Pazoo Inc (OTCMKTS:PZOO) Drops Despite Pump and PR
Yesterday investors traded the unprecedented for Pazoo Inc (OTCMKTS:PZOO) amount of nearly 210 million shares. The increase was truly massive – the monthly average volume for the stock stands at less than 9 million shares. What caused the sudden burst of interest in the company?
Well, there were two reasons for the intense trading – a new PR published by the company and a rather convenient new paid pump. In the press release PZOO announced that soon they will start generating revenue on a commission basis from one of their marijuana testing labs. An undoubtedly encouraging news but more than likely the bigger influence on investors were the alert emails. PZOO was touted by OTC Stars who disclosed a compensation of $20 thousand and by the extremely active lately newsletter the Wolf of Penny Stocks who bagged $48 thousand for its services.
As we said the combined efforts of the company and the promotion did manage to capture the attention of the market and the influx of traders caused PZOO to open with a gap up at $0.0031 followed by a rapid climb to a high of $0.0051. Unfortunately the momentum dissipated equally as fast and not only did the stock wipe the entirety of its gains but it actually fell to a close 3.7% in the red at $0.0026.
Some lucky traders who timed their trades just right may have walked away with sizable gains but those who believed the words of the pump outfits and held on to their shares could now be facing considerable losses. That is why we always encourage you to do your own due diligence instead of basing your trade decisions on the words of any of the various newsletters.
PZOO have stated numerous times that in the fourth quarter of 2015 and early 2016 their operations should start picking up speed but for now the company is surrounded by a plethora of red flags. The latest financial report covers the quarter ended June 30 when PZOO had:
• $152 thousand cash
• $270 thousand current assets
• $4 million current liabilities
• $1,399 revenues
• $3.4 million net loss
The balance sheet is simply atrocious but at least PZOO are taking some steps in the right direction. Instead of issuing more convertible notes at the start of the month the company announced a private investment in its Preferred C shares. Although these shares are convertible the conversion price of $0.01 is far above the current market price. In the same PR PZOO also stated that they have managed to repay a convertible note owned by LG Capital, LLC. before it could be turned into shares.
Is this enough though? Back in August PZOO had over $1.2 million in outstanding convertible debt. Since the start of the year the common stock of the company has been diluted severely – from 193 million shares at the end of 2014 to nearly 730 million outstanding shares as of August 19. The majority of the shares were issued at discounted prices through the conversion of debt. Investors should keep in mind that even more shares could see the light of day thanks to the approved increase of the authorized shares to 2.95 BILLION common shares.
If PZOO manage to deliver on their promises and in the coming months they start generating more substantial revenues while keeping the expenses in check the stock could move upwards. The crushing dilution, however, coupled with the numerous paid pumps demand the use of caution. Take your time to plan your trades carefully before putting any money on the line.
