GROOVE BOTANICALS INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS Groove Botanicals, Inc. Condensed Consolidated Balance Sheets (Unaudited) September 30, 2024 March 31, 2024 ASSETS Current Assets: Cash $ 6,133 $ 1,688 Accounts Receivable — — Prepaid Expenses 4,992 454 Total Current Assets 11,125 2,142 TOTAL ASSETS $ 11,125 $ 2,142 LIABILITIES & STOCKHOLDERS’ EQUITY Current Liabilities: Accounts Payable and Accrued Liabilities $ 74,614 $ 91,172 Interest Payable — — Related Party Payable 544,970 453,057 Convertible Notes Payable — — Dividends payable 267,705 178,470 Dividends payable, related party 60,000 40,000 Total Current Liabilities 947,289 762,699 Total Liabilities 947,289 762,699 Stockholders’ Equity Preferred Stock, Series A, $ 0.10 par value, 100 shares authorized; 100 shares issued and outstanding as of September 30, 2024, and March 31, 2024 10 10 Preferred Stock, Series B, $ 0.10 par value, 2,000 shares authorized; 1,983 shares issued and outstanding as of September 30, 2024, and March 31, 2023 198 198 Common Stock, $ 0.001 par value, 200,000,000 shares authorized. and 59,643,062 shares issued and outstanding as of September 30, 2024, and March 31, 2024, respectively 59,643 59,643 Additional paid-in capital 34,026,869 34,026,869 Accumulated deficit ( 35,022,884 ) ( 34,847,277 ) Total stockholder’s equity ( 936,164 ) ( 760,557 ) TOTAL LIABILITIES AND STOCKHOLDER’S DEFICIT $ 11,125 $ 2,142 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Groove Botanicals, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three Months ended Six Months ended September 30, September 30, 2024 2023 2024 2023 Expenses: Selling, General and Administrative Expenses $ 18,332 $ 21,852 $ 34,931 $ 38,816 Rent 3,591 4,644 8,235 9,288 Legal and Professional Expenses 7,410 1,298 21,956 25,368 Consulting Expense 500 — 1,250 78,300 Total Operating Expenses 29,833 27,795 66,372 151,772 Operating Loss ( 29,833 ) ( 27,795 ) ( 66,372 ) ( 151,772 ) Other Income (Expense) Interest Expense — ( 2,250 ) — ( 4,500 ) Total Other Income (Expense) — ( 2,250 ) — ( 4,500 ) Net (Loss) $ ( 29,833 ) $ ( 30,045 ) $ ( 66,372 ) $ ( 156,272 ) Dividends on Preferred Stock 54,618 54,618 109,235 109,235 Loss attributed to common stockholders $ ( 84,452 ) $ ( 84,663 ) $ ( 175,607 ) $ ( 265,507 ) Basic and Diluted Earnings (Loss) per Common Share $ ( 0.00 ) $ ( 0.00 ) $ ( 0.00 ) $ ( 0.00 ) Weighted Average Common Shares Outstanding – Basic and diluted 59,643,062 58,643,062 59,643,062 58,561,905 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements 4 Groove Botanicals, Inc. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) Series A Preferred Stock Series B Preferred Stock Common Stock Additional Paid In Capital Accumulated Deficit Total Shares Amount Shares Amount Shares Amount Amount Amount Amount Balance, March 31, 2024 100 $ 10 1,983 $ 198 59,643,062 $ 59,643 $ 34,026,869 $ ( 34,847,277 ) $ ( 760,557 ) Accrued dividend to related party - - - - ( 54,617 ) ( 54,617 ) Net (loss) ( 36,539 ) ( 36,539 ) Balance, June 30, 2024 100 $ 10 1,983 $ 198 59,643,062 $ 59,643 $ 34,026,869 $ ( 34,938,433 ) $ ( 851,713 ) Accrued dividend to related party, Series A Preferred Stock — — — — — — — ( 10,000 ) ( 10,000 ) Accrued dividend to Series B Preferred Stock ( 44,618 ) ( 44,618 ) Net (loss) — — — — — — — ( 29,833 ) ( 29,833 ) Balance September 30, 2024 100 $ 10 1,983 $ 198 59,643,062 $ 59,643 $ 34,026,869 $ ( 35,022,884 ) ( 936,164 ) Series A Preferred Stock Series B Preferred Stock Common Stock Additional Paid In Capital Accumulated Deficit Total Shares Amount Shares Amount Shares Amount Amount Amount Amount Balance, March 31, 2023 100 $ 10 1,983 $ 198 57,643,062 $ 57,643 $ 33,930,569 $ ( 34,426,718 ) $ ( 438,298 ) Issuance of Stock for Consulting — — — — 1,000,000 1,000 77,300 — 78,300 Accrued dividend to related party — — — — — — — ( 54,618 ) ( 54,618 ) Net (loss) — — — — — — — ( 126,227 ) ( 126,227 ) Balance, June 30, 2023 100 $ 10 1,983 $ 198 58,643,062 $ 58,643 $ 34,007,869 $ ( 34,607,563 ) $ ( 540,843 ) Accrued dividend to related party, Series A Preferred Stock — — — — — — — ( 10,000 ) ( 10,000 ) Accrued dividend to Series B Preferred Stock ( 44,617 ) ( 44,617 ) Net (loss) — — — — — — — ( 30,045 ) ( 30,045 ) Balance September 30, 2023 100 $ 10 1983 $ 198 58,643,062 $ 58,643 $ 34,007,869 $ ( 34,692,225 ) $ ( 625,505 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Groove Botanicals, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended September 30, 2024 2023 Cash Flow From Operating Activities Net Loss $ ( 66,372 ) $ ( 156,272 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock Issued for Outside Services — 78,300 Accrued Interest — 4,500 Accrued Payroll 24,000 24,000 Changes in working capital Increase (Decrease) in Prepaid Expenses ( 4,538 ) 88 Increase (Decrease) in Accounts Payable and Accrued Liabilities ( 16,558 ) ( 1,438 ) Net Cash Used in Operating Activities ( 63,468 ) ( 50,822 ) Cash Flow From Investing Activities — — Net Cash From Investing Activities — — Cash Flow From Financing Activities Funds received from Related Party 67,913 49,102 Net Cash From Financing Activities 67,913 49,102 Net Change in Cash 4,445 ( 1,720 ) Cash at Beginning of Period 1,688 4,566 Cash at End