UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
________________________
 
FORM S-1
________________________
 
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933


PAZOO, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
5961
 
27-3984713
(State or other jurisdiction of
incorporation or organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. Employer Identification
Number)
 
15A Saddle Road
Cedar Knolls,  NJ 07927-1901
 
Telephone Number – (973) 455-0970
 
(Address, including zip code,
and telephone number,
including area code, of registrant’s
principal executive offices)
 
Sandra Miller
711 South Carson Street
Suite 4, Carson City, NV 89701-5292

Telephone Number - 775-882-4641
 
(Name, address, including zip code,
and telephone number,
including area code, of agent for service)
 
Approximate date of commencement of proposed sale to the public: The Company is not making an initial public offering of its common stock.  Only those shares previously issued, and those shares into which previously issued Series A Convertible Preferred Stock (Series A Preferred Stock) are convertible into, are being registered pursuant to this Form S-1.  Current stock holders may re-sell their shares into the public market as soon as practical after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x
 
 
 
 

 
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
o  
Accelerated filer
o
         
Non-accelerated filer
o
(Do not check if a smaller reporting company)
Smaller reporting company
x
 
Calculation of Registration Fee

Title of Each Class
of Securities to
be Registered
Amount to be
Registered(1)
 
Proposed Maximum Offering Price
 per Unit(1)
   
Proposed Maximum
Aggregate
Offering Price(2)
   
Amount of
Registration Fee(3)
 
Common stock,  $0.001par  value per share
68,182,000 shares
 
$
0.005
   
$
340,910.00
   
$
39.06
 

(1)
48,182,000 shares are being registered by the Security Holders and 20,000,000 of shares of common stock reserved for the conversion of Series A Preferred Stock and bear no relationship to assets, earnings, or any other valuation criteria.  No assurance can be given that the shares will have a market value or that they may be sold at this, or at any price.

(2)
The Company is not making an initial public offering of its common stock.  Only those shares previously issued, and those shares into which previously issued Series A Preferred Stock are convertible into, are being registered pursuant to this Form S-1.

(3)
The registration fee is calculated in accordance with Rule 457(i) of the Securities Act, based upon the fixed price of the Series A Preferred Stock giving effect for the conversion of the Series A Preferred Stock. 
 
 
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 
 
SUBJECT TO COMPLETION, Dated  November 17, 2011
 
 
 

 
ii

 
 
PROSPECTUS
Pazoo, Inc.
68,182,000
SHARES OF COMMON STOCK
 
The shareholders named in this prospectus are registering up to 48,182,000 shares of common stock and 20,000,000 shares of common stock issuable upon conversion of the Series A Preferred Stock, for a total of 68,182,000 shares, through this prospectus. We will not receive any proceeds from this offering and have not made any arrangements for the sale of these securities. We have not set an offering price for these securities.
 
Our common stock is presently not traded on any market or securities exchange. Although we intend to apply for quotation of our common stock on the Over-The-Counter Bulletin Board (“OTCBB”), public trading of our common stock may never materialize. If our common stock becomes traded on the OTCBB, then the sale price to the public will vary according to prevailing market prices or privately negotiated prices by the selling shareholders. We intend to seek quotation of our common stock on the OTCBB immediately following the effectiveness of the Registration Statement of which this Prospectus is a part.
 
TO ANALYZE ANY OF THE SHARES COVERED BY THIS PROSPECTUS, CAREFULLY READ AND CONSIDER THE RISK FACTORS INCLUDED IN THE SECTION ENTITLED “RISK FACTORS” BEGINNING ON PAGE 6. YOU SHOULD BE PREPARED TO ACCEPT ANY AND ALL OF THE RISKS ASSOCIATED WITH PURCHASING THE SHARES, INCLUDING A LOSS OF ALL OF YOUR INVESTMENT.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The information in this prospectus is not complete and may be changed.  These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective.  The prospectus is not an offer to sell these securities and the registrant is not soliciting an offer to buy these securities in any state.
 
 
 
 
 
 
 
 
 
 
 
 
 

 
1

 
 
The Date of This Prospectus Is:  November 17, 2011
 
 
Table of Contents
 
 
Page
   
2
5
6
18
18
18
19
24
28
30
32
34
Directors, Executive Officers, Promoters And Control Persons 38
41
42
44
Exhibits 58
Signatures 59
 
 
 
 
 
 
 
 
 
 
 
 
 

 
2

 
 
PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus.  This summary does not contain all the information that you should consider before investing in the common stock.  You should carefully read the entire prospectus, including “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Financial Statements, before making an investment decision. In this Prospectus, the terms “Company,” “we,” “us” and “our” refer to PAZOO, Inc..

PAZOO, INC

Organization

We were incorporated as a C-Corporation in the State of Nevada as IUCSS, Inc. on November 16, 2010 and we established a fiscal year end of December 31.  On May 9, 2011, we changed our name to Pazoo, Inc. to take advantage of unique branding and website opportunities. We are a developmental stage company formed for the purpose of offering a complete selection of nutritional foods/supplements, wellness goods, fitness apparel, and healthy advice. We believe that total and complete health should be easy for consumers to achieve and our focus is to use average everyday items to help consumers achieve total health and well-being.

On inception of November 16, 2010 we issued 45,000,000 shares of our common stock with no cost basis to four individuals.  The share amounts were issued as follows: 15,000,000 shares to our Chief Executive Officer, David Cunic, 15,000,000 shares to our President, Steve Basloe, 12,500,000 shares to our Chief Financial Officer, Gregory Jung, and 2,500,000 shares to our then Secretary and Treasurer, Gina Morreale.  In September 2011 we added Ben Hoehn who replaced Gina Morreale as Secretary and Treasurer, and also assumed the duties of Chief Operating Officer.  Mr. Hoehn also received 2,500,000 shares of the company. On inception we issued 600,000 shares of Common Stock valued at $0.005 per share to three consultants for services to be performed in 2011. We also issued 2,000,000 shares of our Series A Preferred Stock to an accredited investor, Integrated Capital Partners, Inc. (“ICPI”) at $0.05 per share valued at $100,000.  See “Preferred Stock”.  In addition, from July 2011 through September 2011, we issued 82,000 shares of our Common Stock par value $0.001 to 41 individuals in exchange for evaluation of our website functionality and beta testing logistics.  Our principal executive office is located at 15A Saddle Road, Cedar Knolls, NJ 07927 and our telephone number is 973-455-0970.  Our primary website is www.pazoo.com.

Since November 16, 2010 (our inception) to September 30, 2011 we have generated $636 in product revenues and have a cumulative net loss of $123,288.  Although we have had limited operations, our mini website became fully operational in August 2011 with sales through Amazon.com in two months with 3 product offerings.  Our goal is to increase our product offerings and spend heavily on marketing and branding initiatives.  We anticipate generating significant revenues within twelve months of the date of this filing.  As set forth in the investment agreement with ICPI (See Investment Agreement - Exhibit 99.1), we believe we have secured sufficient working capital to fund our development activities for the next 24 months without the need to seek additional financing.  We currently have four officers and three Board of Directors members.  These individuals allocate time and personal resources to us and devote on average approximately 40 hours per week to Pazoo, Inc.  As of the date of this Prospectus, we have 48,182,000 shares of $0.001 par value common stock issued and outstanding, which is owned by 53 shareholders.

By consent of the Board of Directors, we have authorized 20,000,000 shares of Preferred Stock consisting of 10,000,000 Series A Convertible Preferred Stock, 2,500,000 Series B Non-Convertible Preferred Stock (Series B Preferred Stock), and 7,500,000 Series C Non-Convertible Preferred Stock (Series C Preferred Stock).  The Preferred classes of stock are structured as follows: Series A Preferred Stock is convertible into common stock at 10:1, pays a 5% common stock dividend, and is non-voting.  Series B Preferred Stock is non-convertible, non-dividend paying, and has voting rights at 200:1.  Series C Preferred Stock is non-convertible, pays a common stock dividend of 2% to 12%, and is non-voting.  See Exhibit A of the Investment Agreement.  As of the date of this filing only 2,000,000 shares of Series A Preferred Stock have been sold and only those shares into which those Series A Preferred Stock are convertible (20,000,000 shares common) are being registered hereunder.



 
3

 
 
THE OFFERING

We have 48,182,000 shares of common stock issued and outstanding and are registering these shares on behalf of 53 certain individuals (“Selling Security Holders”) named under Selling Security Holders within this registration statement. The Selling Security Holders may sell all 48,182,000 shares of their common stock after this registration becomes effective, contingent upon the Company being traded on any market or securities exchange. We will not receive any proceeds from the sale of the common stock by the Selling Security Holders.   We are also registering 20,000,000 shares of common stock issuable upon conversion of the Series A Preferred Stock sold prior to the filing of this Registration Statement.  In the event no conversion takes place, or less than the reserved amount of common stock is issued upon conversion, the remainder of any reserved shares will be retired.

The following is a brief summary of this offering. Please see the “Plan of Distribution” section for a more detailed description of the terms of the offering.

Securities being offered by the Selling Security Holders, common stock, $0.001 par value
 
48,182,000 shares of common stock, $0.001 par value issued to Pazoo’s officers, directors and additional individuals through market research participation, and 20,000,000 shares of common stock issuable upon conversion of the Series A Preferred Stock, for a total of 68,182,000 shares.
     
Offering Price per Share by the Selling Security Holders:
 
All shares being registered may be sold by existing shareholders without our involvement.  Until such time as our Stock is quoted on the OTCBB (see below), the initial offering price shall be $0.005.  Thereafter, the actual price of the stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders.
     
Offering Period:
 
Given that we are not offering shares for sale, we have no specific offering period.
     
Number of Shares Outstanding Before the Offering:
 
See “Offering Period”.  48,182,000 common shares are currently issued and outstanding are being registered under this prospectus by the Selling Security Holders.  Additionally, 20,000,000 shares are being registered for the conversion of the Series A Preferred Stock.
     
Minimum number of shares to be sold in this Offering:
 
None.
     
Use of Proceeds
 
We are not selling any shares of the common stock covered by this prospectus.  We will not receive any of the proceeds from the sale of the common stock of the Selling Security Holders. The expenses of this offering, including the preparation of this prospectus and the filing of this registration statement, were approximately $14,600.
     
Termination of the offering
 
Given that we are not offering shares for sale, we have no specific termination of the offering.
     
Terms of the offering
 
The Selling Security holders will determine when and how they will sell the common stock offered in this prospectus.
     
Trading Market:
 
None. We will seek a market maker to file a Rule 211 application with the Financial Industry Regulatory Authority (“FINRA”) in order to apply for the inclusion of the common stock in the Over-the-Counter Bulletin Board (“OTCBB”); however, such efforts may not be successful and our shares may never be quoted and owners of our common stock may not have a market in which to sell the shares. In addition, no estimate may be given as to the time that this application process will require.
 
Even if our common stock is quoted or granted listing, a market for the common shares may not develop.

 
 
4

 
 
The Selling Security Holders named in this prospectus are registering all of the shares of common stock through this prospectus and are doing so for their own account.
 
We will not receive any of the proceeds from the resale of these shares.
 
SUMMARY OF FINANCIAL INFORMATION

The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis,” and the “Financial Statements and Notes” thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data from November 16, 2010 (inception) through September 30, 2011 should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our financial statements and the related notes included in this prospectus.
 
Balance Sheet Data:
 
As at September 30, 2011
 
Current assets
 
$
16,551
 
Total assets
 
$
16,551
 
     
-
 
Current liabilities
 
$
23,929
 
Total liabilities
 
$
23,929
 
Stockholders’ equity
 
$
(7,378)
 
 
 
Statement of Operations:
 
November 16,
2010
(Inception) through September 30, 2011
 
Revenues
 
$
636
 
Cost of Goods Sold
   
390
 
Gross Profit
   
246
 
Operating expenses
 
$
123,534
 
 Net loss
   
(123,288)
 
Net loss per common share – basic and diluted
 
$
-
 
Weighted average common shares outstanding - basic
   
48,182,000
 
Weighted average common shares outstanding - diluted
   
70,182,000
 



We are subject to those financial risks generally associated with development stage enterprises.  Despite currently having sufficient capital on hand, we have sustained losses since inception.  We may require additional financing and independently seek capital to fund our development activities.  However, we may be unable to obtain such financing.  Investing in our common stock involves a high degree of risk. We are subject to risk factors specific to our business strategy and the health and wellness industry.  You should carefully consider all the risks described below, together with other information contained in this prospectus (including our financial statements and related notes), before making a decision to invest in our common stock. Our business could be harmed by any of these risks at any time. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.
 
 
 
5


 
RISK FACTORS
 
Risks Associated With Our Business

WE HAVE A LIMITED OPERATING HISTORY AND HAVE INCURRED OPERATING LOSSES

We were founded in November 2010, and began offering our first product online through a “mini-website” in August 2011.  This minisite was to serve two functions: 1) to sell products from our first vendor service agreement, and 2) to beta test our online logistics and customer service management.  Our main website is currently in the development stage and will be launched contingent upon us attracting new products through vendor relationships.  This limited operating history makes it difficult to evaluate our company’s business prospects.  Since inception on November 16, 2010 we have incurred losses in the amount of $123,288 including 2010, first, second, and third quarter 2011 losses of $1,615, $42,448, $36,992 and $42,233, respectively.  We expect operating expenses, working capital requirements, costs of product development, sales and marketing, research and development, and general and administrative expenses to increase substantially as we execute our business plan to capacity. If we are unable to sufficiently increase our revenue to offset these increased costs, we will not achieve profitability and our operating losses, net losses and negative cash flows will increase.

WE ARE IN THE EARLY STAGES OF DEVELOPMENT

Given the dynamic nature of e-commerce, our potential growth prospects should be similar to examining a company in the early stages of development.  Business model unpredictability and management of growth expectations are risks that should be examined.  In addition, the following are risk areas that we anticipate will affect our business:

maintaining key personnel;
how we respond to competitors;
maintenance of our customer base;
how we manage our suppliers;
customer service excellence;
technology development;
website improvement; and
marketing strategy execution.

Our failure to address these tasks could materially affect our financial condition, operational results, business, and prospects and there can be no assurance that we will be successful in managing such risks.

WE CANNOT PREDICT OUR FUTURE REVENUE

Sales volume is difficult to forecast and is generally dependent upon volume and the Company’s ability to fulfill orders in a timely manner.  Internet sales tend to fluctuate with retail sales and are subject to traditional seasonal fluctuations.  Retail sales tend to be slower in the summer months and are significantly higher in the fourth quarter.  We expect that our business cycles will change according to retail sales cycles.  The Company expects to experience quarterly operational fluctuations due to many external factors outside of our control.  These factors, which may adversely affect our results, include:

economic conditions relative to e-commerce;
technical difficulties related to volume increases;
technology upgrades to online systems;
increasing acceptance of e-commerce as a viable shopping vehicle;
price wars relative to the Company’s competitors;
our ability to manage vendor relationships and inventory;
our ability to build and maintain customers;
the quantity of product returns; and
capital expenditures related to expansion.
 
