Pazoo (PZOO) 10-Q/A 29 Feb 16 2015 Q3 Quarterly report (amended) Financial data

Document and Entity Information

Document and Entity Information - USD ($)	9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015
Document and Entity Information:
Entity Registrant Name	Pazoo, Inc.
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Trading Symbol	pzoo
Amendment Flag	true
Amendment Description	1
Entity Central Index Key	1,533,427
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		756,283,587
Entity Public Float		$ 1,077,657
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited for September 30, 2015) - USD ($)	Sep. 30, 2015		Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 45,184		$ 733,637
Accounts receivable	89,495		87,949
Accounts receivable - related party	3,628
Stock subscription receivable	12,999		18,253
Inventories	2,668		2,668
Prepaid expenses	10,247		6,181
Total current assets	164,221		848,688
Total other assets
Fixed assets, net	1,017,831
Goodwill	1,128,442
Intangible assets, net	516,199
Total other assets	2,662,472
Total assets	2,826,693		848,688
Current liabilities:
Accounts payable and accrued liabilities	239,736		84,189
Loans payable	203,000		3,000
Interest payable	125,534		46,862
Convertible debt	616,884	[1]	895,664	[2]
Contingent consideration liabilities	1,228,581
Derivative liabilities	1,255,917		2,576,025
Total current liabilities	3,669,652		3,605,740
Long-term liabilities:
Long-term portion of convertible debt	147,902	[3]	28,832	[4]
Capital Lease	615,024
Total long-term liabilities	762,926		28,832
Total liabilities	4,432,578		3,634,572
Stockholders' deficit
Common stock	756,283		193,031
Additional paid-in capital	7,472,873		4,438,811
Accumulated deficit	(9,840,414)		(7,419,949)
Total stockholders' deficit	(1,605,885)		(2,785,884)
Total liabilities and stockholders' deficit	2,826,693		848,688
Series A Preferred Stock
Stockholders' deficit
Preferred Stock, Value	2,503		1,036
Series B Preferred Stock
Stockholders' deficit
Preferred Stock, Value	1,637		$ 1,187
Series C Preferred Stock
Stockholders' deficit
Preferred Stock, Value	$ 1,233
[1]	Net of unamortized discounts of $681,729.
[2]	Net of unamortized discounts of $413,898.
[3]	Net of unamortized discounts of $844,598.
[4]	Net of unamortized discounts of $783,668.

Statement of Financial Position

Statement of Financial Position - Parenthetical - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	2,950,000,000	2,950,000,000
Common Stock, Shares Issued	756,283,587	193,030,398
Common Stock, Shares Outstanding	756,283,587	193,030,398
Warrants Issued	7,000,000	2,400,000
Warrants Outstanding	7,000,000	2,400,000
Preferred Stock Series A
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	2,503,526	1,036,394
Preferred Stock, Shares Outstanding	2,503,526	1,036,394
Preferred Stock Series B
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	1,637,500	1,187,500
Preferred Stock, Shares Outstanding	1,637,500	1,187,500
Preferred Stock Series C
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	1,233,000	0
Preferred Stock, Shares Outstanding	1,233,000	0

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues, net:
Advertising sales	$ 5,970	$ 20,892	$ 27,602	$ 72,059
Merchandise sales (revenues)	0	(18)	0	234
Total revenues, net	5,970	20,874	27,602	72,293
Cost of goods sold
Merchandise sales (cost of goods)	0	0	0	569
Total cost of goods sold	0	0	0	569
Gross profit	5,970	20,874	27,602	71,724
Operating expenses:
Selling, general and administrative expenses	306,756	414,708	1,789,539	1,019,747
Professional fees	214,367	361,654	741,924	533,788
Website setup	24,212	53,517	130,602	110,627
Total operating expenses	545,335	829,879	2,662,065	1,664,162
Loss from operations	(539,365)	(809,005)	(2,634,463)	(1,592,438)
Other expenses:
Gain/(Loss) on derivative liabilities	(274,017)	(220,447)	(267,987)	(557,747)
Gain/(Loss) on debt extinguishment	3,623,340	0	2,885,240	0
Net gain on change in fair value of equity method investment	0	0	(780,209)	0
Amortization of debt discount	0	(226,581)	0	(310,107)
Interest expense	(1,008,648)	0	(1,623,046)	(12,000)
Net Income (loss)	1,801,310	(1,256,033)	(2,420,465)	(2,472,292)
Series A preferred stock dividends	(2,016)	(3,650)	(35,155)	(10,209)
Net Income (loss) attributable to common stockholders	$ 1,799,294	$ (1,259,683)	$ (2,455,620)	$ (2,482,501)
Net Income (loss) per common share - basic and diluted	$ 0	$ (0.01)	$ 0	$ (0.02)
Weighted average common shares outstanding - basic and diluted	725,198,103	121,579,943	543,544,416	111,979,303