of Period $ 6,133 $ 2,846 Net cash paid for: Interest $ — $ — Income Taxes $ — $ — The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 GROOVE BOTANICALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 NOTE 1 - ORGANIZATION AND OPERATIONS Current Operations Groove Botanicals, Inc. (the “Company”), (formerly known as Avalon Oil & Gas, Inc.), was originally incorporated in Colorado on April 25, 1991, under the name Snow Runner (USA), Inc. The Company was the general partner of Snow Runner (USA) Ltd.; a Colorado limited partnership to sell proprietary snow skates under the name “Sled Dogs” which was dissolved in August 1992. In late 1993, the Company relocated its operations to Minnesota and in January 1994 changed our name to Snow Runner, Inc. In November 1994 we changed our name to the Sled Dogs Company. On May 25, 1999, we filed articles of merger with Xdogs.com Inc., changing our state of domicile to Nevada. On June 22, 2005, the Corporation changed our name from XDOGS.com, Inc. to Avalon Oil and Gas, Inc. On May 14, 2018, the Corporation changed our name from Avalon Oil and Gas, Inc., to Groove Botanicals, Inc. Until August 2, 2021, when we filed a 15-12B to suspend duty to file reports under sections 13 and 15(d) of the securities exchange act of 1934, we were a reporting company. Subsequently, on September 14, 2023 we filed a Form 10 with the Securities and Exchange Commission, which became effective 60 days later. Since inception we have operated, unsuccessfully, in various different industries. Currently, we plan to assemble a portfolio of early-stage EV Battery Technologies developed from Universities in Norway, Sweden and Finland, and seek grants from the State of Minnesota Department of Economic Development to find and identify corporate partners to commercialize these technologies and ultimately produce revenues for the Company. The Company does not currently own any patents or technologies related to the EV battery industry, and the process to acquire patents and technologies can be costly, and as such, the Company is not guaranteed to acquire any such patents. Management believes that the technologies available in the specialized energy industry present a stable business model with high growth potential and we are actively working towards an impactful acquisition in this space. On July 29, 2024, Mr. Douglas Barton resigned as a director of the Company. Mr. Barton did not resign due to any dispute or disagreement with the Company or its practices. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United Stated of America (“U.S. GAAP”) for financial information. Accordingly, they include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary in order to make the financial statements not misleading. The consolidated balance sheets as of June 30, 2024 and 2023, were derived from the Company’s consolidated financial statements at that date. Basis of Consolidation The Company’s consolidated financial statements include the accounts of Groove Botanicals, Inc., and its two 100% controlled non-operating subsidiaries formed in Wyoming, Biotrex, Inc., and Maxidyne, Inc. Intercompany accounts and transactions have been eliminated in consolidation. 7 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. Net Loss Per Share The Company computes net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As the Company has continued to report operating losses for the periods covered by this report, the impact of potentially dilutive securities would be antidilutive and therefore is not presented. Income Taxes The Company is taxed as a C corporation for income tax purposes. The Company accounts for income taxes under the liability method, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided on deferred tax assets if it is determined that it is more likely than not that the deferred tax asset will not be realized. The Company records interest, net of any applicable related income tax benefit, on potential income tax contingencies as a component of income tax expense. The Company records tax positions taken or expected to be taken in a tax return based upon the amount that is more likely than not to be realized or paid, including in connection with the resolution of any related appeals or other legal processes. Accordingly, the Company recognizes liabilities for certain unrecognized tax benefits based on the amounts that are more likely than not to be settled with the relevant taxing authority. The Company recognizes interest and/or penalties related to unrecognized tax benefits as a component of income tax expense. 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. 8 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. Recently Issued 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. 