 
 
 
6

 
 
WE ARE IN A HIGHLY COMPETITIVE MARKET

The e-commerce industry is highly concentrated with minimal barriers to entry and competitors can launch websites at a relatively low cost.  Our business is particularly subject to rapidly and frequently changing consumer trends and preferences. Our continued success depends in part on our ability to anticipate and respond to these changes, and we may not be able to respond in a timely or commercially appropriate manner to these changes. Our failure to accurately predict these trends could negatively affect our inventory levels, sales and consumer opinion of us as a source for the latest products.  We will be competing against larger companies with central purchasing efficiencies, inventory economies of scale, and in some cases, brick-and-mortar locations.  These competitors include various health improvement, wellness, and sports nutrition stores, as well as vendors of other vitamin products, including VitaminShoppe, VitaCost, and General Nutrition Centers.   Given our small size, we will need to compete on:

customer service excellence;
selection of our niche products;
accessibility;
convenience;
price;
order fulfillment speed; and
brand recognition.

Our competitors may have longer operating histories, greater financial resources, greater brand recognition, larger customer bases and significantly deeper marketing budgets, which, in turn, may result in lower margins and a decreased market share for our company.  There is no assurance that we will compete effectively against present and future competitors, and this competition may have a material adverse effect on our financial condition, operational results, business, and prospects.

WE ARE DEPENDENT ON THE GROWTH OF E-COMMERCE.

Our future revenues and growth are dependent upon the continued acceptance of online purchases as the medium of choice for retail purchases.  Consumer acceptance of e-commerce is dependent upon the maintenance of reliable infrastructure to support technology demands that increased internet usage places upon bandwidth.  Government regulation may cause disruptions in service due to delays in the development of new standards to control various levels of internet activity.  Third party internet service providers may also cause service interruptions outside of our control.  Such delays could adversely affect our ability to provide adequate customer service to our website users.  If online usage growth declines or grows slower than expected, if consumer’s ability to access the internet, or if the infrastructure necessary to sustain online commerce is temporarily or permanently lost, our financial condition, operational results, business, and prospects could be materially adversely affected.

WE ARE EXPOSED TO SECURITY RISKS INHERENT WITH E-COMMERCE.

We rely on technology from third parties to provide the security and authentication necessary to effect secure transmission of personal confidential information, such as customer credit card numbers.  Failure to successfully prevent such breaches could significantly harm our business and expose us to litigation. Outside parties who are able to bypass our security measures could misappropriate proprietary information, including customer credit card and personal data.  To the extent that our activities or third-party contractor activity involves the storage and transmission of proprietary information, security breaches could damage our reputation and expose us to a risk of loss or litigation and possible liability. While we do comply with the Data Security Standards of the Plastic Card Security Act (PCI DSS), there can be no assurance that our security measures will prevent security breaches or that failure to prevent such security breaches will not have a material adverse effect on our financial condition, operational results, business, and prospects.
 
 
 
 
7

 
 
WE ARE DEPENDENT ON KEY PERSONNEL AND MAY REQUIRE ADDITIONAL PERSONNEL IN THE FUTURE.

Our performance is dependent on the continued services and on the performance of our senior management, David Cunic, Chief Executive Officer; Steve Basloe, President; Ben Hoehn, Chief Operating Officer; and Gregory Jung, Chief Financial Officer. Company performance also depends on our ability to retain and motivate other officers and key employees. The loss of the services of any of executive officers or other key employees could have a material adverse effect on our financial condition, operational results, business, and prospects. The Company does not have long-term employment agreements with any of our key personnel and maintains no "key person" life insurance policies. Our future success also depends on our ability to identify, attract, hire, train, retain and motivate other highly skilled technical, managerial, editorial, merchandising, marketing and customer service personnel. Competition for such personnel is intense, and there can be no assurance that we will be able to successfully attract, assimilate or retain sufficiently qualified personnel.  The failure to retain and attract the necessary technical, managerial, merchandising, marketing and customer service personnel could have a material adverse effect on our financial condition, operational results, business, and prospects.

WE RELY ON THIRD PARTY SHIPPERS.

We rely on third-party carriers both for the shipment of our products to customers and for the delivery of inventory. Consequently, we are subject to risks of these carriers, including employee strikes and inclement weather. Any disruption in the ability of these carriers to promptly deliver our products to our customers or inventory to us could damage the brand and lead to customer dissatisfaction. This could materially and adversely affect our financial condition, operational results, business, and prospects.

WE ARE DEPENDENT ON DEVELOPING FAVORABLE VENDOR RELATIONSHIPS FOR OUR PRODUCTS PROCUREMENT.

We currently only carry inventory in Emergent Health products and we have a long-term contract with VitaminSpice (See VitaminSpice Supply Agreement), which assures the availability of merchandise, and the continuation of particular payment terms.   However, there can be no assurance that VitaminSpice will comply with the terms of the contract or that we will be able to negotiate with future vendors to sell us products on terms that will ensure acquisition of merchandise in a timely and efficient manner and on acceptable commercial terms. If we are unable to develop and maintain relationships with vendors that would allow us to obtain sufficient quantities of merchandise on acceptable commercial terms, our financial condition, operational results, business, and prospects would be materially adversely affected.

WE MUST RESPOND TO CONSUMER DEMANDS.

Our business is subject to changing consumer trends and preferences.  Our failure to accurately predict or react to these trends could negatively affect consumer opinion of us as a source for the latest products, which in turn could harm our customer relationships and cause us to lose market share.  The success of our new product offerings depends upon a number of factors, including our ability to:

Anticipate customer needs;
Procure or develop new products;
Successfully commercialize new products in a timely manner;
Price our products competitively;
Deliver our products in sufficient volumes and in a timely manner; and
Differentiate our product offerings from our competition
 
WE MAY BE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY FROM THIRD PARTY INFRINGEMENT
 
We have invested resources to promote our brand name and have applied for trademark and copyright protection; however, while we attempt to ensure that such licensees maintain the quality of our brand, there can be no assurance that such licensees will not adversely affect the value of our financial condition, operational results, business, and prospects. There can be no assurance that the steps 
 
 
 
8

 
 
taken to protect our proprietary rights will be adequate or that third parties will not infringe or misappropriate our copyrights or trademarks. In addition, there can be no assurance that other parties will not assert infringement claims against us.  We may in the future be subject to intellectual property litigation and infringement claims, which could cause us to incur significant expenses or prevent us from manufacturing, selling or using some aspect of our products. Claims of intellectual property infringement may also require us to enter into costly royalty or license agreements. However, we may be unable to obtain royalty or license agreements on terms acceptable to us or at all. Claims that our technology or products infringe on intellectual property rights of others could be costly and would divert the attention of management and key personnel, which in turn could adversely affect our financial condition, operational results, business, and prospects.

COMPLIANCE WITH GOVERNMENTAL REGULATIONS COULD INCREASE OUR COSTS AND AVERSELY AFFECT OUR FINANCIAL RESULTS.

Due to the increasing popularity and use of the Internet and other online services, additional laws and regulations may be adopted (such as PCI DSS) with respect to the Internet or other online services covering issues such as user privacy, pricing, content, copyrights, distribution and characteristics and quality of products and services. Furthermore, the growth and development of the market for online commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on those companies conducting business online. The adoption of any additional laws or regulations may decrease the growth of the Internet or other online services, which could, in turn, decrease the demand for our products and services and increase our cost of doing business, or otherwise have an adverse effect on our financial condition, operational results, business, and prospects. Moreover, the applicability to the Internet and other online services of existing laws in various jurisdictions governing issues such as property ownership, sales and other taxes, libel and personal privacy is uncertain and may take years to resolve. Any such new legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the Internet and other online services could have a material adverse effect on our financial condition, operational results, business, and prospects.  In addition, from time to time, Congress, the FDA, the FTC or other federal, state, local or foreign legislative and regulatory authorities may impose additional laws or regulations that apply to our distribution of dietary supplements, repeal laws or regulations that we consider favorable to us or impose more stringent interpretations of current laws or regulations. We are not able to predict the nature of such future laws, regulations, repeals or interpretations or to predict the effect additional governmental regulation, when and if it occurs, would have on our business in the future. Such developments could require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, adverse event reporting or other new requirements. Any such developments could increase our costs significantly and could have a material adverse effect on our business, financial condition and results of operations. For example, legislation has been introduced in Congress to, among other things, impose substantial new regulatory requirements for dietary supplements, including adverse event reporting, post-market surveillance requirements, FDA market reviews of dietary supplement ingredients, safety testing and records inspection. If enacted, new legislation could raise our costs and negatively influence our business. In addition, the FDA may adopt the proposed rules on GMP in manufacturing, packaging, or holding dietary ingredients and dietary supplements, which will apply to the products we distribute. These regulations will require dietary supplements to be prepared, packaged and held in compliance with stricter rules, and will require quality control provisions similar to those in the GMP regulations. We or our third-party manufacturers may not be able to comply with the new rules without incurring additional expenses, which could have a material adverse effect on our financial condition, operational results, business, and prospects.

CHANGES TO SALES AND OTHER TAX LAWS COULD IMPACT OUR BUSINESS

We do not currently collect sales or other similar taxes in respect of shipments of goods into states other than New Jersey; however, one or more states may seek to impose sales tax collection obligations on out-of-state companies such as Pazoo, which engages in online commerce. In addition, any new operation in states outside New Jersey could subject shipments into such states to state sales taxes under current or future laws. A successful assertion by one or more states or any foreign country that the Company should collect sales or other taxes on the sale of merchandise could have a material adverse effect on, our financial condition, operational results, business, and prospects.
 
 
 
9


 
WE ARE SUBJECT TO INFRASTRUCTURE CAPACITY CONSTRAINTS

Our revenues depend on the number of visitors who shop on our website and the volume of orders we fulfill.  A key element of our strategy is to generate a high volume of traffic on, and use of, our website. As such, the satisfactory performance, reliability and availability of the website, transaction-processing systems and network infrastructure are critical to our ability to attract and retain customers and maintain adequate customer service levels.  Any system interruptions that result in the unavailability of our website or reduced order fulfillment performance would reduce the volume of goods sold and the attractiveness of our product and service offerings.  Any substantial increase in the volume of traffic on the website or the number of orders placed by customers will require Pazoo to expand and upgrade further our technology, transaction-processing systems and network infrastructure. There can be no assurance that we will be able to accurately project the rate or timing of increases, if any, in the use of our website or timely expand and upgrade our systems and infrastructure to accommodate such increases.  In addition, although we work to prevent unauthorized access to Company data, it is impossible to completely eliminate this risk. There can be no assurance that we will be able in a timely manner to effectively upgrade and expand our transaction-processing systems or to integrate smoothly any newly developed or purchased modules with our existing systems.  Any inability to do so would have a material adverse effect on our financial condition, operational results, business, and prospects.
 
WE MAY NOT BE ABLE TO MAINTAIN OUR DOMAIN NAMES.
 
Maintaining our Internet domain names is critical to our success. Under current domain name registration practices, no other entity may obtain an identical domain name but can obtain a similar or identical name with a different suffix, such as “.net” or “.org,” or with a different country designation, such as “de” for Germany.  We have not registered our domain names with each of the suffixes or jurisdictions available. As a result, third parties may use domain names that are similar to our domain names, which may result in confusion to potential customers and lost sales. Failure to maintain our domain name’s uniqueness could have a material adverse effect on our business, results of operations and financial condition.
 
WE ARE RELIANT ON FAVORABLE CONSUMER PERCEPTION OF HEALTH AND WELLNESS PRODUCTS
 
We are highly dependent upon consumer perception of the safety, efficacy and quality of our products, as well as similar products distributed by other companies. Consumer perception of products can be significantly influenced by scientific research or findings, national media attention and other publicity about product use.  A product may be received favorably, resulting in high sales associated with that product that may not be sustainable as consumer preferences change. In addition, recent studies have challenged the safety or benefit of certain nutritional supplements and dietary ingredients. Future scientific research or publicity could be unfavorable to our industry or any of our particular products and may not be consistent with earlier favorable research or publicity. A future research report or publicity that is perceived by our consumers as less favorable or that questions earlier favorable research or publicity could have a material adverse effect on our ability to generate revenues. Adverse publicity in the form of published scientific research, statements by regulatory authorities or otherwise, whether or not accurate, that associates consumption of our products or any other similar products with illness or other adverse effects, that questions the benefits of our or similar products, or that claims that such products are ineffective could have a material adverse effect on our financial condition, operational results, business, and prospects.

WE MAY FACE LOSSES TO OUR SYSTEMS AND INVENTORY DUE TO LOCATION CONCENTRATION

Our ability to successfully receive and fulfill orders and provide high-quality customer service depends on the efficient and uninterrupted operation of our computer and communications hardware systems. Substantially all of our computer and communications hardware is located at a single facility in Cedar Knolls, NJ.   Computer viruses, worms and similar programs may cause our computer systems to incur interruptions, delays, loss of data or the inability to accept and fulfill customer orders.  We do not presently have redundant systems or a business continuity plan and do not carry sufficient business interruption insurance to compensate us for losses that may occur.   The occurrence of any of the foregoing risks could have a material adverse effect on our financial condition,
 
 
 
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operational results, business, and prospects.  Additionally, our inventory is stored at our headquarters facility in Cedar Knolls, New Jersey and any significant disruption in our warehousing location for any reason, such as a fire, flood, hurricanes, earthquakes or similar events, could adversely affect our product distributions and sales until we are able to secure an alternative distribution method. In addition, we may experience loss due to the  expiration of inventory with certain life cycles and/or theft of our products while they are being held in inventory. We have implemented security measures to prevent such theft and maintain insurance to cover such losses. However, if our security measures fail and our losses exceed our insurance coverage or result in service disruptions, our losses and the resulting harm to consumer satisfaction could have a material adverse effect on our business, results of operations and financial condition.
 
WE MAY NOT MANAGE OUR GROWTH EFECTIVELY
 
Our future growth and expansion, which includes negotiating vendor relationships for our private label products, expanding product offerings and increasing our customer base, requires significant management time and operational and financial resources. There is no assurance that we have the operational and financial resources to manage our growth. In addition, rapid growth in our personnel and operations may place a significant strain on our management, administrative, operational and financial infrastructure. Failure to adequately manage our growth could have a material adverse effect on the quoted price of our common stock and our financial condition, operational results, business, and prospects.
 
WE MAY INCUR PRODUCT LIABILITY CLAIMS THAT COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS, BUSINESS AND PROSPECTS.
 