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)		3 Months Ended		9 Months Ended		59 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015
Cash flows from operating activities:
Net Income (loss)		$ 1,801,310	$ (1,256,033)	$ (2,420,465)	$ (2,472,292)	$ 9,840,414
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discounts				1,152,882	310,107
Depreciation				6,469	0
Amortization				8,630	0
Stock-based compensation				937,101	701,023
Gain/(Loss) on derivative liabilities		274,017	220,447	267,987	557,747
Gain/(Loss) on debt extinguishment		(3,623,340)	0	(2,885,240)	0
Loss on true-up of convertible notes				63,630	0
Additional common shares issued for true-up of convertible notes				93,087	0
Impairment loss on equity method investment				780,209	0
Changes in operating assets and liabilities:
Accounts receivable (increase/decrease)				(1,546)	(26,503)
Accounts receivable - related party (increase/decrease)				(560)	0
Stock subscription receivable (increase/decrease)				5,254	0
Inventory (increase/decrease)				0	1,461
Prepaid expenses and other current assets (increase/decrease)				54,368	446
Accounts payable and accrued liabilities (increase/decrease)				155,546	36,739
Interest payable (increase/decrease)				140,495	0
Net cash used in operating activities				(1,642,153)	(891,272)
Cash flows from investing activities:
Deposit made on acquisition of investment				0	(279,180)
Cash paid for intangible asset				(307,500)	0
Cash received in acquisition	[1]			1,798	0
Acquisition of fixed assets				(21,136)	0
Investment in equity method investee				(778,639)	0
Net cash used in investing activities				(1,105,477)	(279,180)
Cash flows from financing activities:
Borrowings on convertible note, net of original issue discounts				1,527,722	888,500
Repayments on convertible notes				(634,925)	0
Borrowings on loan payable				200,000	0
Proceeds from issuing common stock				48,380	31,506
Proceeds from sale of preferred stock	[2]			338,000	0
Proceeds from exercise of preferred warrants	[3]			0	40,000
Proceeds from sale of preferred stock and warrants	[3]			580,000	270,000
Net cash provided by financing activities				2,059,177	1,230,006
Net increase (decrease) in cash and cash equivalents				(688,453)	59,554
Cash and cash equivalents beginning of period				733,637	35,848
Cash and cash equivalents end of period		45,184	95,402	45,184	95,402	45,184
Supplemental Disclosure of Cash Flows Information
Cash paid for interest				0	0
Cash paid for income taxes				0	0
Noncash Investing and Financing Activities
Fixed assets acquired through capital lease				615,024	0
Preferred shares issued for acquisition	[1]	500,000	0	500,000	0	500,000
Contingent consideration for acquisition	[1]	$ 1,228,581	$ 0	1,228,581	0	$ 1,228,581
Common stock issued for the conversion of preferred stock	[4]			131,500	14,950
Debt discount due to derivative liabilities				1,707,481	581,929
Payments of accounts payable by third party				0	16,876
Original issue discount on convertible note				0	25,500
Convertible debt issued for accrued rent expense				58,434	16,601
Common shares issued for conversion of debt and interest				$ 1,103,879	$ 122,722
[1]	Of MA & Associates.
[2]	Series C.
[3]	Series A.
[4]	Series A and C.

Note 1-Description of Business

Note 1-Description of Business and Basis of Presentation	9 Months Ended
	Sep. 30, 2015
Notes
Note 1-Description of Business and Basis of Presentation	Note 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Financial Presentation The unaudited Condensed Consolidated Balance Sheets, Consolidated Statements of Operations, and Consolidated Statements of Cash Flows of Pazoo, Inc. (“we”, “our”, “Pazoo” or the “Company”) reflect all normal recurring adjustments the nature of which are, in the opinion of management, necessary for a fair presentation of financial position and the results of operations for the interim periods presented. Certain prior-year amounts have been reclassified to conform to the current period presentation. Description of Business We are a development stage health and wellness company. Presently, our business consists of pazoo.com, an online, content driven, ad supported health and wellness web site for people and their pets. Additionally, this site has e-commerce functionality which allows pazoo.com to be an online retailer of nutritional foods/supplements, wellness goods, and fitness apparel. Pazoo, Inc. does not have any brick and mortar establishments. Further, we entered the pharmaceutical testing laboratory market with our acquisitions of MA & Associates, LLC which will operate pharmaceutical testing laboratories in Nevada, and Harris Lee Holdings, LLC which will operate pharmaceutical testing laboratories in other states. These pharmaceutical testing laboratories focus on providing quality control services to the medical cannabis industry. The mission is to protect the public health by providing infrastructure and analytical services to legally-authorized cannabis producers and distributors as well as to regulators. States that have legalized cannabis are developing cannabis health and safety criteria that we will fulfill through our testing laboratories. 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. Principles of Consolidation The accompanying condensed consolidated financial statements include the amounts of the Company and its wholly-owned subsidiaries Harris Lee Holdings LLC, MA & Associates, LLC and CK Distribution, LLC each a Nevada limited liability company. All intercompany accounts and transactions have been eliminated as of September 30, 2015. Fixed Asset Fixed assets are presented at cost at the date of acquisition. Depreciation and amortization is calculated based on the straight-line method over the estimated useful lives of the depreciable assets, or in the case of leasehold improvements, the shorter of the lease term or the estimated useful life of the asset, a portion of which is allocated to cost of sales. Improvements are capitalized while repairs and maintenance are charged to operations as incurred. Fixed assets consists of the following: Estimated Useful Life (in years) September 30, 2015 December 31, 2014 Cost: Equipment 3 - 5 $ 1,017,355 $ - Furniture and fixture 7 6,945 - 1,024,300 - Accumulated depreciation and amortization (6,469) Fixed Assets, Net $ 1,017,831 $ - Assets acquired under capital leases were approximately $615,000 for the nine months ended September 30, 2015. Intangible Assets Intangible assets as of September 30, 2015 consisted of a license agreement acquired for $307,500 from Steep Hill Labs for the right to take the Steep Hill software and methodology to states above and beyond Nevada, $100,000 from the MA license and $117,329 in in-process research & development. The cost basis of the intangible asset will be amortized over the initial 9-year term of the license. Amortization expense during the three and nine months ended September 30, 2015 was $2,525 and $8,630 respectively. Amortization expense for the next five years is approximately $58,000 per year, and then approximately $226,200 thereafter. Impairment of Long-Lived Assets The Company’s intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. The Steep Hill and MA license, along with the in-process research & development, were evaluated for impairment and no impairment loss was incurred as of September 30, 2015.

