GROOVE BOTANICALS INC. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of the results of our operations and financial condition should be read in conjunction with our financial statements, and the notes to those financial statements that are included elsewhere in this Report. All monetary figures are presented in U.S. dollars, unless otherwise indicated. Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filings with the SEC. Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects. 6 Results of Operations Revenue We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products in the near future. Operating Expenses For the fiscal years ended March 31, 2024 and 2023 we had the following operating expenses: For the Year ended March 31, 2024 2023 Operating expenses: Selling, General and Administrative Expenses $ 73,743 $ 75,468 Rent 18,576 11,796 Legal and Professional Expenses 95,962 58,350 Consulting Expense 78,300 29,900 Total operating expenses $ 266,581 $ 175,514 Total operating expenses for the year ended March 31, 2024 were $266,581 as compared to $175,514 for the year ended March 31, 2023. During the year ended March 31, 2024, the Company incurred $18,576 of rent expense, legal and professional expenses of $95,962, consulting expenses of $78,300 and $73,743 of selling, general and administrative expenses which consisted primarily of; payroll and related costs of $48,000, advertising and promotion expenses of $416, insurance expenses of $5,612, transfer agent expenses of $5,267 and other selling, general, and administrative expenses of $14,448. The increase was primarily due to an increase in consulting expenses from $29,900 (2023) to $78,300 (2024) and legal and professional expenses, which increased from$58,350 (2023) to $95,962 (2024) due to the filing of a registration statement in fiscal 2024. Rent increased from $11,796 to $18,576 and selling and general expenses decreased from $75,468 (2023) to $73,743 (2024). Selling, general and administrative expenses for the year ended March 31, 2023 consisted primarily of; payroll and related costs of $48,000, advertising and promotion expenses of $5,393, insurance expenses of $5,064, other selling, general, and administrative expenses of $17,369, offset by a credit to transfer and agent fees of $358. Other Income (Expense) March 31, 2024 March 31, 2023 Other Income (Expense) Amortization of Debt Discount $ — $ (74,876 ) Change in Derivative Liability — 95,575 Gain on Settlement of Debt 71,242 54,571 Interest Income (Expense) (6,750 ) (21,662 ) Miscellaneous Other Income (Expense) — 1,180 Total Other Income (Expense) $ 64,492 $ 54,788 Other income was $64,692 in the year ended March 31, 2024, and comprised of a gain on settlement of debt of $71,242 offset by interest expense of $6,750. Other income was $54,788 in the year ended March 31, 2023, which included a gain as a result of a change in the value of derivative liabilities of $95,575, a gain on settlement of debt of $54,571 and miscellaneous other income of $1,180 offset by amortization of debt discount expense of $74,876 and interest expense of $21,662. Net Loss We had a net loss of $202,089 in the year ended March 31, 2024 compared to a net loss of $120,726 in the year ended March 31, 2023. The increase to the reported loss in the current year end is primarily due to an increase in legal and professional expenses and increased consulting fees. 7 Statement of Cash Flows The following table summarizes our cash flows for the period presented: For the Year ended March 31, 2024 2023 Net cash used by operating activities $ (86,835 ) $ (95,503 ) Net cash provided from (used by) investing activities — — Net cash provided from financing activities 83,957 51,535 Decrease in cash and cash equivalents $ (2,878 ) $ (43,968 ) During the year ended March 31, 2024 we used cash of $2,878 as compared to the year ended March 31, 2024, where we used cash of $43,968. Cash Used in Operating Activities Cash used in operating activities for the year ended March 31, 2024 was $86,835 as compared to $95,503 used in the year ended March 31, 2023. Cash used in operating activities for the year ended March 31, 2024 was the result of net loss of $202,089 offset by non-cash operating activities including a gain on settlement of debt of $71,242, accrued interest of $6,750, stock issued for outside services of $78,300, accrued payroll of $48,000, changes to working capital included an increase in prepaid expenses of $28, an increase in accounts payable and accrued liabilities of $53,418. Cash used in operating activities for the year ended March 31, 2023 was the result of net loss of $120,726 offset by non-cash operating activities including a gain on settlement of debt of $54,571, a change in derivative liabilities of $95,575, stock issued for outside services of $33,900, accrued payroll of $48,000, accrued interest of $14,504, interest settled with stock of $7,158 and bad debt of $25, changes to working capital included a decrease in prepaid expenses of $482, a decrease to accounts receivable of $226 and a decrease in accounts payable and accrued liabilities of $2,838. Cash Provided by Investing Activities There was no cash provided by investing activities for the years ended March 31, 2024 and 2023. Cash Provided by Financing Activities March 31, 2024 March 31, 2023 Cash Flow From Financing Activities Funds received from Related Party 104,915 168,000 Funds distributed to Related Party (958 ) (9,428 ) Repayment of Outstanding Convertible Debt (40,000 ) (54,650 ) Repayment of Outstanding Contingent Liability — (95,350 ) Funds received for Issuance of Common Stock 20,000 42,963 Net Cash From Financing Activities 83,957 51,535 During the year ended March 31, 2024, financing activities provided cash of $124,915 as a result of related party advances of $104,915 and funds received for the issuance of common stock of $20,000 for ongoing operations, offset by funds paid to a related party of $958 and repayments of outstanding convertible debt of $40,000 for net cash from financing activities of $83,957. During the year ended March 31, 2023, financing activities provided cash of $210,963 as a result of related party advances of $168,000 and funds received for the issuance of common stock of $42,963 for ongoing operations, offset by funds paid to a related party of $9,428 and repayments of outstanding convertible debt of $54,640 and the repayment of an outstanding contingent liability of $95,350 for net cash from financing activities of $51,535. 