As a retailer of products designed for human consumption, we are subject to product liability claims if the use of our products is alleged to have resulted in illness or injury or if our products include inadequate instructions or warnings. Our products consist of vitamins, minerals, herbs and other ingredients that are classified as foods or dietary supplements and generally are not subject to pre-market regulatory approval or clearance in the U.S. by the FDA or other governmental authorities. Our products could contain contaminated substances, and some of our products contain ingredients that do not have long histories of human consumption. Previously unknown adverse reactions resulting from human consumption of these ingredients could occur. In addition, as a distributor of products manufactured by third parties, we may also be liable for various product liability claims for products we do not manufacture. We require all suppliers to carry products liability insurance.  However, any product liability claim against us could result in increased costs and could adversely affect our reputation with our customers, which in turn could adversely affect our financial condition, operational results, business, and prospects.
 
WE FACE SIGNIFICANT LIABILITY WITH OUR WEBSITE CONTENT
 
Because we post product information and other content on our website, we face potential liability for copyright infringement, patent infringement, trademark infringement, defamation, unauthorized practice of medicine, false or misleading advertising and other claims based on the nature and content of the materials we post. Although we maintain general liability insurance, our insurance may not cover potential claims of this type or may not be adequate to indemnify us for all liability that may be imposed. Any imposition of liability that is not covered by insurance, or is in excess of insurance coverage, could materially adversely affect our financial condition, operational results, business, and prospects.
 
Risks Associated with Our Common Stock

INVESTORS MAY LOSE THEIR ENTIRE INVESTMENT IF WE FAIL TO IMPLEMENT OUR BUSINESS PLAN

As a development-stage company, we expect to face substantial risks, uncertainties, expenses and difficulties.  We were formed on November 16, 2010. We have limited demonstrable operations records, on which you can evaluate our business and prospects. We have just recently commenced planned operations and as of the date of this prospectus, we have generated $636 in product revenues. We cannot guarantee that we will be successful in accomplishing our business plan objectives. In addition, our lack of operating capital could negatively impact the value of our common shares and could result in the loss of your entire investment.
 
 
 
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OUR ARTICLES OF INCORPORATION PROVIDE FOR INDEMNIFICATION OF OFFICERS AND DIRECTORS AT OUR EXPENSE AND LIMIT THEIR LIABILITY THAT MAY BE EXPENDED FOR THE BENEFIT OF OFFICERS AND/OR DIRECTORS

Our Articles of Incorporation, specifically Article VIII, provide for indemnification as follows: No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer: (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law; or (ii) the unlawful payment of dividends. Any repeal or modification of any Article, within our Articles of Incorporation, by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation of the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification.

We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares, if such a market ever develops.
 
ALL OF OUR PRESENTLY ISSUED AND OUTSTANDING COMMON SHARES ARE RESTRICTED UNDER RULE 144 OF THE SECURITIES ACT, AS AMENDED.  WHEN THE RESTRICTION ON ANY OR ALL OF THESE SHARES IS LIFTED, AND THE SHARES ARE SOLD IN THE OPEN MARKET, THE PRICE OF OUR COMMON STOCK COULD BE ADVERSELY AFFECTED.

All of the presently outstanding shares of common stock (48,182,000 shares) are "restricted securities" as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. Rule 144 provides in essence that a person who is not an affiliate and has held restricted securities for a prescribed period of at least six (6) months if purchased from a reporting issuer or twelve (12) months if purchased from a non-reporting Company, may, under certain conditions, sell all or any of his shares without volume limitation, in brokerage transactions. Affiliates, however, may not sell shares in excess of 1% of the Company’s outstanding common stock each three months. As a result of revisions to Rule 144 which became effective on February 15, 2008, there is no limit on the amount of restricted securities that may be sold by a non-affiliate (i.e., a stockholder who has not been an officer, director or control person for at least 90 consecutive days) after the restricted securities have been held by the owner for the aforementioned prescribed period of time. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop.

BECAUSE WE ARE NOT SUBJECT TO COMPLIANCE WITH RULES REQUIRING THE ADOPTION OF CERTAIN CORPORATE GOVERNANCE MEASURES, OUR STOCKHOLDERS HAVE LIMITED PROTECTION AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.

The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.
 
 
 
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Because we have no independent directors, we do not currently have independent audit or compensation committees. As a result, these directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.
 
We intend to comply with all corporate governance measures relating to director independence as and when required. However, at this time we do not have officers and directors liability insurance and we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.

WE DO NOT EXPECT TO PAY CASH DIVIDENDS IN THE NEAR FUTURE.

We have never paid cash dividends on our common stock. We do not expect to pay cash dividends on our common stock at any time in the near future. The future payment of dividends directly depends upon our future earnings, capital requirements, financial requirements and other factors that our board of directors will consider. Since we do not anticipate paying cash dividends on our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

ANY TRADING MARKET THAT MAY DEVELOP MAY BE RESTRICTED BY VIRTUE OF STATE SECURITIES “BLUE SKY” LAWS THAT PROHIBIT TRADING ABSENT COMPLIANCE WITH INDIVIDUAL STATE LAWS.  THESE RESTRICTIONS MAY MAKE IT DIFFICULT OR IMPOSSIBLE TO SELL SHARES IN THOSE STATES.

There is currently no established public market for our common stock, and there can be no assurance that any established public market would develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities regulations or laws promulgated by various states and foreign jurisdictions, commonly referred to as “Blue Sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions prohibit the secondary trading of our common stock. We currently do not intend to and may not be able to qualify securities for resale in at least 17 states which do not offer manual exemptions and require shares to be qualified before they can be resold by our shareholders. Accordingly, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time.   See also “Plan of Distribution-State Securities-Blue Sky Laws.”
 
WE ARE SUBJECT TO RISKS INHERENT WITH MICRO CAPITALIZTION COMPANIES.
 
We believe that certain micro capitalization companies have significant potential for growth, although such companies generally have limited product lines, markets, market shares and financial resources. The securities of such companies, if traded in the public market, may trade less frequently and in more limited volume than those of more established companies. Additionally, in recent years, the stock market has experienced a high degree of price and volume volatility for the securities of micro capitalization companies.  In particular, micro capitalization companies that trade in the over-the-counter markets have experienced wide price fluctuations not necessarily related to the operating performance of such companies.
 
 
 
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THE ADDITIONAL ISSUANCE OF PREFERRED STOCK MAY ADVERSELY AFFECT THE VOTING RIGHTS OF THE COMMON STOCKHOLDERS.

Our Board of Directors has authorized up to 10,000,000 shares of Series A Preferred Stock and we have issued 2,000,000 Series A Preferred Stock at $0.05 per share to Integrated Capital Partners Incorporated (ICPI) to date.  As of January 2011, through an investment agreement titled ICPI Investment Agreement (See Investment Agreement - Exhibit 99.1) ICPI has committed to the following: (i) $50,000 within ten (10) days of the date of the Investment Agreement, but in no event later than January 15, 2011; (ii) $50,000 within thirty (30) days of the first installment, but in no event later than February 15, 2011; (iii) $50,000 upon IUCSS filing a Form S-1 Registration Statement with the Securities and Exchange Commission; (iv) $100,000 upon the Form S-1 Registration Statement becoming effective; and (v) at the sole option and discretion of ICPI, Investor may within ten (10) days of the Form S-1 Registration Statement becoming effective, purchase up to $250,000 of additional Series A Convertible Preferred Stock.  Our Board of Directors has authorized up to 2,500,000 shares of Series B Preferred Stock, however, none of these shares have been issued and we currently have no plans to issue these shares.  Our Board of Directors has authorized up to 7,500,000 shares of Series C Preferred Stock, however, none of these shares have been issued and we currently have no plans to issue these shares. The issuance of additional Preferred Stock may have the effect of delaying, deferring or preventing a change in control of the Company without further action by the stockholders and may adversely affect the voting and other rights of the holders of Common Stock. The rights of the holders of Common Stock will be subject to, and may be adversely affected by, the rights of the holders of any Preferred Stock that may be issued in the future. Further, certain provisions of the Company's Articles of Incorporation and Bylaws and Nevada and/or New Jersey law could delay or make more difficult a merger, tender offer or proxy contest involving the Company. See "Description of Securities: Preferred Stock."

THERE IS HIGH CONCENTRATION OF CAPITAL STOCK INSIDE OWNERSHIP AND CERTAIN ACTIONS DO NOT NEED SHAREHOLDER APPROVAL.

We are not making an initial public offering of our common stock and only those shares previously issued, and those shares into which previously issued Series A Preferred Stock are convertible into, are being registered pursuant to this filing.  However, the outstanding common stock is beneficially owned approximately 31.1% by David Cunic, 29.1% by Steve Basloe, 25.9% by Gregory Jung, our Chief Executive Officer, President, and Chief Financial Officer, respectively.   The above persons compose our Board of Directors and will hold an aggregate of approximately 86.1% of the outstanding voting power of the Company.  As a result these shareholders will be able to:

(i)  elect, or defeat the election of, the Company's directors;

(ii)  amend or prevent amendment of the Company's Articles of Incorporation or Bylaws; or

(iii)  effect or prevent a merger, sale of assets or other corporate transaction.

The Company's public stockholders, for so long as they hold less than 50% of the outstanding voting power of the Company, will not be able to control the outcome of such transactions.  The extent of ownership by the aforementioned shareholders may have the effect of preventing a change in control of the Company or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company, which in turn could have an adverse effect on the market price of the Common Stock.   Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued common shares. Such issuances may be issued to parties or entities committed to supporting existing management and the interests of existing management which may not be the same as the interests of other shareholders. Our ability to issue shares without shareholder approval serves to enhance existing management’s ability to maintain control of our Company.  See "Management," "Certain Transactions" and "Principal Stockholders."

 
 
 
 
 
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THERE IS NO CURRENT MARKET FOR OUR SECURITIES AND THERE CAN BE NO ASSURANCE THAT ANY PUBLIC MARKET WILL DEVELOP. IF, AND WHEN, OUR COMMON STOCK IS QUOTED FOR TRADING, IT IS LIKELY TO BE SUBJECT TO SIGNIFICANT PRICE FLUCTUATIONS.

Prior to the date of this registration, there has not been any established trading market for our common stock, and there is currently no established public market for our securities.  We plan to contact a market maker immediately following the effectiveness of this registration statement and apply to have the shares quoted on the OTCBB. To be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC. Market makers are not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their required filing during that time.  If the application is accepted, there can be no assurances as to:

whether any market for our shares will develop;

the prices at which our common stock will trade; or

the extent to which investor interest in Pazoo will lead to the development of an active, liquid, trading market. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors

If our shares of common stock become available to be quoted on the OTCBB, we will attempt through a broker-dealer and its clearing firm, to become eligible with the Depository Trust Company ("DTC") to permit our shares to trade electronically. If an issuer is not “DTC-eligible”, then its shares cannot be electronically transferred between brokerage accounts, which, based on the dynamics of the marketplace today (specifically, the OTCBB), means that shares of a company will not be traded.  DTC-eligibility is a necessity to process trades on the OTCBB if a company’s stock will be trading high volume. There are no assurances that our shares will become DTC-eligible or, if they do, how long the process may take.  We have identified Platinum Stock Transfer to be our transfer agent in the event our registration statement becomes effective.  See Exhibit 99.4 “Platinum Stock Transfer Agent”

In addition, our common stock will unlikely be followed by any market analysts, and there may be few institutions acting as market makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of Pazoo and general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common stock.
 
Because of the anticipated low price of the securities being registered, many brokerage firms may not be willing to effect transactions in these securities. Purchasers of our securities should be aware that any market that develops in our stock will be subject to the penny stock restrictions. See “Plan of Distribution”.
 
WE ARE SUBJECT TO PENNY STOCK REGULATIONS

The trading of our securities, if any, will be in the over-the-counter market which is commonly referred to as the OTCBB as maintained by FINRA. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of our securities.
 
 
 
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Rule 3a51-1 of the Securities Exchange Act of 1934 establishes the definition of a "penny stock," for purposes relevant to us, as any equity security that has a minimum bid price of less than $4.00 per share or with an exercise price of less than $4.00 per share, subject to a limited number of exceptions which are not available to us. It is likely that our shares will be considered penny stocks for the immediately near future. This classification severely and adversely affects any market liquidity for our common stock.

For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that each person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:

when the basis on which the broker or dealer made the suitability determination, and

that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Disclosure must be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares, in all probability, will be subject to such penny stock rules for the near future and our shareholders will, in all likelihood, find it difficult to sell their securities.

YOU MAY HAVE LIMITED ACCESS TO INFORMATION REGARDING OUR BUSINESS BECAUSE OUR OBLIGATIONS TO FILE PERIODIC REPORTS COULD BE AUTOMATICALLY SUSPENDED UNDER CERTAIN CIRCUMSTANCES.

As of the effective date of our registration statement of which this prospectus is a part, we will become subject to certain informational requirements of the Exchange Act, as amended, and we will be required to file periodic reports (i.e., annual, quarterly and special reports) with the SEC which will be immediately available to the public for inspection and copying. Except during the year that our registration statement becomes effective, these reporting obligations may (at our sole discretion) be automatically suspended under Section 15(d) of the Exchange Act if we have less than 300 shareholders and do not file a registration statement on Form 8A. If this occurs after the year in which our registration statement becomes effective, we will no longer be obligated to file periodic reports with the SEC and your access to our business information would then be even more restricted. After this registration statement on Form S-1 becomes effective, we may be required to deliver periodic reports to security holders. However, we will not be required to furnish proxy statements to security holders and our directors, officers and principal beneficial owners will not be required to report their beneficial ownership of securities to the SEC pursuant to Section 16 of the Exchange Act until we have both 500 or more security holders and greater than $10 million in assets. This means that your access to information regarding our business will be limited.
 
 
 
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THE MARKET FOR PENNY STOCKS HAS EXPERIENCED NUMEROUS FRAUDS AND ABUSES THAT COULD ADVERSELY AFFECT INVESTORS OF OUR STOCK

We believe that the market for penny stocks has suffered from patterns of fraud and abuse, including:

Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by salespersons;

Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
 
WE MAY NEED ADDITIONAL CAPITAL

While we feel we have sufficient capital to sustain operations for the next 24 months, the development of our services will require the commitment of substantial resources to implement our business plan which we may not have anticipated. Currently, we have no established bank-financing arrangements. Therefore, it is likely that we may need to seek additional financing through subsequent future private offering of our equity securities, or through strategic partnerships and other arrangements with corporate partners.  Our expenses are at a minimum and therefore most of the capitals raised will be invested in marketing.  We cannot give any assurance that additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations.
 