Note 2-Going Concern

Note 2-Going Concern	9 Months Ended
	Sep. 30, 2015
Notes
Note 2-Going Concern	Note 2—GOING CONCERN From inception of November 16, 2010 through September 30, 2015, the Company has incurred net losses of $9,840,414 and the Company has a working capital deficit as of September 30, 2015. These factors, among others, raise significant doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately attain profitability. Management believes that we can alleviate the facts and circumstances which indicate a going concern by expanding our services, expert advice and online products. We aim to become more than a web based company by providing information, services and products through direct response, retail, and advertising revenue, in addition to our website. Furthermore, we look to expand our business and further eliminate the ongoing concern by establishing our medical marijuana testing labs in Denver, CO, Las Vegas, NV, and Portland, OR.

Note 3-Stockholders' Equity

Note 3-Stockholders' Equity	9 Months Ended
	Sep. 30, 2015
Notes
Note 3-Stockholders' Equity	Note 3—STOCKHOLDERS’ EQUITY Common Stock During the nine months ending September 30, 2015, the Company issued 563,253,189 common shares for the following purposes. 6,158,333 shares for third-party services valued at $48,711 5,460,125 shares issued for cash for cash proceeds of $48,380 12,165,163 shares issued for true-up of loan conversion valued and expensed at $93,087 111,500,000 shares resulting from Series A Preferred Stock holders converting 1,115,000 shares 20,000,000 shares resulting from Series C Preferred Stock holders converting 200,000 shares 403,469,568 shares resulting from debt holders converting $1,103,897 of debt into common stock 4,500,000 shares for warrants exercised currently included in debt conversion 563,253,189 shares issued total 193,030,398 shares at December 31, 2014 756,283,587 shares at September 30, 2015 Preferred Stock During the first nine months ending September 30, 2015, the Company issued 1,467,132 net shares of Series A preferred stock for the following purposes. (1,115,000) shares converted into 111,500,000 common shares 40,000 shares issued for non-cash services 2,542,132 shares issued for $580,000 in cash 1,467,132 shares total 1,036,394 shares at December 31, 2014 2,503,526 shares at September 30, 2015 During the nine months ending September 30, 2015, the Company issued 450,000 shares of Series B preferred stock and issued 1,080,000 shares of Series C preferred stock as a part of its investments in Harris Lee Holdings, LLC., MA & Associates, LLC., and as compensation. The total value of preferred shares was $2,097,250. In addition, 200,000 shares of preferred C shares were converted into common stock and 338,000 preferred C shares were sold for $338,000. Warrants Simultaneous with issuing Series A Preferred Stock to ICPI in the nine month period ended September 30, 2015, and under Investment Agreement No. 5 (October 2014) and Investment Agreement No. 6 (February 2015), we issued 2,325,000 warrants. These warrants allow the holder to purchase one share of Series A Preferred Stock for each Series A Preferred Stock at an exercise price of $0.50, subject to the terms of the warrant agreement between the warrant agent and us. These warrants are exercisable up to five years from the issuance date. The following table presents the Series A preferred stock warrant activity during the nine months ended September 30, 2015: Warrants Weighted Average Exercise Price Outstanding - December 31, 2014 1,030,226 $ 2.23 Granted 2,375,000 0.50 Forfeited/Canceled (50,000) 0.05 Exercised - - Outstanding - September 30, 2015 3,355,226 0.96 Exercisable - September 30, 2015 3,355,226 $ 0.96 The weighted average remaining life of the outstanding Series A preferred stock warrants as of September 30, 2015 and December 31, 2014 was 4.22 and 3.26 years, respectively. As of December 31, 2014 two warrants for 6,130,470 number of common shares were outstanding, which were comprised of a warrant for 5M shares, which expired during the 9 months ended September 30, 2015 and a warrant that was exercisable into $67,500 worth of common stock, which was exercised during the 9 months ended September 30, 2015. See below for additional detail regarding this warrant. As of September 30, 2015, no warrants for common stock were outstanding. On June 22, 2015 Typenex Co-Investments, LLC submitted a cashless warrant Notice of Exercise seeking 52,468,182 shares pursuant to a Warrant dated on or about May 14, 2014. The Company disputed the Notice of Exercise due to what the company believes was bad faith upon the holder acting in such a fashion to deflate the Company’s stock price in order to obtain more share under the Warrant. On or about July 29, 2015 the Company permitted Typenex to submit a new Notice of Exercise for 4,500,000 shares. It is the Company’s position that Typenex is not entitled to any additional shares under the Warrant and will dispute any further attempt to exercise Warrants in the future.

