORT LAUDERDALE, Fla.–(BUSINESS WIRE)–PotNetwork Holdings, Inc. (OTC Pink: POTN)
(“the company”) released today an open “Letter to Shareholders” from
its President and Chief Executive Officer, Kevin Hagen, to provide its
investors with an overview on the Company’s performance and developments
in 2018 and what is anticipated for the year ahead.

Dear Shareholders,

I would like to begin by thanking you all for your trust in us over the
past year and beyond and I hope that this letter will help underline the
incredible potential that I firmly believe this company has to become
one of the CBD space’s most important players.

Record revenues

I am excited to report that we closed 2018 exceeding $25.5
Million in revenues
, which was more than 78% ahead of our audited
2017 annual results. For us, this record growth validates the strength
of our brands, our innovative strategy, and the ever-increasing consumer
demand for our products.

In 2019, our overall revenues are anticipated to continue to grow,
driven by an expanding global market for our CBD products, our overall
innovative marketing and product development, and our manufacturing and
supply chain’s ability to rapidly and cost effectively respond to
consumer and trade channel desires and needs for high quality products.

Capturing new markets

If you follow our general press releases during the year or attend any
of the innumerable trade shows, expositions and exhibitions we attend,
you know that we are constantly innovating and always expanding our
distribution footprint.

For example, in November, you witnessed the introduction of what has
become our highly successful MediPets product line, which opened
completely new channels of distribution and outlets for us in the pet
industry which represents $69.5
billion
in consumer sales in the United State alone. As a result of
the new line, today we are approaching multiple new points of
distribution, from pet supply stores to veterinary facilities. We firmly
believe that our product formulations for pet wellness are unsurpassed
in the marketplace and have positioned us for strong continued growth in
this new niche market.

We didn’t stop with pets. An announcement
in December confirmed that Diamond CBD planned to claim a piece of
the $46 billion coffee market with a line of coffee and tea K-Cup
capsules, which are compatible with almost any single cup coffee
machine. To date, the company has sold out almost all of its initial
20,000 production run and is ordering more to satisfy what appears to be
an accelerating demand for a new CBD product category that we are at the
forefront of.

Education efforts underline a successful year

On “Black Friday,” Diamond CBD announced
plans to sell its products in shopping malls across America via
stand-alone retail kiosks, carts, and mall retail stores displaying the
Diamond CBD logo and brand. Our efforts here are geared not only to sell
product, but to educate consumers about CBD. We have already begun such
sales initiatives in the South Florida area to refine product offerings,
merchandising and messaging. We anticipate a gradual metro market
rollout in 2019 in Florida, with a leap to other major metro markets in
other states starting in 2020.

Diamond CBD also launched its own fleet of mobile
sales vans
to deepen its penetration in brick-and-mortar retail
outlets in its hometown of Miami. The fleet provides a level of customer
service to retailers that is unprecedented in our industry. The literal
“front door delivery service” has redefined retailer expectations of
what exceptional customer service and support mean in our industry. To
date, the mobile fleet has installed over 500 self-contained Diamond CBD
product sales centers solely designed for this initiative. Based on our
early success, we have expanded the fleet to a dozen colorful vans
readily visible on the roads and highways of Miami, which has become an
important tool for building our local consumer awareness. This program
is planned to expand to other Florida metro areas in 2019. Inevitably,
such a program can further expand in creative ways to solidify reseller
loyalty through initiatives such as targeted local co-op advertising and
promotions to more firmly seat Diamond CBD as the leading CBD brand in
such markets.

The PotNetwork magazine sheds a light on our industry

We have always strived to be an industry leader with high levels of “top
of mind” awareness in the CBD and cannabis industries. So, in 2018, we
began the process to further strengthen this industry position by
exerting renewed effort behind PotNetwork.com, our informational
cannabis industry website, while embarking on the publication of a hard
cover sister magazine, PotNetwork Magazine.

With more than 300,000 page views and in excess of 150,000 unique
visitors per month, PotNetwork.com is the cannabis sector’s leading news
and information website. Our recently launched PotNetwork Magazine
offers the only 360-degree view of the cannabis industry that exists
today, from small retail enterprises to publicly traded companies in the
U.S. and Canada. The printed magazine reaches a diverse readership of
individual cannabis industry investors and entrepreneurs, as well as
high-level cannabis industry executives and CEOs in the U.S. and Canada.

It is a natural offline extension that promises to delve deeper into the
untold stories of an industry that is expected to generate
$136 billion
in retail sales over the next six years in the U.S.
alone. We believe the two together, PotNetwork.com and PotNetwork
Magazine, will further solidify our industry leadership standing while
building brand equity and synergy across all our efforts.

Cutting edge vending machines offer new opportunities

At the Consumer Electronics Show in January, Diamond CBD announced
a partnership
with CloudPlay for the development of a stand-alone
retail vending machine to sell select Diamond CBD products. The
machine’s prototype was displayed at CES 2019 and its announcement
generated far reaching news coverage across the $292 billion electronic
technologies market. Critical to the success of the machine is the
completion of a groundbreaking built-in age verification technology. The
companies plan to have a commercially marketable version of the machine
to be placed into test markets by CES 2020.

