Pazoo Inc (OTCMKTS:PZOO) Increases Authorized Shares, Crashes Hard
Recently Pazoo Inc (OTCMKTS:PZOO) announced a couple of encouraging news. At the end of May the company formed a new subsidiary called CannabisKing Distribution, LLC and just a month later this subsidiary signed its first deal with Accuvape to sell their vaporizers, related products and services. In addition PZOO acquired the remaining 60% of the MA & Associates, LLC., marijuana testing facility which became the third wholly-owned subsidiary of the company.
Despite the positive PRs the stock of the company failed to move in the right direction. Not only that but for the last couple of sessions the negative momentum seems to be getting stronger and stronger. Yesterday the ticker suffered a devastating crash wiping 24% and closing at $0.0073 per share.
There are plenty of reasons that could explain the chart performance. The company has been having troubles with its financial reports delaying the annual report for 2014 by nearly a month. Not surprisingly the same thing happened with the quarterly covering the first three months of the year. At least PZOO have stated that they will try to file their following financial reports on time. So let’s see what the financial results of the company were at the end of March:
• $17,209 cash
• $123 thousand total current assets
• $1.96 million total current liabilities
• $20,233 thousand total revenues
• $1.92 million net loss
By the end of the year PZOO plan to open at least a couple of marijuana testing facilities so the revenues could grow but will that be enough to offset the rest of the numbers?
Not to mention that the outstanding shares of the company have been diluted significantly since the start of the year. Just for the first three months the O/S ballooned from 191 million shares to over 500 million shares. 231 million of the issued shares came as a conversion of just $679,251 of debt at an average price of $0.0029. Another 60 million shares saw the light of day through the conversion of preferred A shares.
The subsequent events section of the report shows that during the following months even more shares were issued – $282,067 worth of convertible notes were turned into 115 million shares while more preferred A shares were converted into 43 million common shares. As of June 22 PZOO had 660 million outstanding shares, or in other words, the outstanding shares increased by 3.5 times in less than 6 months.
The conversions may not be coming to end anytime soon. The company did pay back $373 thousand of convertible notes but at the same time they had to borrow $780 thousand under new convertible notes. Keep in mind that in an official filing from yesterday PZOO revealed that their authorized shares have been increased from 1 billion to 3 billion with the authorized common shares growing from 980 million to 1.97 BILLION.
It should be obvious that Pazoo is an extremely risky choice for investment. Any trades involving the company’s stock should be preceded by doing you own due diligence and deciding on appropriate time horizons.