Note 4-Related Party Transactio

Note 4-Related Party Transactions	9 Months Ended
	Sep. 30, 2015
Notes
Note 4-Related Party Transactions	Note 4—RELATED PARTY TRANSACTIONS In July 2013, we entered into a consulting agreement with an affiliate of Mr. Basloe. The agreement provides for consulting on marketing-related services for use in our business operations. The amounts paid under this agreement in the nine months ended September 30, 2015 and September 30, 2014 were $87,000 and $82,688, respectively. In January 2015, we entered into a services agreement with a family member of Mr. Basloe. The agreement provided for consultation services related to the Colorado recreational and medical marijuana marketplace and onsite retail operations studies in Boulder, CO and Denver, CO. The consultant was granted 250,000 common shares under the agreement which vest after six months. The fair value of the award was determined to be $1,750, of which $1,750 was recognized during the nine months ended September 30, 2015 as stock-based compensation. In connection with the investments in Harris Lee Holdings, LLC and MA & Associates, LLC the Company issued Series B and Series C Preferred shares to two current board members, Mr. Del Hierro and Mr. Lieberthal. Mr. Del Hierro was issued 150,000 shares of Series B Preferred and 260,000 shares of Series C Preferred. Mr. Lieberthal was issued 150,000 shares of Series B Preferred shares and 236,000 shares of Series C Preferred shares for total compensation of $675,000, which was recorded as stock compensation.

