Pazoo Inc (OTCMKTS:PZOO) is a deep sub-penny that caught our eye into the end of last week with some huge volume and a monstrous sudden rally. The company has not put out any press releases since May of this year but did just hit the market with a rather interesting 8-K. That filing stated that it had, “pursuant to a certain Limited Liability Company Membership Interest Purchase Agreement, sold a seventy percent (70%) Membership Interest in its wholly owned subsidiary MA & Associates LLC to MA Analytics, LLC, an entity owned and managed by Mark Sarna, a lender to the Company.”
The chart shows 300% tacked on to share pricing for the company in the past week, a rally that has pushed up against longer standing distributive pressure in the stock. However, PZOO has a history of dramatic rallies. What’s more, the name has seen a growing influx of trading interest, with the stock’s recent average trading volume running a bit less than 560% beyond its prior sustained average level.
Pazoo Inc (OTCMKTS:PZOO) bills itself as a company focused on health, wellness and safety. Our focus is to provide best-in-class laboratory testing of cannabis and cannabinoids to protect consumers from impurities, contaminants and other irregularities. Through our wholly-owned subsidiaries, Harris Lee and MA & Associates, Pazoo provides industry leading laboratory testing of cannabis.
Pazoo is licensed to test cannabis in Nevada, with a focus on expansion into other states. Additionally, Pazoo delivers a comprehensive array of health and wellness information on its website www.pazoo.com, and features industry experts from both the health and wellness arena and the pet industry.
Lastly, our newly formed wholly owned subsidiary CK Distribution LLC, provides the marketing and sales agent for the distribution of non-controlled hemp products throughout the USA. Non-controlled hemp products are the items utilized by the industry that support grow facilities, infusion companies and dispensaries.
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As noted above, the company announced a 70% sale of part of its base. The story here is not at all straightforward. We present the 8-K text below. This could be something interesting. But, at the same time, we would be skeptical and responsible and avoid getting carried away with this one.
“The sale was based on an enterprise value of MA & Associates LLC of $2,176,810. The purchase price for the purchased interest was $1,523,767, of which $492,227.30 was paid in the form of cash and $1,031,539.70 in the form of the retirement of outstanding loans, including accrued interest, made by Mark Sarna to the Company. The Agreement also provides that MA Analytics, LLC has the option, exercisable over the next 18 months, to purchase an additional 10 percent (10%) Membership Interest in MA & Associates LLC at a 4% to 10% valuation premium depending on when the Las Vegas, Nevada testing laboratory opens. Before any distributions are made to the members of MA & Associates, LLC, certain existing loans made by Mark Sarna to the Company and MA & Associates LLC, presently totaling approximately $461,000 in principal and accrued interest, will be repaid; thereafter, certain of the remaining non-convertible loans made by Mark Sarna and/or associated lenders to the Company, in the approximate amount of $304,000, may, at the discretion of MA Analytics, LLC, be repaid out of the Company’s thirty percent (30%) profit participation interest. The foregoing description of the Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of the Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.”
Now commanding a market cap of $0.7M, PZOO has a stash ($103K) of cash on the books, which compares with about $3.1M in total current liabilities. One should also note that debt has been growing over recent quarters. PZOO is pulling in trailing 12-month revenues of $12K. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling at -100%. This may be a very interesting story and we will look forward to updating it again soon. Sign-up for continuing coverage on shares of $PZOO stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $PZOO, either long or short, and we have not been compensated for this article.