We are adapting to new regulations

Clearly for any company, rapid growth in a quickly accelerating,
volatile industry brings significant challenges. For the industry, 2018
bought landmark shifts in federal and state laws and regulations
impacting CBD businesses. While most changes are beneficial it is
essential that we remain agile in our approach to facilitate rapid
adaption to an uncertain regulatory and business environment.

As a result of these changes governmental attention and oversight of our
industry has increased. A change that we welcome since we believe
properly balanced increased oversight will benefit both the consumer and
legitimate operators like ourselves in the long run.

You may recall that in October we had announced
that Diamond CBD had engaged Washington-based legal counsel to assist us
in applying for FDA product registrations for unique product
formulations for medicinal use. Scientific and other work has already
been initiated in this area and it progresses. As a result, we have
every reason to maintain positive feelings about continuing our
development of a positive relationship with the FDA.

As managers of your company, and at all times, we exert all efforts and
intentions to comply with all governmental requirements, but in
addition, as industry leaders, we believe we have an obligation to
proactively nurture all such relationships. One way to help accomplish
this goal is by increasing our overall transparency for the benefit of
our customers, shareholders and the Company alike.

As our company grows transparency is key to our success

We also believe that increased investor transparency is necessary. In
2018 we initiated the process of becoming a fully reporting SEC company,
and as part of the process had the Company’s financial results fully
audited by PCAOB member audit firms.

Initial efforts at SEC registration proved unsuccessful because of,
first, an auditor’s internal problems stemming from an audit in 2015 for
an unrelated company, and secondly, a predecessor company’s loss of some
accounting backup records from 2016 needing accounting comparatives
against our results for 2017. Neither of these had any relevance to the
Company currently. Pursuant to strict PCAOB rules, the effect was that
we were prevented from obtaining the necessary qualifying audit opinions.

2019 is now a new year, and we have completed a full PCAOB audit of our
2018 financial statements as recently published. In turn, we will now
move forward to become a fully reporting SEC company which we intend to
be by mid-year.

Lastly, in order to better communicate with investors, customers and
consumers alike, we have begun a broad internal initiative to improve
our overall communications infrastructure and efforts. As part of this
plan, I will be writing letters similar to this one each quarter to
provide you with the most recent updates on our progress, growth and
challenges. For 2019, we have numerous plans in the works that we
believe will further escalate our growth, shareholder value, and our
overall market standing as well.

In the last two years, we have watched the overall CBD and cannabis
industry environment change dramatically for the better, with an
exploding consumer awareness and mainstream acceptance of CBD and its
benefits. Such dramatic trends have attracted new competitors to our
space further cluttering consumer choice and making market “noise.” Know
that we are committed to maintaining and expanding our market leadership
positions and continued growth in revenues from our businesses in these
exploding markets. We believe our history has demonstrated that our
innovation, high quality products and approach in these diverse markets
is paying off.

2018 was an exciting year for us. 2019 is looking even better.

Thank you.

Kevin Hagen, President and CEO

About Diamond CBD, Inc.: Diamond
CBD
focuses on the research, development, and multinational
marketing of premium hemp extracts that contain a broad range of
cannabinoids and natural hemp derivatives. Diamond CBD’s team consists
of hemp industry pioneers and natural product experts, chemists, doctors
and scientists, dedicated to producing the finest and purest cannabidiol
(CBD) oils. The result is a robust selection considered among the most
powerful natural CBD
oils
, tinctures, edibles, and vape liquids found anywhere. For
more information, please visit its website at www.DiamondCBD.com.

About PotNetwork Holdings, Inc.: PotNetwork
Holdings, Inc.
(OTC Pink: POTN)
is a publicly traded company that acts as a holding company for its
principal subsidiaries, First Capital Venture Co., the owner of Diamond
CBD, Inc., the maker of Diamond CBD products, and PotNetwork Media
Group, Inc., the publisher of PotNetwork News and PotNetwork Magazine.
For more information, please visit, www.potnetworkholding.com.

Safe Harbor: Forward-Looking Statements are included within the
meaning of Section 27A of the Securities Act of 1933, and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements
regarding our expected future financial position, results of operations,
cash flows, financing plans, business strategy, products and services,
competitive positions, growth opportunities, plans and objectives of
management for future operations, including words such as “anticipate,”
“if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,”
“should,” “will,” and similar expressions are forward-looking statements
and involve risks, uncertainties and contingencies, many of which are
beyond our control, which may cause actual results, performance, or
achievements to differ materially from anticipated results, performance,
or achievements. We are under no obligation to (and expressly disclaim
any such obligation to) update or alter forward-looking statements,
whether as a result of new information, future events or otherwise.

Contacts

PotNetwork Holdings, Inc.
Investor Relations:
1-800-915-3060
investor@PotNetworkHolding.com

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