Note 5-Equity Method Investment

Note 5-Equity Method Investments and Acquisitions	9 Months Ended
	Sep. 30, 2015
Notes
Note 5-Equity Method Investments and Acquisitions	Note 5—EQUITY METHOD INVESTMENTS AND ACQUISITIONS MA & Associates, LLC Equity method investees are all entities over which the Company has significant influence, but not control. Significant influence is presumed with a shareholding of between 20% and 50% of the voting rights. Investments in equity method investees are accounted for using the equity method of accounting and are initially recognized at cost. As of September 30, 2015, the Company has control of MA & Associates, LLC., and is a now a wholly owned subsidiary of the company. See below. On April 8, 2014 the Company entered into a Limited Liability Company Membership Interest Purchase Agreement with MA & Associates, LLC (“MA”) under which the Company agreed to acquire a 40% equity interest in MA for two testing locations in exchange for a purchase price of $2,000,000 and 150,000 shares of the Company’s Series C Preferred Stock. MA was formed to become a marijuana testing laboratory within the State of Nevada. In 2014 the Company paid an aggregate of $542,780 of the cash portion of the purchase price. This equity method investment was fully impaired during 2014. In 2015, the Company paid an additional $778,639 of the $2,000,000 cash portion of the purchase price and issued 100,000 of the 150,000. The $778,639 equity method investment was fully impaired in 2015. The fair value of the 100,000 Series C shares was determined to be $100,000 and it was recognized as compensation expense to the sellers of MA. In addition, there are 60,000 additional Series C shares to be issued for compensation upon achieving certain milestones in 2015 of which 30,000 were issued, valued and expensed at $30,000. On June 3, 2015, the Company entered into an agreement to acquire the remaining 60% interest in MA & Associates, LLC for 1,000,000 shares of Series C preferred stock. 500,000 of the shares were issued and valued at $500,000. The remaining 500,000 shares under the 60% agreement and the remaining 50,000 shares under the 40% agreement will be issued in the future after the testing laboratory is operational. The fair value of the additional 550,000 shares was determined to be $550,000 as of the date of this acquisition and this fair value, along with the remaining cash payments due under the 40% acquisition, were recognized as a contingent consideration liability of $1,228,581. In accounting for this step-acquisition, the Company estimated the fair value of the previous equity method investment to be $666,667 as of the date control was obtained. This resulted in a loss on the change in fair value of equity method investment of $61,914 as the carrying value of the equity method investment was $728,581. ICPI, who is a related party, was entitled to 500,000 Series C shares as a commission for services related to the MA & Associates LLC., acquisition, of which 300,000 were issued during the nine months ended September 30, 2015 valued and expensed at $300,000. The remaining 200,000 shares will be issued upon achieving certain milestones in 2015. The aggregate purchase price for the business acquisition was approximately $1.7 million consisting of 1,000,000 shares of Series C valued at $1,000,000 and the fair value of the previously held equity method investment of $666,667. The acquisitions were accounted for using the purchase method and accordingly, the purchase price was allocated based on the estimated fair market values of the assets acquired and liabilities assumed on the date of each acquisition. As of the date of acquisition we felt that the entire acquisition cost should be impaired as MA & Associates, LLC had not yet begun its testing operations and it is uncertain when the testing operations would begin. The goodwill from the transaction was $1,128,442. The fair value of the assets acquired and liabilities assumed for this acquisition is as follows: ACQUIRED ASSETS: Current assets $ 4,866 In-process research & development 117,329 Licensing 100,000 Other assets 327,796 Total assets acquired $ 549,991 LIABILITIES ASSUMED: Current liabilities $ (11,756 ) Other liabilities (10 ) Total liabilities assumed $ (11,766 ) Net assets acquired $ 538,225 Unaudited pro forma results of operations data for the three and nine months ended September 30, 2015 and 2014 are shown below as if the Company and the entities described above had been combined on January 1, 2014. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results do not include any anticipated cost savings or other effects of the planned integration of these entities, and are not necessarily indicative of the results that would have occurred if the business combinations had been in effect on the dates indicated, or which may result in the future. Unaudited Pro Forma Results of Operations Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenues $ 5,970 $ 20,874 $ 27,602 $ 72,293 Loss from operations (539,365 ) (809,005 ) (3,002,330 ) (1,592,438 ) Net income (loss) $ 1,801,310 $ (1,256,033 ) $ (2,788,332 ) $ (2,472,292 ) Harris Lee Holdings, LLC At December 31, 2014, the Company owned 45% of Harris Lee Holdings, LLC (“Harris Lee”). During 2015, the company acquired the remaining 55% interest in Harris Lee in exchange for 150,000 shares of the Company’s Series C Preferred stock to be issued based on a series of milestone events and 450,000 shares of the Company’s Series B Preferred Stock. Management deemed it had control of Harris Lee prior to the 2015 preferred issuance. As such, value was considered compensation and not a business combination. The aggregate fair value of the 450,000 Series B and the 150,000 Series C shares was determined to be $219,450 and it was recognized as compensation expense to the sellers of Harris Lee. Harris Lee is now consolidated in the Company’s financial results. During the quarter ended September 30, 2015, Harris Lee was not operating and its impact on the Company’s Statement of Operations was zero as it was determined to be nominal.

Note 6-Convertible Notes

Note 6-Convertible Notes	9 Months Ended
	Sep. 30, 2015
Notes
Note 6-Convertible Notes	Note 6—CONVERTIBLE NOTES During the nine months ended September 30, 2015, the Company recorded discounts of $1,897,564 on the notes of which $1,707,066 resulted from derivative liabilities and $184,498 resulted from original issue discounts. During the nine months ended September 30, 2015, the Company recognized a total of $156,617 in losses on true-up of convertible notes due to certain debt provisions that the company reported as additional debt of which $63,630 related to additional principal and $93,087 related to additional shares issued. Aggregate amortization of debt discounts was $1,152,882 for the nine months ended September 30, 2015. The following table summarizes the changes in the convertible notes for the nine months ending September 30, 2015: Short Term Long Term Total Balance as of December 31, 2014 - Net $ 908,889 $ 15,607 $ 927,496 Add back: unamortized discount 500,673 696,893 1,197,566 Balance as of December 31, 2014 - Gross $ 1,409,562 $ 712,500 $ 2,122,062 Cash additions 1,432,220 280,000 1,712,220 Non-cash additions 58,434 - 58,434 Cash payments (634,925 ) - (634,925 ) Conversions (1,030,308 ) - (1,030,308 ) Original issue discount 63,630 - 63,630 Total 1,298,613 992,500 2,291,113 Less: unamortized discount (681,729 ) (844,598 ) (1,526,327 ) Balance as of September 30, 2015 $ 616,884 $ 147,902 $ 764,786 The Company uses the Black Scholes Option Pricing Model to value its convertible debt and warrant derivative liabilities based upon the following assumptions during the three months ended September 30, 2015: September 30, 2015 Dividend yield: 0 Expected volatility 117.0% to 209.0% Risk free interest rate 0.00% to 1.37% Expected life (years) 0.06 to 4.63

Note 7-Derivative Liabilities

Note 7-Derivative Liabilities	9 Months Ended
	Sep. 30, 2015
Notes
Note 7-Derivative Liabilities	Note 7—DERIVATIVE LIABILITIES The following table summarizes the changes in the derivative liabilities during the period ending September 30, 2015: Balance as of December 31, 2014 $ 2,576,025 Initial value derivatives 3,925,510 Extinguished (3,295,576 ) Change in fair value (1,950,042 ) Ending balance as of September 30, 2015 $ 1,255,917