WE ARE SUBJECT TO RISKS ASSOCIATED TO THE TYPES OF PAYMENT THAT WE ACCEPT

We accept payment by credit card, debit card, and PayPal. If we offer new payment options to our customers, we may be subject to additional regulations, compliance requirements and fraud. For credit and debit card payments, we pay interchange and other fees, which may increase over time and raise our operating costs and lower our profit margins. We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our customers. In addition, we have and may continue to suffer losses because of orders placed with fraudulent credit and debit card data. Under current practices, a merchant is liable for fraudulent credit card transactions when the merchant does not obtain a cardholder’s signature. A failure to adequately control fraudulent credit card transactions would result in significantly higher credit card-related costs and could have a material adverse effect on our financial condition, operational results, business, and prospects.

For all of the foregoing reasons and others set forth herein, an investment in our securities in any market that may develop in the future involves a high degree of risk.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Information in this Prospectus contains “forward looking statements” which can be identified by the use of forward-looking words such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue,” “seek” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. The matters herein constitute cautionary statements identifying important factors with respect to those forward-looking statements, including certain risks and uncertainties that could cause actual results to differ materially from the future results anticipated by those forward-looking statements.

The following uncertainties and factors, among others (including those set forth under "Risk Factors"), could affect future performance and cause actual results to differ materially from those expressed in or implied by forward-looking statements:
 
 
 
 
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our ability to protect our brand;
pricing of our products;
our ability to improve the functionality of our website;
the development of our private label product offerings;
our ability to attract and retain quality management personnel;
compliance with government regulations;
our ability to enter into and maintain key supply and outsourcing relationships;
our ability to effectively manage and defend litigation matters pending, or asserted in the future, against us, including product liability claims;
unfavorable publicity or consumer acceptance of our products; and
our reaction to significant competition in our industry.
 
We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Except as required by applicable law, including the securities laws of the U.S. and the rules and regulations of the SEC, we do not plan to publicly update or revise any forward-looking statements after we distribute this prospectus, whether as a result of any new information, future events or otherwise. Consequently, forward-looking statements should be regarded solely as our current plans, estimates and beliefs. Potential investors should not place undue reliance on our forward-looking statements. Prior to any investment in our common stock, you should be aware that the occurrence of any of the events described in the “Risk Factors” section and elsewhere in this prospectus could have a material adverse effect on our business, results of operations, financial condition, cash flows, customer relationships and Pazoo-brand value. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the securities being registered pursuant to this registration statement on behalf of the Selling Security Holders.

DETERMINATION OF OFFERING PRICE

All shares being registered will be sold by existing shareholders without our involvement, consequently the actual price of the stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders. The offering price will thus be determined by market factors and the independent decisions of the selling shareholders.

DILUTION

The common stock being registered by the Selling Shareholders is all of the currently issued and outstanding common stock of the Company. In addition, 20,000,000 of the shares being registered hereunder are being reserved for the possible future conversion of the Series A Preferred Stock previously sold. Also at September 30, 2011, there were 2,000,000 warrants outstanding, each exercisable for 1 common share.  Accordingly, dilution will occur to our existing shareholders if the holder of the Series A Preferred Stock elects to convert its shares into common stock.
 
 
 
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SELLING SECURITY HOLDERS

The Company is not making an initial public offering of its common stock.  Only those shares previously issued, and those shares into which previously issued Series A Preferred Stock are convertible into, are being registered pursuant to this Form S-1.  Current stock holders may re-sell their shares into the public market as soon as practical after the effective date of this registration statement.  We are registering, for offer and sale, shares of common stock held by all of our current shareholders, which consist of the Selling Security Holders listed below.

To date, we have not taken any steps to list our common stock on any public exchange.  We intend to apply for listing on a public exchange as soon as we meet all listing requirements; however, there is no assurance that a public exchange will grant us a listing.  Moreover, if a public exchange grants us a listing for our common stock, the Selling Security Holders offering price will be determined by market factors and the independent decisions of the selling shareholders.
 
The following table sets forth information as of the date of the filing of this registration statement, with respect to the beneficial ownership of our common stock. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of their shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this registration statement. All information with respect to share ownership has been furnished by the selling stockholders.

 NOTE: As of the date of this prospectus, our officers and directors, David Cunic, Chief Executive Officer, Steve Basloe, President, Gregory Jung Chief Financial Officer, and Ben Hoehn, Chief Operating Officer own 15,000,000, 15,000,000, 12,500,000, and 2,500,000 common shares, respectively, which are currently subject to Rule 144 restrictions.  There are currently a total of 53 shareholders of our common stock.

We base the percentages determined in these calculations upon the 48,182,000 of our common shares issued and outstanding as of the date of this prospectus. The following table shows the number of shares and percentage as of the date of this offering:
 
Name and Address of
Beneficial Owners of Common Stock
 Ownership
Before Offering
 % Owned
Before Offering (1)
 Total Shares
Offered for Sale
 Total Shares
After Offering
% Owned
After Offering
David Cunic
 
  15,000,000
31.1%
0
       15,000,000
31.1%
13 Old Mill Drive
           
Denville NJ 07834
           
Steve Basloe
(2)
  14,000,000
29.1%
0
       14,000,000
29.1%
560 Sylvan Avenue
           
Englewood NJ 07632
           
Gregory Jung
 
  12,500,000
25.9%
0
       12,500,000
25.9%
17625 North 14th Street
           
Phoenix AZ 85022
           
Ben Hoehn
 
    2,500,000
5.2%
0
         2,500,000
5.2%
496 Mayhow Court
           
South Orange NJ 07079
           
 
 
 
 
Gina Morreale
 
    2,500,000
5.2%
0
         2,500,000
5.2%
361 Mohegan Circle
           
Lafayette NJ 07848
           
Jeremy Basloe
(2)
       250,000
*
0
            250,000
*
560 Sylvan Avenue
           
Englewood NJ 07632
           
Adam Basloe
(2)
       250,000
*
0
            250,000
*
560 Sylvan Avenue
           
Englewood NJ 07632
           
Daniel Basloe
(2)
       250,000
*
0
            250,000
*
560 Sylvan Avenue
           
Englewood NJ 07632
           
Rebecca Basloe
(2)
       250,000
*
0
            250,000
*
560 Sylvan Avenue
           
Englewood NJ 07632
           
Ken Bae
 
       250,000
*
0
            250,000
*
122 Vincent Road
           
Hicksville NY 11801
           
Howard Klein
 
       250,000
*
0
            250,000
*
250 Piermont Road
           
Cresskill NJ 07626
           
Peter Risano
 
       100,000
*
0
            100,000
*
45 Eastern Promenade, Unit 4A
           
Portland ME 04101
           
Greg Dupont
 
           2,000
*
0
                2,000
*
307 North 18 Avenue
           
Bozeman MT 59715
           
Cheryl Moreland
 
           2,000
*
0
                2,000
*
61 Philip Street
           
Medfield MA 02052
           
Jack Cunic
 
           2,000
*
0
                2,000
*
13 Old Mill Drive
           
Denville NJ 07834
           
Brian Yadisernia
 
           2,000
*
0
                2,000
*
185 Peck Street
           
Franklin MA 02038
           
Morris Bibliowicz
 
           2,000
*
0
                2,000
*
1449 Croaker Court
           
San Francisco CA 94130
           
 
 
 
 
Ryan Vass
 
           2,000
*
0
                2,000
*
208 West Washington Ave
           
Pearl River NY 10965
           
Zelig Prudowsky
 
           2,000
*
0
                2,000
*
24 Culebra Terrace
           
San Francisco CA 94109
           
Charles Schwarz
 
           2,000
*
0
                2,000
*
3 Sycamore Terrace
           
Cedar Knolls NJ 07927
           
Lynda Deehan
 
           2,000
*
0
                2,000
*
12 Birch Hill Drive
           
Whippany NJ
           
Ana Navarro
 
           2,000
*
0
                2,000
*
5 Appio Dr.
           
Randolph NJ 07869
           
Michael Fitzpatrick
 
           2,000
*
0
                2,000
*
160 Littleton Road, Suite 200
           
Parsippany NJ 07054
           
Brian Quinn
 
           2,000
*
0
                2,000
*
25 Cooper Lane
           
Chester NJ 07930
           
James Rossiter
 
           2,000
*
0
                2,000
*
205 Harrison Avenue
           
Westfield NJ 07090
           
Mary Meola
 
           2,000
*
0
                2,000
*
68 Thurmont Road
           
Denville NJ 07834
           
Kimberely Bustamante
 
           2,000
*
0
                2,000
*
H10 Farmhouse Lane
           
Morristown NJ 07960
           
Shelley Seelig
 
           2,000
*
0
                2,000
*
13266 Solana Beach Cove
           
Delray Beach FL 33446
           
Julia Deehan
 
           2,000
*
0
                2,000
*
12 Birch Hill Drive
           
Whippany NJ 07981
           
Christopher Deehan
 
           2,000
*
0
                2,000
*
12 Birch Hill Drive
           
Whippany NJ 07981
           
Christine O’Sullivan
 
           2,000
*
0
                2,000
*
36 Lake Drive
           
Randolph NJ 07869
           
 
 
 
 
Allison Hoehn
 
           2,000
*
0
                2,000
*
6490 Winter Hazel Drive
           
Liberty Township OH 45044
           
Daniel O’Sullivan
 
           2,000
*
0
                2,000
*
36 Lake Drive
           
Randolph NJ 07869
           
Marko Maniaces
 
           2,000
*
0
                2,000
*
94A Everdale Rd
           
Randolph NJ 07869
           
Richard Seelig
 
           2,000
*
0
                2,000
*
13266 Solana Beach Cove
           
Delray Beach FL 33446
           
Anthony Carlucci, Jr
 
           2,000
*
0
                2,000
*
9 Sparrow Road
           
Randolph NJ 07868
           
Andrew Deehan
 
           2,000
*
0
                2,000
*
12 Birch Hill Drive
           
Whippany NJ 07981
           
William Martz
 
           2,000
*
0
                2,000
*
10 Pleasant Hill Road
           
Randolph NJ 07869
           
Todd Simonds
 
           2,000
*
0
                2,000
*
112 Springbrook Road
           
Morristown NJ 07960
           
Anthony Maniaces
 
           2,000
*
0
                2,000
*
94A Everdale Road
           
Randolph NJ 07869
           
Jennifer Hoehn
 
           2,000
*
0
                2,000
*
496 Mayhow Court
           
South Orange NJ 07079
           
Dante Maniaces
 
           2,000
*
0
                2,000
*
94A Everdale Road
           
Randolph NJ 07869
           
Joe Morreale
 
           2,000
*
0
                2,000
*
228 Demarest Road
           
Sparta NJ 07871
           
Joseph Colantoni
 
           2,000
*
0
                2,000
*
6 Hunting Meadow Court
           
Rockaway NJ 07866
           
 
 
 
 
Robert Deehan
 
           2,000
*
0
                2,000
*
12 Birch Hill Drive
           
Whippany NJ 07981
           
Mark O’Sullivan
 
           2,000
*
0
                2,000
*
36 Lake Drive
           
Randolph NJ 07869
           
Frederick Dower
 
           2,000
*
0
                2,000
*
106 Sonoma Valley Drive
           
Cary NC 27518
           
Michael Friedman
 
           2,000
*
0
                2,000
*
211 Morris Turnpike
           
Randolph NJ 07869
           
Anne Hoehn
 
           2,000
*
0
                2,000
*
6490 Winter Hazel Drive
           
Liberty Township
           
John Alexander
 
           2,000
*
0
                2,000
*
8184 Grey Fox Drive
           
West Chester OH 45069
           
Ralph Hoehn
 
           2,000
*
0
                2,000
*
914 East 3rd Street
           
Delpos OH 45833
           
David Hoehn
 
           2,000
*
0
                2,000
*
6490 Winter Hazel Drive
           
Liberty Township OH 45044
           
Dennis White
 
           2,000
*
0
                2,000
*
23 Saddle Road
           
Far Hills NJ 07931
           
   
  48,182,000
100.0%
0
       48,182,000
100.0%
 
(1)
Based on 48,182,000 common shares outstanding prior to the registration statement
     * - less than 1% of the shares outstanding as of September 30, 2011
   
(2) Mr. Basloe received 15,000,000 shares of restricted founders stock, however, Mr. Basloe directed that certain of his founder’s shares be titled in the names of his four children.  Jeremy Basloe, Adam Basloe, Daniel Basloe, and Rebecca Basloe each received 250,000 shares of restricted founders stock.
 
There are no agreements between the company and any selling shareholder pursuant to which the shares subject to this registration statement were issued.  As a group, the 53 Selling Security Holders are hereby registering 48,182,000 common shares.  The Selling Security Holders may sell at prevailing market prices or privately negotiated prices only after the shares are quoted on either the OTCBB or an exchange.
 
 
 
23


 
The shares owned by all of our shareholders, which includes the Selling Security Holders and our officers, director and founders, were acquired in three issuances.  On inception of November 16, 2010, we issued 45,000,000 shares of our common stock, $0.001 par value to our officers, director and founders at no cost basis (Mr. Basloe directed that 1,000,000 of his founder’s shares be titled in the names of his four (4) children in increments of 250,000 shares each.)  Also on inception we issued 600,000 shares of restricted stock to three consultants for services to be performed in 2011.  From July 2011 through September 2011, we issued a total of 82,000 common shares for participation in our marketing research.  Each shareholder participated in a questionnaire designed to give us feedback on our website functionality and offered input on their individual shopping experience.  In September 2011 we issued 2,500,000 shares of common stock to our new Chief Operating Officer who also assumed the duties of Secretary and Treasurer, replacing Gina Morreale.  Mr. Hoehn received shares valued at $12,500 as stock based compensation.  In the event the Selling Security Holders receive payment for the sale of their shares, we will not receive any of the proceeds from such sales. We are bearing all expenses in connection with the registration of the shares of the Selling Security Holders.

To our knowledge, other than David Cunic, Steven Basloe, Ben Hoehn, Gregory Jung and Gina Morreale, none of the selling shareholders, except as set forth herein, have either: (1) had a material relationship with us other than as a shareholder at any time within the past three years; or (2) ever been one of our officers or directors.

PLAN OF DISTRIBUTION

We are registering 48,182,000 shares of common stock for possible resale at prevailing market rates.  We will not receive any proceeds from the sale of the shares by the Selling Security Holders. The percentage of the total outstanding common stock being registered to be offered by the Selling Security Holders is 100% based upon the 48,182,000 common shares that are issued and outstanding as of the date of this prospectus.  There is no arrangement to address the possible effect of the offerings on the price of the stock.

The Selling Security Holders may sell at prevailing market prices or privately negotiated prices only after the shares are quoted on either the OTCBB or an exchange.  However, our common stock may never be quoted on the OTCBB or listed on any exchange.

