Pazoo Inc (OTCMKTS:PZOOD) Gets Demolished
During yesterday’s trading the stock of Pazoo Inc (OTCMKTS:PZOO) suffered a devastating crash of more than 44%. The severe drop pushed the ticker all the way down to 1 cent per share. During the trading day over 7.2 million shares got dumped on the market, volume that is nearly 9 times higher than the monthly average of 882 thousand traded shares. If PZOO are unable to stabilize their stock it may soon find itself falling into the double-zero price ranges.
The red flags around the company make such a possibility not that unlikely. At the end of March PZOO performed a 1-for-100 reverse split and as a result their stock moved from a price of $0.0004 to 4 cents per share. Well, it has been less than a month since then and the ticker has already lost 75% of its value. The rather negative sentiment displayed by the market is easily explained. Just take a look at the annual report for 2015 that was filed several days ago. It showed that as of December 31, 2015, PZOO had:
• $16,819 cash
• $22,267 total current assets!!!
• $4.39 million total current liabilities
• $26,662 total revenues
• $4.78 million net loss
With such a balance sheet it is no wonder that investors are finding it hard to get excited. But if you thought that the depressing financials are the biggest problem surrounding PZOO, well, you are in for a very unpleasant surprise.
Last month PZOO published two PRs each announcing a six-figure investment received by the company. What the press releases failed to mention, however, are the details of these financing deals. The subsequent events section of the annual report reveals in March Pazoo had entered into a $300 thousand convertible agreement note. In February the company had already sold a $102 thousand note that is convertible into common shares at a 50% discount. And all of this is on top of the $$810 thousand in convertible debt that was outstanding at the end of 2015.
Last year the shareholders of the company had to suffer through simply abysmal levels of dilution – PZOO‘s O/S grew from less than 200 million shares at the start of 2015 to nearly 1.5 billion just twelve months later. The recent reverse split reduced the outstanding shares drastically and as of April 13, 2016, PZOO had less than 24 million outstanding shares. The threat of further dilution and the possibility of millions of underpriced shares finding their way to the open market is still as serious as ever, though.
PZOO have stated that they expect to report “explosive” increase in revenues starting from the second quarter of the year but we will have to wait a while longer to see if this will indeed be the case. In the meantime approach the stock with caution and only after doing your own due diligence.