Note 8-Fair Value Measurements

Note 8-Fair Value Measurements and Derivative Liability	9 Months Ended
	Sep. 30, 2015
Notes
Note 8-Fair Value Measurements and Derivative Liability	Note 8—FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITY The Company evaluates all of it financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based derivative financial instruments, the Company uses the Black-Scholes option-pricing model to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. Under ASC-815 the conversion options embedded in the notes payable described in Note 6 require liability classification because they do not contain an explicit limit to the number of shares that could be issued upon settlement. As defined in FASB ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities. Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value at the period ending September 30, 2015. Recurring Fair Value Measurements Level 1 Level 2 Level 3 Total LIABILITIES: Derivative liabilities – September 30, 2015 - - 1,255,917 1,255,917 Derivative liabilities – December 31, 2014 - - 2,576,025 2,576,025

Note 9-Commitments

Note 9-Commitments	9 Months Ended
	Sep. 30, 2015
Notes
Note 9-Commitments	Note 9—COMMITMENTS On March 10, 2015, Harris Lee signed a 9-year licensing agreement with Steep Hill Labs, LLC, with options to renew for an additional 9 years. The purpose of the agreement is to take the Steep Hill licensing to additional states to test medical marijuana above and beyond the State of Nevada, namely Oregon and Colorado. Under the license agreement for the first two states (Oregon and Colorado), if certain gross revenue thresholds are met, the Company is obligated to pay an additional $250,000. In addition, the Company is obligated to pay certain royalties over the life of the license agreement to Steep Hill Labs, LLC, based on the greater of the number of tests ($5 dollars a test) or an escalating royalty rate (7% to 15%) of the initial purchase price. The Company has the option to enter into additional states with similar commitments and royalties. During the nine months ended September 30, 2015 MA and Associates, LLC entered into various capital lease agreements to finance fixed asset purchases for approximately $615,000. Total monthly payments over the 36 month terms are approximately $17,000. The Company rents office space in New Jersey with a term ending on February of 2016 and monthly payments of approximately $1,500. The Company’s MA and Associates, LLC subsidiary rents space in Nevada with a 60 month term ending in May of 2019, with monthly rent expense of $1,632. The Company’s Harris Lee, LLC subsidiary rents space in Portland, Oregon under a 96 month lease, ending October of 2023 with escalating monthly rental payments from $1,650 to $2,322.

Note 10-Subsequent Events

Note 10-Subsequent Events	9 Months Ended
	Sep. 30, 2015
Notes
Note 10-Subsequent Events	Note 10—SUBSEQUENT EVENTS In accordance with FASB ASC 855-10-50-1 we evaluated our subsequent events through November 16, 2015. During this period, we entered into the following debt and equity transactions: Investors converted $135,875 of Convertible Promissory Notes into 113,112,903 common shares. The Company borrowed three Convertible Notes totaling $292,450 with the following average terms: 10.0% interest, maturity date of 7/3/16, and a conversion price calculated at 53% discount to the lowest trading price of the previous 17 days. The Company took aggregate investments of $105,000 in exchange for Convertible Series C Stock which converts to 105,000,000 common shares. The Company issued an aggregate of 24,000,000 common shares for services at an average price of $0.0029. Investors converted 350,000 Preferred A Shares into 35,000,000 common shares at a valuation of $70,000. The Company’s 14-C Filing went effective, increasing the authorized shares of the company from 980,000,000 to 3,000,000,000. The effectiveness of the 14C also established two new classes of Preferred Series Stock, Series D and Series E, both of which have no voting rights, dividends, or interest. The Company issued 500,000 Preferred C Stock to MA & Associates as a part of the MA & Associates Purchase Agreement.

Note 1-Description of Busines16

Note 1-Description of Business and Basis of Presentation: Financial Presentation (Policies)	9 Months Ended
	Sep. 30, 2015
Policies
Financial Presentation	Financial Presentation The unaudited Condensed Consolidated Balance Sheets, Consolidated Statements of Operations, and Consolidated Statements of Cash Flows of Pazoo, Inc. (“we”, “our”, “Pazoo” or the “Company”) reflect all normal recurring adjustments the nature of which are, in the opinion of management, necessary for a fair presentation of financial position and the results of operations for the interim periods presented. Certain prior-year amounts have been reclassified to conform to the current period presentation.