If and when the common stock is quoted on the OTCBB or listed on an exchange, the Selling Security Holders’ shares may be sold to purchasers from time to time directly by, and subject to the discretion of, the Selling Security Holders. Further, the Selling Security Holders may occasionally offer their shares for sale through underwriters, dealers or agents, who may receive compensation in the form of underwriting discounts, concessions or commissions from the Selling Security Holders and/or the purchasers of the shares for whom they may act as agents.  The shares sold by the Selling Security Holders may be sold occasionally in one or more transactions, either at an offering price that is fixed or that may vary from transaction to transaction depending upon the time of sale, or at prices otherwise negotiated at the time of sale. Such prices will be determined by the Selling Security Holders or by agreement between the Selling Security Holders and any underwriters.

In the event that the Selling Security Holders enter into an agreement, after the effective date of this Registration Statement, to sell their shares through a broker-dealer that acts as an underwriter, we will file a post-effective amendment to this Registration Statement and file the agreement as an exhibit to the amended Registration Statement. The amendment will identify the underwriter, provide the required information on the plan of distribution and revise the appropriate disclosures in the Registration Statement.
 
Any underwriter, dealer, or agent who participates in the distribution of the securities registered in this Registration Statement may be deemed to be an "underwriter" under the Securities Act. Further, any discounts, commissions, or concessions received by any such underwriter, dealer or agent may be deemed to be underwriting discounts and commissions under the Securities Act. In the event an “underwriter” will assist in the sale of the shares, we will disclose:

1.  
the name or names of any underwriters, dealers, or agents, the purchase price paid by any underwriters for the shares purchased from the Selling Security Holders, and
 
 
 
24


 
2.  
any discounts, commissions, and other items constituting compensation from the Selling Security Holders, and

3.  
any discounts, commissions, or concessions allowed, realized or paid to dealers, and

4.  
the proposed selling price to the public

Pursuant to Regulation M of the General Rules and Regulations of the Securities and Exchange Commission, no person engaged in a distribution of securities on behalf of a Selling Security Holder may simultaneously bid for, purchase or attempt to induce any person to bid for or purchase securities of the same class during the period of time starting five business days prior to the commencement of such distribution and continuing until the Selling Security Holder, or other person engaged in the distribution, is no longer a participant in the distribution.

In order to comply with the applicable securities laws of certain states, the securities will be offered or sold in such states only through registered or licensed brokers or dealers in those states. In addition, in certain states, the securities may not be offered or sold unless they have been registered or qualified for sale in such states or an exemption from such registration or qualification requirement is available and with which Pazoo, Inc. has complied.

In addition and without limiting the foregoing, the Selling Security Holders will be subject to applicable provisions, rules and regulations under the Exchange Act with regard to security transactions during the period of time when this Registration Statement is effective.

We will pay all expenses incidental to the registration of the shares (including registration pursuant to the securities laws of certain states) other than commissions, expenses, reimbursements and discounts of underwriters, dealers or agents, if any.

Any purchasers of our securities should be aware that any market that develops in our stock would be subject to the penny stock restrictions.

The trading of our securities, if any, will be in the over-the-counter markets, which are commonly referred to as the OTCBB as maintained by FINRA (once and when quoting thereon has occurred). As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the price of, our securities.

OTCBB Considerations

OTCBB securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTCBB securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTCBB stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

To be quoted on the OTCBB, a market maker must file an application on our behalf in order to make a market for our common stock. We are not permitted to file such application on our own behalf. We do not have an agreement with a market maker to file an application with FINRA on our behalf to be able to quote the shares of our common stock on the OTCBB maintained by FINRA commencing upon the effectiveness of our registration statement of which this prospectus is a part. We intend to contact market makers in the future to file an application with FINRA on our behalf. There can be no assurance that a market maker will agree to file an application or that if one agrees to file an application that its application will be accepted by FINRA. If a market maker agrees to file an application with FINRA, we cannot estimate the time period that the application will require to be approved by FINRA.

The OTCBB is separate and distinct from the NASDAQ stock market. NASDAQ has no business relationship with issuers of securities quoted on the OTCBB. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTCBB.

Although the NASDAQ stock market has rigorous listing standards to ensure the high quality of its issuers, and can delist issuers for not meeting those standards, the OTCBB has no listing standards. Rather, it is the market maker who chooses to quote a security on the system, files the application, and is obligated to comply with keeping information about the issuer in its files. FINRA cannot deny an application by a market maker to quote the stock of a company assuming all FINRA questions relating to its Rule 211 process are answered accurately and satisfactorily. The only requirement for ongoing inclusion in the OTCBB is that the issuer be current in its reporting requirements with the SEC.
 
 
 
25

 
 
 

Although we anticipate that quotation on the OTCBB will increase liquidity for our stock, investors may have difficulty in getting orders filled because trading activity on the OTCBB in general is not conducted as efficiently and effectively as with NASDAQ-listed securities. As a result, investors’ orders may be filled at a price much different than expected when an order is placed.

Investors must contact a broker-dealer to trade OTCBB securities. Investors do not have direct access to the bulletin board service. For bulletin board securities, there only has to be one market maker.

OTCBB transactions are conducted almost entirely manually. Because there are no automated systems for negotiating trades on the OTCBB, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders. Therefore, when investors place market orders - an order to buy or sell a specific number of shares at the current market price - it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and getting execution.

If we become able to have our shares of common stock quoted on the OTCBB, we will then try, through a broker-dealer and its clearing firm, to become eligible with the DTC to permit our shares to trade electronically. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCBB), means that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on broker dealers for stock transactions - like all the companies on the OTCBB). This means that while DTC-eligibility is not a requirement to trade on the OTCBB, it is a necessity to process trades on the OTCBB if a company’s stock is going to trade with any volume. There are no assurances that our shares will ever become DTC-eligible or, if they do, how long it will take.

Because analysts do not usually follow OTCBB stocks, there may be lower trading volume than for NASDAQ-listed securities.

Section 15(g) of the Exchange Act

Section 15(g) of the Exchange Act will cover our shares and Rules 15g-1 through 15g-6 promulgated thereunder. Securities regulations impose additional sales practice requirements on broker-dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses).

Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules (but is not applicable to us).

Rule 15g-2 declares unlawful broker-dealer transactions in penny stocks unless the broker-dealer has first provided to the customer a standardized disclosure document.

Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a penny stock transaction unless the broker-dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.

Rule 15g-4 prohibits broker-dealers from completing penny stock transactions for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.
 
 
 
26


 
Rule 15g-5 requires that a broker-dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons compensation.

Rule 15g-6 requires broker-dealers selling penny stocks to provide their customers with monthly account statements.

Rule 15g-9 requires broker/dealers to approve the transaction for the customer’s account; obtain a written agreement from the customer setting forth the identity and quantity of the stock being purchased; obtain from the customer information regarding his investment experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement for the basis for the suitability determination; notify the customer of his rights and remedies in cases of fraud in penny stock transactions; and, the FINRA's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.

Rule 3a51-1 of the Exchange Act establishes the definition of a "penny stock," for purposes relevant to us, as any equity security that has a minimum bid price of less than $4.00 per share or with an exercise price of less than $4.00 per share, subject to a limited number of exceptions. It is likely that our shares will be considered to be penny stocks for the immediately near future. For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
 
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:

The basis on which the broker or dealer made the suitability determination, and
That the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Additionally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, which is likely, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it difficult to dispose of our securities.

State Securities – Blue Sky Laws

There is no established public market for our common stock, and there can be no assurance that any market will develop in the foreseeable future. Transfer of our common stock may also be restricted under the securities regulations or laws promulgated by various states and foreign jurisdictions, commonly referred to as "Blue Sky" laws.  Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state blue-sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. Accordingly, investors may not be able to liquidate their investments and should be prepared to hold the common stock for an indefinite period of time.
 
 
 
27


 
DIVIDEND POLICY

We have never paid cash or any other form of dividend on our common stock, and we do not anticipate paying cash dividends in the foreseeable future. Moreover, any future credit facilities might contain restrictions on our ability to declare and pay dividends on our common stock. We plan to retain all earnings, if any, for the foreseeable future for use in the operation of our business and to fund the pursuit of future growth. Future dividends, if any, will depend on, among other things, our results of operations, capital requirements and on such other factors as our board of directors, in its discretion, may consider relevant.

DESCRIPTION OF SECURITIES

We were incorporated under the laws of the State of Nevada on November 16, 2010.  We are authorized to issue 980,000,000 shares of common stock, $0.001 par value per share and  to issue 20,000,000 shares of preferred stock (10,000,000 Series A Convertible Preferred Stock, 2,500,000 Series B Non-Convertible Preferred Stock, and 7,500,000 Series C Non-Convertible Preferred Stock) as fixed by our board of directors.  As of the date of this prospectus, we have issued 2,000,000 shares of Series A Preferred Stock to ICPI, however,  there are no Series B or Series C Preferred Stock issued and outstanding to date.

Common Stock

When filed on November 16, 2010, our Articles of Incorporation authorized the issuance of 75,000,000 shares of common stock with $0.001 par value per share.  On March 29, 2011, we increased the authorized shares from 75,000,000 to 980,000,000 par value $0.001 per share.  As of the date of this registration statement there are 48,182,000 shares of our common stock issued and outstanding held by 53 shareholders of record.

Each share of common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders.  The holders of our common stock:

have equal ratable rights to dividends from funds legally available if and when declared by our Board of Directors;

in the event of a liquidation, dissolution or winding up of the Company, are entitled to share ratably in all assets remaining after payment of liabilities and liquidation preferences of any outstanding shares of Preferred Stock;

do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and

are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.

Preferred Stock

The Board of Directors will have the authority, without further action by the stockholders, to issue up to 20,000,000 shares of Preferred Stock in one or more series with designations, powers, preferences, privileges and relative, participating, optional or special rights and the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the Common Stock.  We currently have authorized 10,000,000 Series A Convertible Preferred Stock, 2,500,000 Series B Non-Convertible Preferred Stock, and 7,500,000 Series C Non-Convertible Preferred Stock which could thus be issued quickly with terms calculated to delay or prevent a change in control of the Company or make removal of management more difficult. See Exhibit 99.1.  Additionally, the issuance of Preferred Stock may have the effect of decreasing the market price of the Common Stock, and may adversely affect the voting and other rights of the holders of Common Stock.  We have issued 2,000,000  Series A Preferred Stock at $0.05 per share to Integrated Capital Partners Incorporated (ICPI), as of the date of this
 
 
28

 
 
filing.  Through an Investment Agreement (See Investment Agreement - Exhibit 99.1), ICPI has committed to the following: (i) $50,000 within ten (10) days of the date of the Investment Agreement, but in no event later than January 15, 2011; (ii) $50,000 within thirty (30) days of the first installment, but in no event later than February 15, 2011; (iii) $50,000 upon IUCSS filing a Form S-1 Registration Statement with the Securities and Exchange Commission; (iv) $100,000 upon the Form S-1 Registration Statement becoming effective; and (v) at the sole option and discretion of ICPI, Investor may within ten (10) days of the Form S-1 Registration Statement becoming effective, purchase up to $250,000 of additional Series A Convertible Preferred Stock.  ICPI has completed the commitments set forth in (i) and (ii) above. See “Exhibits”.   Our Board of Directors has authorized up to 2,500,000 shares of Series B Preferred Stock, however, no Series B Preferred Stock has been issued and we currently have no present plans to issue these shares.  Our Board of Directors has authorized up to 7,500,000 shares of Series C Preferred Stock, however, no Series C Preferred Stock has been issued and we currently have no present plans to issue these shares.
 
Preferred Stock
 
Series A
   
Series B
   
Series C
 
Convertible
 
10 to 1
   
No
   
No
 
Dividend
 
5% in stock
   
No
   
2% to 12% in stock
 
Voting
 
No
   
200 to 1
   
No
 
Total Shares
    10,000,000       2,500,000       7,500,000  
 
Voting Rights

Holders of common stock have the right to cast one vote for each share of stock in his or her own name on the books of the corporation, whether represented in person or by proxy, on all matters submitted to a vote of holders of common stock, including the election of directors.  There is no right to cumulative voting in the election of directors.  Except where a greater requirement is provided by statute or by the Articles of Incorporation, or by the Bylaws, the presence, in person or by proxy duly authorized, of the holder or holders of a majority of the outstanding shares of our common voting stock shall constitute a quorum for the transaction of business. The vote by the holders of a majority of such outstanding shares is also required to effect certain fundamental corporate changes such as liquidation, merger or amendment of the Company's Articles of Incorporation.

Dividend Policy

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends.  The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:

1.  we would not be able to pay our debts as they become due in the usual course of business, or;
2.  our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.
 
 
 
 
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Pre-emptive Rights

Holders of common stock are not entitled to pre-emptive or subscription or conversion rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of common stock are, and the shares of common stock offered hereby will be when issued, fully paid and non-assessable.

Common Stock Warrants

Simultaneous with the purchase of Series A Preferred Stock in 2011, we issued 2,000,000 warrants to ICPI and each warrant entitles its owner to purchase common share for each Series A Preferred Stock at an exercise price of $0.05 per common share thereunder, subject to the terms of the warrant agreement between the warrant agent and us. The warrants are exercisable three years from the date of issue.  (See Exhibit B of the Investment Agreement).
 
No warrants have been exercised as of the date of this registration statement.

The holders of the warrants are not entitled to vote, to receive dividends or to exercise any of the rights of common shareholders for any purpose until such warrants have been duly exercised. No shares of common stock acquired as the result of the exercise of any Series A warrant are included within the shares to be registered under this registration statement.  All such shares will be restricted securities and may only be sold pursuant to further registration or exemption therefrom.

Options

We have not issued and do not have outstanding any options to purchase shares of our common stock.

Convertible Securities

We have 2,000,000 shares of Series A Convertible Preferred Stock (Series A Preferred Stock) par value 0.001 per share issued and outstanding.  Each share Series A Preferred Stock may be converted, at the election of the holder, into 10 shares of the Company’s Common Stock.  See also “Description of Securities: Preferred Stock”

Nevada Anti-Takeover Laws

Nevada Revised Statutes sections 78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply.  Our articles of incorporation and bylaws do not state that these provisions do not apply.  The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in the State of Nevada directly or through an affiliated corporation. Because of these conditions, the statute currently does not apply to our company.

MARKET FOR SECURITIES

No Public Market for Common Stock.

There is no established public market for our common stock, and a public market may never develop. We will seek to identify a market maker to file an application with FINRA so as to be able to quote the shares of our common stock on the OTCBB maintained by FINRA commencing upon the effectiveness of our registration statement. There can be no assurance as to whether we will identify a market marker that will be willing to file an application and, if we identify one and it agrees to file an application, whether such market maker’s application will be accepted by FINRA. We cannot estimate the time period that will be required for the application process. Even if our common stock were quoted in a market, there may never be substantial activity in such market. If there is substantial activity, such activity may not be maintained, and no prediction can be made as to what prices may prevail in such market.
 