8 Liquidity and Capital Resources We are in need of additional cash resources to maintain our operations. As of March 31, 2024 we had cash of $1,688. We are in the early stage of development and have experienced net losses to date and have not generated revenue from operations which raises substantial doubt about our ability to continue as a going concern. There are a number of conditions that we must satisfy before we will be able to acquire, license and acquire products and intellectual property, not the least of which is negotiating and financing any acquisitions. We are in the process of identifying and establishing strategic partners and technologies in order to establish a market and generate commercial orders by customers and licensing which will include effective marketing and sales capabilities for any products. We do not currently have sufficient resources to accomplish any of these conditions necessary for us to generate revenue and expect to incur increasing operating expenses. We will require substantial additional funds for operations, the service of debt and to fund our business objectives. There can be no assurance that financing, whether debt or equity, will always be available to us in the amount required at any particular time or for any particular period or, if available, that it can be obtained on terms favorable to us. If additional funds are raised by the issuance of equity securities, such as through the issuance and exercise of warrants, then existing stockholders will experience dilution of their ownership interest. If additional funds are raised by the issuance of debt or other equity instruments, we may be subject to certain limitations in our operations, and issuance of such securities may have rights senior to those of the then existing stockholders. We currently have no agreements, arrangements or understandings with any person or entity to obtain funds through bank loans, lines of credit or any other sources. If we do not have sufficient working capital to pay our operating costs for the next 12 months, we will require additional funds to pay our legal, accounting and other fees associated with our Company and our filing obligations under United States federal securities laws, as well as to pay our other accounts payable generated in the ordinary course of our business. Once these costs are accounted for, we will focus on assembling a portfolio of early-stage EV Battery Technologies developed by Universities in Norway, Sweden and Finland Any failure to raise money will have the effect of delaying the timeframes in the business plan as set forth above, and the Company may have to push back the dates of such activities. Going Concern The Company has incurred recurring net losses since its inception and has raised limited capital. The Company had a net loss of $202,089 and $120,726 for the years ended March 31, 2024, and March 31, 2023, respectively. The Company’s accumulated deficit was $34,847,277 and $34,426,718 as of March 31, 2024, and March 31, 2023, respectively. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustment relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company is taking certain steps to provide the necessary capital to continue its operations. These steps include but are not limited to: 1) focus on our new business model and 2) raising equity or debt financing. Our auditors express substantial doubt about our ability to continue as a going concern. Off Balance Sheet Arrangements We currently have no off-balance sheet arrangements. Critical Accounting Policies The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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 revenues and expenses during the reporting period. Specifically, such estimates were made by the Company for the valuation of derivative liability, stock compensation and beneficial conversion feature expenses. Actual results could differ from those estimates. 9 Financial Instruments The Company's financial instruments primarily consist of cash and cash equivalents, accounts payable and accrued liabilities, related party payables, dividends payable and other debt. The carrying values of the Company's financial instruments approximate fair value. FASB ASC 820, Fair Value Measurements and Disclosures ("ASC 820") establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories: Level 1—Quoted market prices for identical assets or liabilities in active markets or observable inputs; Level 2—Significant other observable inputs that can be corroborated by observable market data; and Level 3—Significant unobservable inputs that cannot be corroborated by observable market data. The Company believes that the carrying amounts of cash and cash equivalents, accounts payable, related party payables, accrued dividends and debt approximate fair value based on either their short-term nature or on terms currently available to the Company in financial markets. Beneficial Conversion Feature The Company measures certain convertible debt using a nondetachable conversion feature known as a beneficial conversion feature, or BCF. A convertible instrument contains a BCF when the conversion price is less than the fair value of the shares into which the instrument is convertible at the commitment date. From time to time, the Company may issue convertible notes that may contain a beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid-in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method. Debt Issuance Cost Debt issuance costs incurred in connection with the issuance of debt are capitalized and amortized to interest expense over the term of the debt using the effective interest method. The unamortized amount is presented as a reduction of debt on the balance sheet. In August 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20 that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. Two methods of transition were permitted upon adoption: full retrospective and modified retrospective. The Company has yet to adopt ASC 2020-06. The accounting impact will be a reclassification from Additional Paid-In Capital to Retained Earnings. The Company adopted ASC 2020-06 as of April 1, 2023. Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company does not believe the adoption of ASU 2023-07 will have any impact on our financial statements. In December 2023, the FASB issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public entities on an annual basis to (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). ASU 2023-09 is effective for fiscal years beginning after December 15, 2025. We are evaluating the impact of adopting ASU 2023-09 on our financial statements. 10 In March 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate Related Disclosures for Investors , which requires registrants to disclose climate-related information in registration statements and annual reports. The new rules would be effective for annual reporting periods beginning in fiscal year 2025. However, in April 2024, the SEC exercised its discretion to stay these rules pending the completion of judicial review of certain consolidated petitions with the United States Court of Appeals for the Eighth Circuit in connection with these rules. We are evaluating the impact the adoption of this rule, if any, may have on our financial statements. Item 7A. Quantitative and Qualitative Disclosures about Market Risks. Disclosure in response to this Item is not required for a smaller reporting company.