Note 1-Description of Busines17

Note 1-Description of Business and Basis of Presentation: Description of Business (Policies)	9 Months Ended
	Sep. 30, 2015
Policies
Description of Business	Description of Business We are a development stage health and wellness company. Presently, our business consists of pazoo.com, an online, content driven, ad supported health and wellness web site for people and their pets. Additionally, this site has e-commerce functionality which allows pazoo.com to be an online retailer of nutritional foods/supplements, wellness goods, and fitness apparel. Pazoo, Inc. does not have any brick and mortar establishments. Further, we entered the pharmaceutical testing laboratory market with our acquisitions of MA & Associates, LLC which will operate pharmaceutical testing laboratories in Nevada, and Harris Lee Holdings, LLC which will operate pharmaceutical testing laboratories in other states. These pharmaceutical testing laboratories focus on providing quality control services to the medical cannabis industry. The mission is to protect the public health by providing infrastructure and analytical services to legally-authorized cannabis producers and distributors as well as to regulators. States that have legalized cannabis are developing cannabis health and safety criteria that we will fulfill through our testing laboratories. 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.

Note 1-Description of Busines18

Note 1-Description of Business and Basis of Presentation: Principles of Consolidation (Policies)	9 Months Ended
	Sep. 30, 2015
Policies
Principles of Consolidation	Principles of Consolidation The accompanying condensed consolidated financial statements include the amounts of the Company and its wholly-owned subsidiaries Harris Lee Holdings LLC, MA & Associates, LLC and CK Distribution, LLC each a Nevada limited liability company. All intercompany accounts and transactions have been eliminated as of September 30, 2015. Fixed Asset Fixed assets are presented at cost at the date of acquisition. Depreciation and amortization is calculated based on the straight-line method over the estimated useful lives of the depreciable assets, or in the case of leasehold improvements, the shorter of the lease term or the estimated useful life of the asset, a portion of which is allocated to cost of sales. Improvements are capitalized while repairs and maintenance are charged to operations as incurred. Fixed assets consists of the following: Estimated Useful Life (in years) September 30, 2015 December 31, 2014 Cost: Equipment 3 - 5 $ 1,017,355 $ - Furniture and fixture 7 6,945 - 1,024,300 - Accumulated depreciation and amortization (6,469) Fixed Assets, Net $ 1,017,831 $ - Assets acquired under capital leases were approximately $615,000 for the nine months ended September 30, 2015.

Note 1-Description of Busines19

Note 1-Description of Business and Basis of Presentation: Intangible Assets (Policies)	9 Months Ended
	Sep. 30, 2015
Policies
Intangible Assets	Intangible Assets Intangible assets as of September 30, 2015 consisted of a license agreement acquired for $307,500 from Steep Hill Labs for the right to take the Steep Hill software and methodology to states above and beyond Nevada, $100,000 from the MA license and $117,329 in in-process research & development. The cost basis of the intangible asset will be amortized over the initial 9-year term of the license. Amortization expense during the three and nine months ended September 30, 2015 was $2,525 and $8,630 respectively. Amortization expense for the next five years is approximately $58,000 per year, and then approximately $226,200 thereafter.

Note 1-Description of Busines20

Note 1-Description of Business and Basis of Presentation: Impairment of Long-lived Assets (Policies)	9 Months Ended
	Sep. 30, 2015
Policies
Impairment of Long-lived Assets	Impairment of Long-Lived Assets The Company’s intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. The Steep Hill and MA license, along with the in-process research & development, were evaluated for impairment and no impairment loss was incurred as of September 30, 2015.

Note 1-Description of Busines21

Note 1-Description of Business and Basis of Presentation: Principles of Consolidation: Property, Plant and Equipment (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Property, Plant and Equipment	Estimated Useful Life (in years) September 30, 2015 December 31, 2014 Cost: Equipment 3 - 5 $ 1,017,355 $ - Furniture and fixture 7 6,945 - 1,024,300 - Accumulated depreciation and amortization (6,469) Fixed Assets, Net $ 1,017,831 $ -

Note 3-Stockholders' Equity_ Sc

Note 3-Stockholders' Equity: Schedule of Stockholders Equity (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Schedule of Stockholders Equity	6,158,333 shares for third-party services valued at $48,711 5,460,125 shares issued for cash for cash proceeds of $48,380 12,165,163 shares issued for true-up of loan conversion valued and expensed at $93,087 111,500,000 shares resulting from Series A Preferred Stock holders converting 1,115,000 shares 20,000,000 shares resulting from Series C Preferred Stock holders converting 200,000 shares 403,469,568 shares resulting from debt holders converting $1,103,897 of debt into common stock 4,500,000 shares for warrants exercised currently included in debt conversion 563,253,189 shares issued total 193,030,398 shares at December 31, 2014 756,283,587 shares at September 30, 2015

Note 3-Stockholders' Equity_ 23

Note 3-Stockholders' Equity: Schedule of Preferred Units (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Schedule of Preferred Units	(1,115,000) shares converted into 111,500,000 common shares 40,000 shares issued for non-cash services 2,542,132 shares issued for $580,000 in cash 1,467,132 shares total 1,036,394 shares at December 31, 2014 2,503,526 shares at September 30, 2015