 
 
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If we become able to have our shares of common stock quoted on the OTCBB, we will then try, through a broker-dealer and its clearing firm, to become eligible with the DTC to permit our shares to trade electronically. If an issuer is not “DTC-eligible,” then its shares cannot be electronically transferred between brokerage accounts, which, based on the realities of the marketplace as it exists today (especially the OTCBB), means that shares of a company will not be traded (technically the shares can be traded manually between accounts, but this takes days and is not a realistic option for companies relying on broker dealers for stock transactions - like all the companies on the OTCBB). This means that while DTC-eligibility is not a requirement to trade on the OTCBB, it is a necessity to process trades on the OTCBB if a company’s stock will trade with any volume. There are no assurances that our shares will ever become DTC-eligible or, if they do, how long it will take.

In general, under Rule 144, a holder of restricted common shares who is an affiliate at the time of the sale or any time during the three months preceding the sale can resell shares, subject to the restrictions described below.

If we have been a public reporting company under the Exchange Act for at least 90 days immediately before the sale, then at least six months must have elapsed since the shares were acquired from us or one of our affiliates, and we must remain current in our filings for an additional period of six months; in all other cases, at least one year must have elapsed since the shares were acquired from us or one of our affiliates.

The number of shares sold by such person within any three-month period cannot exceed the greater of:

1% of the total number of our common shares then outstanding; or

The average weekly trading volume of our common shares during the four calendar weeks preceding the date on which notice on Form 144 with respect to the sale is filed with the SEC (or, if Form 144 is not required to be filed, the four calendar weeks preceding the date the selling broker receives the sell order). This condition is not currently available to the Company because its securities do not trade on a recognized exchange.

Conditions relating to the manner of sale, notice requirements (filing of Form 144 with the SEC) and the availability of public information about us must also be satisfied.

All of the presently outstanding shares of our common stock are "restricted securities" as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. While Pazoo, Inc. is a development stage company, and is exempt from the “shell company” rules and regulations, the SEC has adopted final rules amending Rule 144, which have become effective on February 15, 2008. Pursuant to the new Rule 144, one year must elapse from the time a “shell company,” as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act, ceases to be a “shell company” and files a Form 8-K addressing Item 5.06 with such information as may be required in a Form 10 Registration Statement with the SEC, before a restricted shareholder can resell their holdings in reliance on Rule 144. Form 10 information is equivalent to information that a company would be required to file if it were registering a class of securities on Form 10 under the Exchange Act. Under the amended Rule 144, restricted or unrestricted securities that were initially issued by a reporting or non-reporting shell company or a company that was at anytime previously a reporting or non-reporting shell company, can only be resold in reliance on Rule 144 if the following conditions are met:

1.  
the issuer of the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company;

2.  
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;

3.  
the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding twelve months (or shorter period that the Issuer was required to file such reports and materials), other than Form 8-K reports; and

4.  
at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
 
 
 
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In the event we become a “shell company”, we will need to comply with the foregoing provisions.

Current Public Information

In general, for sales by affiliates and non-affiliates, the satisfaction of the current public information requirement depends on whether we are a public reporting company under the Exchange Act:

If we have been a public reporting company for at least 90 days immediately before the sale, then the current public information requirement is satisfied if we have filed all periodic reports (other than Form 8-K) required to be filed under the Exchange Act during the 12 months immediately before the sale (or such shorter period as we have been required to file those reports).

If we have not been a public reporting company for at least 90 days immediately before the sale, then the requirement is satisfied if specified types of basic information about us (including our business, management and our financial condition and results of operations) are publicly available.

However, no assurance can be given as to:

the likelihood of a market for our common shares developing,
the liquidity of any such market,
the ability of the shareholders to sell the shares, or
the prices that shareholders may obtain for any of the shares.
 
Stock Option Grants

To date, we have not granted any stock options.

Registration Rights

We have not granted registration rights to the selling shareholders or to any other persons.

We are paying the expenses of the offering because we seek to: (i) become a reporting company with the Commission under the Securities Exchange Act of 1934; and (ii) enable our common stock to be traded on the Over-the-Counter Bulletin Board.  We must be a reporting company under the 1934 Act in order that our common stock is eligible for trading on the OTCBB.  We believe that the registration of the resale of shares on behalf of existing shareholders may facilitate the development of a public market in our common stock if our common stock is approved for trading on a recognized market for the trading of securities in the United States.

We consider that the development of a public market for our common stock will make an investment in our common stock more attractive to future investors.  In the near future, in order for us to continue with our business plan, we will need to raise additional capital.  We believe that obtaining reporting company status under the 1934 Act and trading on the OTCBB should increase our ability to raise these additional funds from investors.  However, at the current time we believe we have secured sufficient working capital to fund our development activities for the next 24 months without the need to seek additional financing.  We intend to seek quotation of our common stock on the OTCBB immediately following the effectiveness of the Registration Statement of which this Prospectus is a part.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.  On an on-going
 
 
 
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basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or condition.

We were incorporated on November 16, 2010 under the laws of the state of Nevada.

While our operating plan is in the development stage, our goal is to expand our product offerings on our website through management’s current contacts in the health improvement industry.  We look to increase gross sales by offering additional products incrementally each month.

For the year ending December 31, 2010

Results of Operations

Revenues. We had no revenues for the year ending December 31, 2010. We hope to generate revenues as we continue operations and implement our business plan in 2011.
 
Operating Expenses. For the fiscal year ending December 31, 2010, our total operating expenses were $1,615.

Net Loss. For the fiscal year ending December 31, 2010, our net loss was $1,615.

As of December 31, 2010, we had liabilities of  $1,615, all of which were represented by short term loans for startup and organizational costs.  We had no other long-term liabilities, commitments or contingencies.

For the nine month period ending September 30, 2011

Results of Operations

Revenues.  We had $636 in product revenues for the nine month period ending September 30, 2011.  We hope to increase revenues as we continue operations and implement our business plan in 2011 and beyond.
 
Operating Expenses.  For the nine month period ending September 30, 2011 our total operating expenses were $121,919.  Our operating expenses were comprised of organizational costs of $3,642, general and administrative expenses of $49,980, professional fees of $37,112, interest expense of $21, equipment expenses of $3,904, and website development expenses of $27,260.

Net Loss. For the nine month period ending September 30, 2011 our net loss was $121,673.

Liquidity and Capital Resources.  In 2011, we issued 2,000,000 shares of Series A Preferred Stock to ICPI at a price of $0.05 per share for $100,000.  We used part of those proceeds to pay for start-up and organizational costs.

For the first nine months ending September 30, 2011, we incurred liabilities of $23,929 which included accounts payable of $8,527, payroll liabilities of $2,079, interest payable of $21, and short term loans of $13,302.

During 2011, we expect to incur accounting costs associated with the audit of our financial statements. We expect that the legal and accounting costs of becoming a public company will continue to impact our liquidity, however, we do not anticipate needing to obtain additional funds beyond those committed to by ICPI to pay those expenses. In the event ICPI fails to invest the funds to which it has committed, additional funding will need to be obtained.  Other than the anticipated increases in legal and accounting costs due to the reporting requirements of becoming a reporting company, we are not aware of any other known trends, events or uncertainties, which may affect our future liquidity.
 
 
 
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DESCRIPTION OF BUSINESS
 
We were incorporated in the State of Nevada on November 16, 2010 with fiscal year end on December 31.  We are a start-up e-commerce retailer of nutritional foods/supplements, wellness goods, fitness apparel, and health improvement advice on our website.  We do not have any brick and mortar establishments and our only source of revenue is through www.pazoo.com.  Since November 16, 2010 (our inception) to September 30, 2011 (the date of the accompanying financial statements) we have generated $636 in revenues and have had a cumulative net loss of $123,288.  We have never been party to any bankruptcy, receivership or similar proceeding, nor have we undergone any material reclassification, merger, consolidation, purchase or sale of a significant amount of assets not in the ordinary course of business.

We have yet to commence planned operations to any significant measure. As of the date of this registration statement, we have had only limited start-up operations and have generated only $636 in revenues.  We will not be profitable until we derive sufficient revenues and cash flows from our retail website www.pazoo.com

Our mission is to deliver healthy cost-effective nutritional products through relationships with leading manufacturers in the health improvement industry.  PAZOO.com is a user-friendly, attractively designed e-commerce portal for total health products.  We are a startup e-commerce retailer and we seek to enhance our customers well being by providing total health products including foods, drinks, supplements, wellness merchandise, and health/wellness advice.  Our target demographic will be health conscious adults ages 29-75 seeking to better their personal well-being and complement their daily lifestyles with practical use items.    Our operations to date have been devoted primarily to start-up and development costs, which include:

1.  
Formation of the Company;
2.  
Development of our business plan;
3.  
Secured our website domain www.pazoo.com;
4.  
Procuring products for inclusion on our website; and
5.  
Website development and product logistics testing.
 
Our product line will evolve as new vendor relationships are cultivated and new products are discovered.  We will look to leverage our in-house experts and industry contacts to expand our market presence.  On our website, we will also blog on health improvement, with an additional focus on the latest total health concepts.  These value added features and a strong product mix should help to establish us as a leading retailer of total health.  Nutrition is one area where consumers can severely make changes in their lifestyle to positively alter their total well-being.  The Company will work closely with leading manufacturers who offer alternative food options that enhance or elevate consumers general nutrition habits.    PAZOO will carry a variety of nutrition and food supplement products; however, we will initially begin with VitaminSpice and Emergent products.  Energy drinks, and energy bars will also be considered for our online website.  Magnetic therapy is believed to provide pain relief, increased blood flow, stress relief, and anti-infective properties.  The Company will seek to carry pre-established brands of energy bracelets, watches and anklets, as well as develop its own product line using magnetic technology to increase its therapeutic effect.  PAZOO’s bracelets may be in copper, rubber, and metal form for a variety of uses and health benefits.  Our product inventory will be held in our headquarters at 15A Saddle Rd, Cedar Knolls, NJ 07927 and will be distributed to consumers through third party shippers.
 
We have developed a marketing campaign aimed strategically at reaching our intended customer base.  A targeted and powerful internet presence will be achieved by utilizing search engine optimization (SEO), social networking, blogging, and newsletters to enhance the brand name.  Our website will be designed to have a comprehensive, user friendly, full product selection with complete descriptions our company’s products.  We will compete against traditional brick and mortar retailers as well as a host of online retailers that sell vitamins, supplements, and health/wellness products.  Our website, PAZOO.com, will seek to utilize technology and web development to maximize the natural economies of scale of the online business model.  Our profitability will be determined by our ability to achieve and maintain heightened revenue levels through superior customer service, unique product offerings, brand recognition, and favorable vendor relationships.
 
Pazoo Marketing and Promotion
Our goal is to be the leading provider of health and wellness products and services and our marketing strategy is designed to:
 
 
 
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Strengthen the Pazoo.com brand name,
Increase customer traffic to the Pazoo.com website,
Build strong customer loyalty,
Maximize repeat purchases and develop incremental revenue opportunities.
 
We intend to build customer loyalty by creatively applying technology to deliver personalized programs and service, as well as creative and flexible merchandising.  We will strive to provide increasingly targeted and customized services by using customer preference data obtained as a result of consumer online feedback.   By offering customers a compelling and personalized value proposition, we seek to increase the number of visitors that make a purchase, to encourage repeat visits and purchases and to extend customer retention.

We will utilize a variety of media, program and product development, business development and promotional activities to achieve these goals implementing the following:

On-Line Marketing
Search Engine Optimization (SEO)
Pay-per-click Marketing
Social media
You Tube
Online promotions
Online promotional partners
 
Brick and Mortar Marketing and Promotion
Targeting distributors to independent outlets in the pharmacy and health store markets
Big box stores
Take advantage of market relationships from suppliers and retailers
Take advantage of combined sales efficiencies from online as well as off line
Build strong relationships with suppliers from both a sales standpoint as well as a promotional standpoint
 
We feel that loyal, satisfied customers have vast potential to generate word-of-mouth advertising and awareness, and are able to reach thousands of other customers and potential customers because of the reach of online communication.
 
Industry Overview
 
The U.S. overall market for e-commerce retail sales includes 16,000 companies with estimated revenue of $235 billion and the top 50 companies accounting for 60% of the industry revenue.  According to U.S. Census data reports, online retail sales for the fourth quarter of 2010 rose 16.3% to $44.1 billion from the prior year, which recently led to the gradual revenue shift from catalog to internet sales.2 Total annual online retail sales in 2010 accounted for 4.2% of total sales.  While some of this growth can be linked to a slight rebound from the current recession, it also indicates strong sector strength as well.
 
SHIPPING

We will look to offer our consumers low cost and timely delivery of product by negotiating with shipping companies to offer a flat rates on various products.  We will also seek to ship orders to customers on the same day if placed before 2pm Eastern Standard Time, Monday through Friday, Holidays excluded.  Our goal will be to deliver all orders within one to four business days via third party shippers such as, United Parcel Service or United States Postal Service.

 
 
2Excerpt from Internet and Catalog Retailers Industry Profile, First Research, March 2011.  Obtained at http://www.firstresearch.com/industry-research/Internet-and-Catalog-Retailers.html
 
 
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COMPETITION

The online commerce market is rapidly evolving and intensely competitive, and we expect the competition to intensify in the future. Barriers to entry are minimal, and current and new competitors can launch new sites at a relatively low cost. In addition, the health improvement industry is intensely competitive. We currently or potentially compete with a variety of other companies. These competitors include: (i) direct competitors that specialize in or derive a substantial portion of their revenues from online retail and direct marketing of health and wellness products, including Vitacost; (ii) various nutrition centers and vendors of other health related products such as sports nutrition, diet or other wellness products, including General Nutrition Centers; and (iii) online vendors of dietary supplements, vitamins, minerals and herbs, with significant brand awareness, sales volume and customer bases, such as and VitaminShoppe.

We believe that the principal competitive factors in our market are brand recognition, selection, convenience, price, accessibility, customer service, and speed of order fulfillment. Many of our current and potential competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than Pazoo. In addition, online retailers may be acquired by, receive investments from or enter into other commercial relationships with larger, well-established and well-financed companies as use of the Internet and other online services increases. Some of our competitors may be able to secure merchandise from vendors on terms that are more favorable, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing or inventory availability policies and devote substantially more resources to website and systems development than our company. Increased competition may result in reduced operating margins, loss of market share and a diminished brand franchise. There can be no assurance that we will be able to compete successfully against current and future competitors, and competitive pressures faced by us may have a material adverse effect on our financial condition, operational results, business, and prospects.  Furthermore, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing decisions or acquisitions that could have a material adverse effect on our financial condition, operational results, business, and prospects.

PATENTS, TRADEMARKS, AND LICENSES

We have filed for a trademark application for IUCSS with the United States Patent and Trademark Office (USPTO) on April 8, 2011, bearing Serial Number 85290478. On June 29, 2011 we filed a name change to Pazoo, Inc. with the USPTO bearing docket number 0078851-000005. See Exhibit 99.2 “Trademark Application”.
 
Government Regulation
 
We are subject to federal and state consumer protection laws, including laws protecting the privacy of consumer non-public information and regulations prohibiting unfair and deceptive trade practices. In particular, under federal and state financial privacy laws and regulations, we must provide: (i) notice to consumers of our policies on sharing non-public information with third-parties; (ii) advance notice of any changes to our policies; and (iii) with limited exceptions, provide consumers the right to prevent sharing of their non-public personal information with unaffiliated third parties. Furthermore, the growth and demand for online commerce could result in more stringent consumer protection laws that impose additional compliance burdens on online retailers. These consumer protection laws could result in substantial compliance costs and could interfere with the conduct of our business.
 
There is currently great uncertainty in many states whether or how existing laws governing issues such as property ownership, sales and other taxes, libel and personal privacy apply to the Internet and commercial online retailers. These issues may take years to resolve. For example, tax authorities in a number of states, as well as a Congressional advisory commission, are currently reviewing the appropriate tax treatment of companies engaged in online commerce, and new state tax regulations may subject us to additional state sales and income taxes. New legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or a change in application of existing laws and regulations to the Internet and commercial online services could result in significant additional taxes on our business. These taxes could have an adverse effect on our results of operations. Furthermore, there is a possibility that we may be subject to significant fines or other payments for any currently unknown past failures to comply with these requirements.
 
The sale of nutritional supplements is subject to extensive legislation in the U.S. and abroad. The FDA is responsible for enforcing the Federal Food, Drug and Cosmetic Act, or FDCA, which governs the formulation, packaging, labeling, manufacturing and distribution of vitamins, minerals, herbs and other nutritional supplements, as well as the sale of over the counter, or OTC, drugs. The Federal Trade
 
 
 
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Commission, or FTC, is responsible for overseeing the advertising of nutritional supplements, and is primarily concerned with publicly made health claims that are not substantiated by definitive scientific studies. The U.S. Postal Service governs advertising as it relates to product safety. Regulation of certain aspects of the nutritional supplement business at the federal level is also governed by the Consumer Safety Product Commission, the Department of Agriculture and the Environmental Protection Agency. The formulation, manufacture, packaging, labeling and sale of nutritional supplements are also subject to extensive state, local and foreign legislation.
 
The FDCA addresses dietary supplements principally through the Dietary Supplement Health and Education Act of 1994, or DSHEA. The DSHEA defines “dietary supplements” as vitamins, minerals, herbs, other botanicals, amino acids and other dietary substances that are used to supplement the diet, as well as concentrates, constituents, extracts or combinations of such dietary ingredients. Generally, under DSHEA, dietary ingredients that were on the market before October 15, 1994 may be used in dietary supplements without notifying the FDA. However, a “new” dietary ingredient (i.e., a dietary ingredient that was not marketed in the U.S. before October 15, 1994) must be the subject of a new dietary ingredient notification submitted to the FDA unless the ingredient has been “present in the food supply as an article used for food” without having been “chemically altered.” A new dietary ingredient notification must provide the FDA with evidence of a “history of use or other evidence of safety” which establishes that use of the dietary ingredient “will reasonably be expected to be safe.” A new dietary ingredient notification must be submitted to the FDA at least 75 days before the new dietary ingredient can be marketed. Furthermore, there can be no assurance that the FDA will accept evidence purporting to establish the safety of any new dietary ingredients that we may want to market, and the FDA’s refusal to accept such evidence could prevent the marketing of such dietary ingredients. The FDA is in the process of developing guidance for the industry to clarify its interpretation of the new dietary ingredient notification requirements, and this guidance has the potential to raise new and significant regulatory barriers for new dietary ingredients. In addition, increased FDA enforcement could lead the FDA to challenge dietary ingredients already on the market as “illegal” under the FDCA because of the failure to file a new dietary ingredient notification.
 
DSHEA permits “statements of nutritional support” to be included in labeling for dietary supplements without FDA pre-approval. Such statements may describe how a particular dietary ingredient affects the structure, function or general well-being of the body, or the mechanism of action by which a dietary ingredient may affect the structure, function or well-being of the body, but such statements may not state that a dietary supplement will diagnose, cure, mitigate, treat or prevent a disease unless such claim has been reviewed and approved by the FDA. A company that uses a statement of nutritional support in labeling must possess evidence substantiating that the statement is truthful and not misleading. In some circumstances, it is necessary to disclose on the label that the FDA has not “evaluated” the statement, to disclose the product is not intended to combat disease and to notify the FDA about our use of the statement within 30 days of marketing the product. However, there can be no assurance that the FDA will not determine that a particular statement of nutritional support that we want to use is an unacceptable disease claim or an unauthorized version of a “health claim.” Such a determination might prevent the use of such a claim.
 
In addition, DSHEA provides that certain so-called “third-party literature,” e.g., a reprint of a peer-reviewed scientific publication linking a particular dietary ingredient with health benefits, may be used “in connection with the sale of a dietary supplement to consumers” without being subject to labeling regulations. Such literature must not be false or misleading, the literature may not “promote” a particular manufacturer or brand of dietary supplement and a balanced view of the available scientific information on the subject matter must be presented. There can be no assurance, however, that all third-party literature that we would like to disseminate in connection with our products will satisfy each of these requirements, and failure to satisfy all requirements could prevent use of the literature or subject the product to regulation as an unapproved drug.
 
As authorized by DSHEA, the FDA has recently proposed Good Manufacturing Practices, or GMPs, specifically for dietary supplements. These new GMP regulations, which are anticipated to be finalized in the near future, would be more detailed than the current GMPs regulating dietary supplements and may, among other things, require dietary supplements to be prepared, packaged and held in compliance with certain rules and might require quality control provisions similar to those set forth in the GMP regulations for drugs. There can be no assurance that if the FDA adopts GMP regulations for dietary supplements we will be able to comply with the new rules without incurring substantial expense.
 
 
 
37

 
 
The FDA generally prohibits labeling a dietary supplement with any “health claim” (that is not authorized as a “statement of nutritional support” permitted by DSHEA) unless the claim is pre-approved by the FDA. There can be no assurance that some of the labeling statements that we would like to use will not be deemed by the FDA to be impermissible “health or disease claims.”
 
Although the regulation of dietary supplements is in some respects less restrictive than the regulation of drugs, there can be no assurance that dietary supplements will continue to be subject to less restrictive regulation. Legislation has been periodically introduced in Congress, including in 2004 and 2005, to amend the FDCA to place more restrictions on the marketing of dietary supplements. In addition, Congress has been asked to consider various systems for pre-market and post-market review of dietary supplements to make the regulation of these products similar to the regulation of drugs under the FDCA. The FDA regulates the formulation, manufacturing, packaging, labeling and distribution of OTC drug products pursuant to a “monograph” system that specifies active drug ingredients that are generally recognized as safe and effective for particular uses. If an OTC drug is not in compliance with the applicable FDA monograph, the product generally cannot be sold without first obtaining FDA approval of a new drug application, which can be a long and expensive procedure. There can be no assurance that, if more stringent statutes are enacted for dietary supplements, or if more stringent regulations are promulgated, we will be able to comply with such statutes or regulations without incurring substantial expense.
 
The FDA has broad authority to enforce the provisions of the FDCA with respect to dietary supplements and OTC drugs, including powers to issue a public “warning letter” to a company, to publicize information about illegal products, to request a voluntary recall of illegal products from the market and to request that the Department of Justice initiate a seizure action, an injunction action or a criminal prosecution in U.S. courts.
 
The FTC exercises jurisdiction over the advertising of dietary supplements. In recent years, the FTC has instituted numerous enforcement actions against dietary supplement companies for making false or misleading advertising claims and for failing to adequately substantiate claims made in advertising. These enforcement actions have often resulted in consent decrees and the payment of civil penalties and/or restitution by the companies involved.

We are also subject to regulation under various state, local and international laws that include provisions governing, among other things, the formulation, manufacturing, packaging, labeling, advertising and distribution of dietary supplements and OTC drugs. Government regulations in foreign countries may prevent or delay the introduction, or require the reformulation, of certain of our products. Compliance with such foreign governmental regulations is generally the responsibility of our distributors in those countries. These distributors are independent contractors whom we do not control.
 
In addition, from time to time in the future, we may become subject to additional laws or regulations administered by the FDA or by other federal, state, local or foreign regulatory authorities, to the repeal of laws or regulations that we consider favorable, such as DSHEA, or to more stringent interpretations of current laws or regulations. We are not able to predict the nature of such future laws, regulations, repeals or interpretations, and we cannot predict what effect additional governmental regulation, if and when it occurs, would have on our business in the future. Such developments could, however, require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, additional personnel or other new requirements. Any such developments could have a material adverse effect on our business.

Our fiscal year end is December 31.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Our directors serve until their successors are elected and qualified. Our directors elect our officers to a term of one (1) year and they serve until they are reelected or their successors are duly elected and qualified, or until they are removed from office. The board of directors has no nominating or compensation committees.
 
 
 
38

 
 
The name, age, and position of our present officers and directors is set forth below:
 
Name
 
Age
 
Title
David Cunic
 
32
 
Chief Executive Officer, Director
Steven Basloe
 
60
 
President, Director
Ben Hoehn
 
30
 
Chief Operating Officer
Gregory Jung
 
44
 
Chief Financial Officer, Director
 
With the exception of Ben Hoehn, who has held his position since September 2011, the persons named above have held their offices/positions since November 2010 and we expect them to hold their offices/positions at least until the next annual meeting of our shareholders.

David M. Cunic – Chief Executive Officer, Director
David Cunic is a member of various physical therapy and community service organizations, as well as the owner and manager of DMC Athletics & Rehabilitation, Inc. (DMC).  Educated with a Bachelor of Health Science and Master of Physical Therapy from the University of New England, David is highly trained in sports medicine, orthopedics, and manual therapy and has had the honor of working with prestigious doctors from numerous professional and Olympic sport teams.  In addition, prior to forming DMC, he has worked at inpatient facilities and has managed several outpatient orthopedic clinics.  Mr. Cunic periodically refines his knowledge and manual skills through workshops and continuing education seminars, but what makes him truly unique is his ability to relate to his patients, which is a result of receiving intensive physical therapy himself for four years.  David is a certified personal trainer and a licensed referee for the United States Soccer Federation.

Steven Basloe – President, Executive Vice President of Marketing and Sales, Director
Steven Basloe holds a Bachelor of Science degree and a Master in Business Administration in marketing, as well as a Juris Doctorate, all from Syracuse University.  Mr. Basloe brings over three decades of sales and marketing experience to PAZOO and will play a key role in developing strategic plans for advertising, sales, marketing, and distribution.  Mr. Basloe recently served as owner of SMB Marketing Group where he successfully provided consulting services in creative and strategic planning to major corporations such as Bertelsmann, Warner’s, Samsung, S. Rothschild, and Alfred Haber Distribution.

Ben Hoehn – Chief Operating Officer
Ben Hoehn has both a Bachelor and a Master of Science in Criminal Justice from the University of Cincinnati.  He is currently the Chief Operating Officer for all 3 of DMC Athletics and Rehabilitation’s physical therapy and personal training facilities as well as DMC's Nutritional Line.  Prior to his work at DMC, he worked in Cincinnati for a non-profit organization that worked with the Cincinnati Police Department in crime and problem solving techniques.

Gregory Jung – Chief Financial Officer, Director
Gregory Jung holds a Bachelor of Science degree from Michigan State University in Food Systems Economics and Management.  Mr. Jung brings over 14 years of capital markets experience spanning the areas of equity and fixed income trading, compliance, and supervision in the planning and delivery within client relationships.  He has formerly held FINRA Series 4, 7, 24, 53, 55, and 63 licenses.

Possible Potential Conflicts

The OTCBB on which we plan to have our shares of common stock quoted does not currently have any director independence requirements.

No member of management will be required by us to work on a full time basis. Accordingly, certain conflicts of interest may arise between us and our officers and directors in that they may have other business interests in the future to which they devotes their attention, and may be expected to continue to do so although management time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of such business judgment as is consistent with each officer's understanding of his fiduciary duties to us.
 
 
 
39


 
Currently we have three officers and directors and will seek to add additional officer(s) and/or director(s) as and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such offers.

We cannot provide assurances that our efforts to eliminate the potential impact of any conflicts of interest will be effective.

Code of Business Conduct and Ethics

In January 1, 2011, we adopted a Code of Ethics and Business Conduct that is applicable to our future employees, concurrently with adopting a separate Code of Ethics for Principal Executive and Senior Financial Officers or persons performing similar functions. A code of ethics is a written standard designed to deter wrongdoing and to promote:

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships

full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, the SEC and in other public communications made by the Company

compliance with applicable governmental laws, rules and regulations

the prompt internal reporting of violations of the Code of Ethics to an appropriate person or persons identified in the Code of Ethics; and

accountability for adherence to the Code of Ethics.
 
Copies of our Code of Ethics and Business Conduct and Code of Ethics for Principal and Senior Financial Officers are being filed as Exhibit 99.2 to our Registration Statement of which this prospectus is a part.
 
Board of Directors
Our directors hold office until the completion of their terms of office, which is not longer than one year, or until they have been reelected or their successor(s) have been elected. Our directors terms of office expire on November 16, 2011. All officers are appointed annually by the board of directors and, subject to existing employment agreements (of which there are currently none), serve at the discretion of the board. Currently, directors receive no compensation for their role as directors but may receive compensation for their role as officers.  In hope of attracting exemplary professionals, the company reserves the right to compensate outside directors when such outside directors are elected.

Involvement in Certain Legal Proceedings

During the past five years, no present director, executive officer or person nominated to become a director or an executive officer of us:
 
(1) had a petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
 
(2) was convicted in a criminal proceeding or subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
 
 
 
40

 
 
(3) was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any of the following activities:
 
i. acting as a futures commission merchant, introducing broker, commodity trading advisor commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
 
ii. engaging in any type of business practice; or
 
iii. engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws; or
 
(4) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of an federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3) (i), above, or to be associated with persons engaged in any such activity; or
 
(5) was found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and for which the judgment has not been reversed, suspended or vacated.