Note 3-Stockholders' Equity_ 24

Note 3-Stockholders' Equity: Schedule of Stockholders' Equity Note, Warrants or Rights (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Schedule of Stockholders' Equity Note, Warrants or Rights	Warrants Weighted Average Exercise Price Outstanding - December 31, 2014 1,030,226 $ 2.23 Granted 2,375,000 0.50 Forfeited/Canceled (50,000) 0.05 Exercised - - Outstanding - September 30, 2015 3,355,226 0.96 Exercisable - September 30, 2015 3,355,226 $ 0.96

Note 5-Equity Method Investme25

Note 5-Equity Method Investments and Acquisitions: Equity Method Investments (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Equity Method Investments	ACQUIRED ASSETS: Current assets $ 4,866 In-process research & development 117,329 Licensing 100,000 Other assets 327,796 Total assets acquired $ 549,991 LIABILITIES ASSUMED: Current liabilities $ (11,756 ) Other liabilities (10 ) Total liabilities assumed $ (11,766 ) Net assets acquired $ 538,225

Note 5-Equity Method Investme26

Note 5-Equity Method Investments and Acquisitions: Business Acquisition, Pro Forma Information, Nonrecurring Adjustments (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Business Acquisition, Pro Forma Information, Nonrecurring Adjustments	Unaudited Pro Forma Results of Operations Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenues $ 5,970 $ 20,874 $ 27,602 $ 72,293 Loss from operations (539,365 ) (809,005 ) (3,002,330 ) (1,592,438 ) Net income (loss) $ 1,801,310 $ (1,256,033 ) $ (2,788,332 ) $ (2,472,292 )

Note 6-Convertible Notes_ Conve

Note 6-Convertible Notes: Convertible Debt (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Convertible Debt	Short Term Long Term Total Balance as of December 31, 2014 - Net $ 908,889 $ 15,607 $ 927,496 Add back: unamortized discount 500,673 696,893 1,197,566 Balance as of December 31, 2014 - Gross $ 1,409,562 $ 712,500 $ 2,122,062 Cash additions 1,432,220 280,000 1,712,220 Non-cash additions 58,434 - 58,434 Cash payments (634,925 ) - (634,925 ) Conversions (1,030,308 ) - (1,030,308 ) Original issue discount 63,630 - 63,630 Total 1,298,613 992,500 2,291,113 Less: unamortized discount (681,729 ) (844,598 ) (1,526,327 ) Balance as of September 30, 2015 $ 616,884 $ 147,902 $ 764,786

Note 6-Convertible Notes_ Sched

Note 6-Convertible Notes: Schedule of Interest Rate Derivatives (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Schedule of Interest Rate Derivatives	September 30, 2015 Dividend yield: 0 Expected volatility 117.0% to 209.0% Risk free interest rate 0.00% to 1.37% Expected life (years) 0.06 to 4.63

Note 7-Derivative Liabilities_

Note 7-Derivative Liabilities: Schedule of Derivative Liabilities at Fair Value (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Schedule of Derivative Liabilities at Fair Value	Balance as of December 31, 2014 $ 2,576,025 Initial value derivatives 3,925,510 Extinguished (3,295,576 ) Change in fair value (1,950,042 ) Ending balance as of September 30, 2015 $ 1,255,917

Note 8-Fair Value Measurement30

Note 8-Fair Value Measurements and Derivative Liability: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Tables)	9 Months Ended
	Sep. 30, 2015
Tables/Schedules
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis	Recurring Fair Value Measurements Level 1 Level 2 Level 3 Total LIABILITIES: Derivative liabilities – September 30, 2015 - - 1,255,917 1,255,917 Derivative liabilities – December 31, 2014 - - 2,576,025 2,576,025

Note 1-Description of Busines31

Note 1-Description of Business and Basis of Presentation: Intangible Assets (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015
Details
Amortization of Acquired Intangible Assets	$ 2,525	$ 8,630

Note 2-Going Concern (Details)

Note 2-Going Concern (Details) - USD ($)	3 Months Ended		9 Months Ended		59 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015
Details
Net Income (loss)	$ 1,801,310	$ (1,256,033)	$ (2,420,465)	$ (2,472,292)	$ 9,840,414

Note 3-Stockholders' Equity (De

Note 3-Stockholders' Equity (Details)	9 Months Ended
	Sep. 30, 2015shares
Details
Stock Issued During Period, Shares, New Issues	563,253,189
Auction Market Preferred Securities, Shares, Issued	1,467,132

Note 4-Related Party Transact34

Note 4-Related Party Transactions (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Professional and Contract Services Expense	$ 87,000	$ 82,688
Employee Benefits and Share-based Compensation	1,750
Employee Service Share-based Compensation, Cash Received from Exercise of Stock Options	$ 675,000

Note 6-Convertible Notes (Detai

Note 6-Convertible Notes (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Details
Amortization of debt discounts	$ 1,152,882	$ 310,107

Note 9-Commitments (Details)

Note 9-Commitments (Details)	9 Months Ended
	Sep. 30, 2015USD ($)
Details
Repayments of Debt and Capital Lease Obligations	$ 615,000