Committees of the Board of Directors

Concurrent with having sufficient members and resources, our board of directors will establish an audit committee and a compensation committee. We believe that we will need a minimum of five directors to have effective committee systems. The audit committee will review the results and scope of the audit and other services provided by the independent auditors and review and evaluate the system of internal controls. The compensation committee will manage any stock option plan we may establish and review and recommend compensation arrangements for the officers. No final determination has yet been made as to the memberships of these committees or when we will have sufficient members to establish committees. See “Executive Compensation” hereinafter.

EXECUTIVE COMPENSATION

We will reimburse all directors for any expenses incurred in attending directors' meetings provided that we have the resources to pay these fees. At the current time we do not have officers and directors liability insurance.  We will consider applying for officers and directors liability insurance at such time when we have the resources to do so.

Summary Executive Compensation Table
 
The following table shows, for the period from November 16, 2010 (inception) to December 31, 2010, and the first nine months of 2011, compensation awarded to or paid to, or earned by, our Chief Executive Officer, President, Chief Operating Officer, and Chief Financial Officer. 
 
 
 

 
 
41

 
 
Summary Compensation Table
Name
and
principal
position
(a)
 
Year
(b)
 
Salary
($)
(c)
 
Bonus
($)
(d)
 
Stock
Awards
($)
(e)
 
Option
Awards
($)
(f)
 
Non-Equity
Incentive
Plan
Compensation
($)
(g)
 
Nonqualified
Deferred
Compensation
Earnings
($)
(h)
 
All Other
Compensation
($)
(i)
 
Total
($)
(j)
David Cunic,
 
2011
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
-
CEO and Director
 
2010
 
-
 
-
 
-
 
-
 
-
 
-
 
(1)
 
-
                                     
Steve Basloe,
 
2011
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
-
President and Director   
2010
 
-
 
-
 
-
 
-
 
-
 
-
 
(2)
 
-
                                     
Ben Hoehn,
 
2011
 
-
 
-
 
-
 
-
 
-
 
-
 
(3)
 
-
COO   
2010
 
-
 
-
 
-
 
-
 
-
 
-
 
-
 
-
                                     
Gregory Jung,
 
2011
 
13,462
 
-
 
-
 
-
 
-
 
-
 
-
 
-
CFO and Director
 
2010
 
-
 
-
 
-
 
-
 
-
 
-
 
(4)
 
-
 
We have no formal employment arrangement with our Directors and their compensation has not been fixed or based on any percentage calculations. Our Directors will make all decisions determining the amount and timing of their compensation and, for the immediate future, will not receive any compensation. Our Directors compensation amounts will be formalized if and when their annual compensation exceeds $50,000.

(1)  
David Cunic, our Chief Executive Officer and Director, was issued 15,000,000 shares of no cost basis common stock at inception in 2010

(2)  
Steve Basloe, our President and Director, was issued 15,000,000 shares of no cost basis common stock at inception in 2010.  However, Mr. Basloe directed that certain of his founder’s shares be titled in the names of his four children.  Jeremy Basloe, Adam Basloe, Daniel Basloe, and Rebecca Basloe each received 250,000 shares of restricted founders stock.

(3)  
Ben Hoehn, our Chief Operating Officer, was issued 2,500,000 shares of common stock valued at $12,500 in 2011 and replaced Gina Morreale as Secretary and Treasurer

(4)  
Gregory Jung, our Chief Financial Officer, was issued 12,500,000 shares of common stock in 2010 and is the only Director receiving monetary compensation in 2011 from the Company for his services in the amount of $25,000 per year.  As of September 30, 2011, Mr. Jung’s compensation was in the amount of $13,462.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of September 30, 2011, the beneficial ownership of our common stock by each executive officer and director, by each person known by us to beneficially own more than 5% of our common stock and by the executive officers and directors as a group. Except as otherwise indicated, all shares are owned directly and the percentage shown is based on 48,182,000 shares of common stock.
 
 
 
42

 
 
Title of class
 
Name and address of beneficial owner
 
Amount of
beneficial ownership
   
Percent
of class*
 
Common
 
 David Cunic
13 Old Mill Drive
Denville NJ 07834
   
15,000,000
     
31.1
%
                     
Common
 
 Steve Basloe
560 Sylvan Avenue
Englewood NJ 07632
   
14,000,000
     
29.1
%
                     
Common
 
 Gregory Jung
17625 North 14th Street
Phoenix AZ 85022
   
12,500,000
     
25.9
%
                     
Common
 
 Ben Hoehn
496 Mayhow court
South Orange NJ 07079
   
2,500,000
     
5.2
%
                     
Common
 
 Gina Morreale
361 Mohegan Circle
Lafayette NJ 07848
   
2,500,000
     
5.2
%
                     
Common
 
Total beneficial ownership
   
46,500,000
     
96.5
%
 
As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date.

The persons named above have full voting and investment power with respect to the shares indicated.  Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security.  Accordingly, more than one person may be deemed to be a beneficial owner of the same security.

Disclosure of Commission Position of Indemnification for Securities Act Liabilities

In accordance with the provisions in our Articles of Incorporation, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to our directors, officers and controlling persons pursuant to the company’s Articles of Incorporation, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.





 
43

 
 
Report of Independent Registered Public Accounting Firm



To the Board of Directors and Shareholders
PAZOO, Inc.
Cedar Knolls, NJ 07927-1901

We have audited the accompanying balance sheet of PAZOO, Inc., a development stage enterprise, as of December 31, 2010, and the related statements of income, stockholders' equity, and cash flows for the period from November 16, 2010 (Date of Inception) through December 31, 2010.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PAZOO, Inc., as of December 31, 2010, and the results of its operations and its cash flows for the period from November 16, 2010 (Date of Inception) through December 31, 2010, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 4 to the financial statements, unless the Company is successful in expanding its operations and generating sufficient cash flow to meet its obligations, the Company is likely to cease operations.  These matters raise substantial doubt about the Company's ability to continue as a going concern.  Management's plan in regard to these matters is also described in Note 4.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ Santora CPA Group
Newark, DE 19713-4309

November 17, 2011
 
 
 
44

 
 
PAZOO, INC
 
(A DEVELOPMENT STAGE COMPANY)
 
BALANCE SHEET
 
       
       
   
 December 31, 2010
 
ASSETS  
Current assets:
     
Prepaid expense
  $ 3,000  
         
Total current assets
    3,000  
         
Total assets
  $ 3,000  
         
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
       
Loans payable - related party
  $ 1,615  
         
Total current liabilities
    1,615  
         
Total liabilities
  $ 1,615  
         
Stockholders' equity:
       
Common stock, 980,000,000 shares authorized, 45,600,000 shares issued and outstanding as of December 31, 2010
    600  
Additional paid in capital
    2,400  
Retained earnings (accumulated deficit)
    (1,615 )
         
Total stockholders' equity
    1,385  
         
Total liabilities and stockholders' equity
  $ 3,000  
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
45

 
 
PAZOO, INC.
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENT OF OPERATIONS
 
       
   
November 16, 2010
(Inception) to
December 31, 2010
 
Net sales
  $ -  
Cost of goods sold
    -  
         
Gross profit
    -  
         
Organizational costs
    1,615  
         
Loss from operations
    (1,615 )
         
Net loss
  $ (1,615 )
         
Weighted average common shares outstanding - Basic and Diluted
    45,600,000  
Net loss per common share - Basic and Diluted
  $ -  
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
46

 
 
PAZOO, INC.
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENT OF CASH FLOWS
 
       
   
November 16, 2010
(Inception) to
December 31, 2010
 
Cash flows from operating activities:
     
Net loss
  $ (1,615 )
Adjustments to reconcile net income to net cash provided by operating activities:
 
Changes in operating assets and liabilities:
       
Prepaid expenses and other current assets
    (3,000 )
Stock issued for services
    3,000  
         
Net cash used in operating activities
    (1,615 )
         
Cash flows from investing activities:
       
         
Net cash used in investing activities
    -  
         
Cash flows from financing activities:
       
Increase in loans payable
    1,615  
Net cash provided by financing activities
    1,615  
         
Net (decrease) increase in cash and cash equivalents
    -  
         
Cash and cash equivalents end of period
  $ -  
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
47

 
 
PAZOO, INC.
 
(A DEVELOPMENT STAGE COMPANY)
 
STATEMENT OF STOCKHOLDERS' EQUITY
 
                                                 
   
Common Stock (in shares)
   
Common Stock
   
Preferred Stock (in shares)
   
Preferred Stock
   
Additional Paid-In Capital
   
Accumulated Other Comprehensive Income (Loss)
   
Retained Earnings (Accumulated Deficit)
   
Total Stockholders' Equity
 
                                                 
Beginning Balance at Nov. 16, 2010 (Inception)
    -       -       -             -       -       -       -  
Founders' Stock, issued at no cost on November 16, 2010
    45,000,000       -       -       -       -       -       -       -  
Stock issued to consultants for services rendered on November 16, 2010
    600,000       600       -               2,400       -       -       3,000  
Net loss
    -       -       -       -       -       -       (1,615 )     (1,615 )
Ending Balance at Dec. 31, 2010
    45,600,000       600       -       -       2,400       -       (1,615 )     1,385  
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these financial statements.
 
 
48

 
 
PAZOO, INC.
(A DEVELOPMENT STAGE COMPANY)
 
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 16 2010 (INCEPTION)
THROUGH DECEMBER 31, 2010
 
 
Note 1—DESCRIPTION OF BUSINESS AND ACCOUNTING POLICIES
                     
                         
Description of Business
                       
 
Pazoo, Inc. was originally incorporated in the State of Nevada as IUCSS, Inc., and is a development stage company with our operating headquarters in Cedar Knolls, New Jersey as an online retailer and distributer of nutritional foods/supplements, wellness goods, and fitness apparel.  We changed our name on May 9, 2011 to take advantage of unique branding and website opportunities in the health improvement field.  The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards (“SFAS”) No. 7, "Accounting and Reporting by Development Stage Enterprises".  The Company has devoted substantially all of its efforts to business planning and development, as well as allocating a substantial portion of its time and resources in bringing its product to the market.  The Company has not commenced any commercial operations as of December 31, 2010.
 
Use of Estimates
                       
 
In accordance with Generally Accepted Accounting Principals (GAAP) the preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.
 
On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described at relevant sections in the notes to the financial statements.
 
Fair Value of Financial Instruments
                       
 
For certain of the Company's assets and liabilities, including prepaid expense, the carrying amounts approximate fair value due to their short maturities.  The amounts shown for loanss payable also approximate fair value because current interest rates and terms offered to the Company for similar debt are substantially the same.
 
Cash and Cash Equivalents
                       
                     
We classify all highly liquid instruments with an original maturity of three months or less at the time of purchase as cash equivalents.
                   
                         
Revenue Recognition
                       
     
The Company's financial statements are prepared under the accrual method of accounting. Revenues are recognized when evidence of an agreement exists, the price is fixed or determinable, collectability is reasonably assured and goods have been delivered or services performed.
   
                         
Inventories
                       
 
Inventory currently consists predominately of goods purchased from third party suppliers and does not include raw materials.  Certain inventory contains expiration dates (“shelf life”) and the efficacy of any product which is held beyond its shelf life may be impaired.  The company has made no adjustments to inventory for products which may have, or are approaching, the end of their shelf life.   Inventory cost is determined using the weighted average cost method.
                         
Net Income Per Common Share
                       
 
Basic net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share reflects, in addition to the weighted average number of common shares, the potential dilution if shares of convertible preferred stock were converted into shares of common stock, unless the effects of such exercises and conversions would have been anti-dilutive.
 
   
For the period ending
December 31, 2010
 
 
  
     
Weighted average common shares outstanding
  
     
Basic
  
 
          45,600,000
 
Diluted
  
 
          45,600,000
 
Net income per common share
  
     
Basic
  
 $
                        -
 
Diluted
  
 $
                        -
 
         
 
 
 
49

 
 
Note 2—RELATED PARTY TRANSACTIONS
                       
                         
Loans Payable
                       
                         
Pazoo, Inc. entered into a Promissory note with Integrated Capital Partners Incorporated (ICPI) and used the funds for startup and organizational costs.  ICPI is a Series A Preferred stockholder.
           
                         
                         
Note 3—STOCKHOLDERS’ EQUITY
                       
                         
Common Stock
                       
                         
Common shares outstanding totaled 45,600,000 at December 31, 2010.  In November 2010, Pazoo, Inc. issued stock at inception at no cost per share.  We issued 15,000,000 shares of common stock to our Chief Executive Officer and Director, David Cunic, 15,000,000 shares of common stock to our President and Director, Steve Basloe (however, he requested that 250,000 shares each for his four children be registered in their names), 12,500,000 shares of our common stock to our Chief Financial Officer, Gregory Jung, and 2,500,000 shares of our common stock to our then, Secretary and Treasurer, Gina Morreale.  Also, in November 2010, we issued 600,000 shares of common stock to three consultants for prepaid services to be completed in 2011. Voting rights are non cumulative for the holders of the common shares.
                         
                         
Note 4—GOING CONCERN
                       
                         
Going Concern
                       
                         
The company was formed in November 2010.  We have limited operations and are still in the development stage.   This factor, among others, raises 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 generating online revenue through an increase of products on our website.  We have spent minimal capital resources on marketing and brand advertising; however, we have $636 in product revenue in one month with essentially three product offerings through our mini website (which was launched in August 2011).  ICPI has committed to additional funding upon the filing of a registration statement, and subsequently upon the effectiveness of the registration statement.  These funds will be used to market the name “Pazoo” and to add additional product offerings on our main website.
                         
                         
Note 5—RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
                     
                       
Recently Issued Accounting Pronouncements
                     
                       
We have implemented all new accounting pronouncements that are in effect and that may impact our financial statements and do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

 

 
50

 
 
PAZOO, INC
 
(A DEVELOPMENT STAGE COMPANY)
 
BALANCE SHEETS
 
(UNAUDITED)
 
             
 
 
 September 30,
2011
   
 December 31,
2010
 
ASSETS  
Current assets:
           
Cash and cash equivalents
  $ 2,601       -  
Inventories
    1,050       -  
Prepaid expense
    -       3,000  
Advance to vendor
    12,900       -  
                 
Total current assets
    16,551       3,000  
Property and equipment, net
    -       -  
                 
Total assets
  $ 16,551       3,000  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
               
Accounts payable
  $ 8,527       -  
Payroll liabilities
    2,079       -  
Loans payable - related party
    13,302       1,615  
Interest payable
    21       -  
                 
Total current liabilities
    23,929       1,615  
                 
Total Liabilities
  $ 23,929       1,615  
                 
Stockholders' equity:
               
Common stock, $0.001 par value; 980,000,000 shares authorized, 48,182,000 shares issued and outstanding as of September 30, 2011
    3,182       600