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. NOTE 3 - GOING CONCERN The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the consolidated financial statements, the Company has incurred recurring net losses since its inception and has raised limited capital. The Company had a net loss of $ 66,372 and $ 156,272 for the six-month periods ended September 30, 2024, and 2023, respectively. The Company’s accumulated deficit was $ 35,022,884 and $ 34,847,277 as of September 30, 2024, and March 31, 2024, 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. NOTE 4 – CASH The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of September 30, 2024, the Company’s cash consisted of non-restricted cash. 9 NOTE 5 – RELATED PARTY TRANSACTIONS The Company had related party payables of $ 544,970 and $ 453,057 as of September 30, 2024 and March 31, 2024, respectively. These amounts consist of funds contributed by the management for the purpose of providing financing during periods of low or negative cashflow in order to cover essential costs of continuing operations, as well as funds payable to management as compensation. On an annual basis the Company accrues $48,000 of wages payable to its CEO, Kent Rodriguez, under the terms of a four-year employment agreement entered into April 1, 2020, which designates monthly payments due Mr. Rodriguez in the amount of $4,000. On July 30, 2024, the Company and Mr. Kent Rodriguez agreed to extend the term of this Employment Contract, which expired on March 31, 2024, for a further two-year term to March 31, 2026, retroactive to April 1, 2024, on the same terms and conditions. These payables and cash advances accrue no interest and have no maturity date. During each of the three and six months ended September 30, 2024 and 2023 salary of $ 12,000 and $ 24,000 , respectively were accrued for Mr. Rodriquez. During each of the three-and six-month periods ended September 30, 2024, and 2023, the Company accrued $ 10,000 and $ 20,000 , respectively in preferred dividends from the Series A preferred shares to Mr. Kent Rodriguez, the holder of the Series A Preferred shares. Upon conversion the number of shares of common stock to be exchanged shall equal 51% of the then fully diluted issued and outstanding common stock. NOTE 6 – CONVERTIBLE NOTES PAYABLE Convertible notes payable consists of a $ 40,000 Convertible Promissory Note issued on March 5, 2021, by management to a third party in exchange for professional services. Beginning on the issuance date of this note, the outstanding principal balance of this note shall bear annual interest at 10 % , with interest commencing on the sixth month anniversary of the Issuance Date. The note has a maturity date of June 30, 2022 . Additionally, the note has a fixed conversion feature of $0.02 per share, and therefore the Convertible Note is measured at the net of Debt Discount, calculated based off its Beneficial Conversion Features. The note was booked with a debt discount of the full principal balance of $ 40,000 . As of June 30, 2022, this entire debt discount had been amortized. Further, on March 7, 2022, the Company issued additional convertible promissory note in the amount of $ 60,000 , with a maturity date of March 7, 2023 , an annual interest rate of 10 % and a fixed conversion price of $ 0.02 per share, in exchange for consulting services. The convertible amount is accounted for based off the outstanding principal and related interest pertaining to the portion convertible debt instrument being converted, multiplied by the previously specified conversion rate. On July 18, 2022, a Letter Agreement was drafted between the Company and the debtholder, which establishes the settlement of these debts once the Company’s Form 10 goes effective. On January 23, 2023 the Company and the convertible note holder mutually agreed to settle any and all amounts owed pursuant to 1) the Consulting Agreement and Convertible Promissory Note in the amount of $ 40,000 dated March 5, 2021; and 2) the Consulting Agreement and a Convertible Promissory Note in the amount of $ 60,000 dated March 7, 2022; 3) all interest accrued through settlement date, as follows: $10,000.00 to be paid to Hymers upon execution of this Agreement, with an additional payment of $40,000 30 days after GRVE’s Form 10 has gone effective. $ 10,000 was paid on January 24, 2023. $ 40,000 was paid on December 31, 2023. This resulted in a gain on the settlement of debt in the amount of $ 71,242 , including interest forgiven of $ 21,242 , during the fiscal year ended March 31, 2024. As of September 30, 2024 and March 31, 2024, the balance of the convertible note was $ 0 . NOTE 7 – PREFERRED STOCK The Company is authorized to issue 1,000,000 shares of Preferred Stock. We have authorized 100 shares of Series A Preferred Stock and 2,000 shares of Series B Preferred Stock, respectively, both with a par value of $ 0.10 . As of September 30, 2024, and March 31, 2024, there were 100 and 1,983 shares issued and outstanding for Series A Preferred Stock and Series B Preferred Stock, respectively. 10 Series A Preferred Stock holds designations of cash dividends at the rate of 8% of the amount per share of Series A Preferred Stock per annum in the form of “Preferred Dividends”, voting rights on an as-converted to Common Stock basis, liquidation preferences, and conversion rights in which each share of Series A Preferred Stock shall, upon conversion, represent 0.51% of the then “Fully-Diluted Shares Outstanding” of the Company. On January 12, 2018, our Board of Directors agreed to amend Designation of the Series A Convertible Preferred Stock be amended by changing the ratio for conversion, in Article IV, subparagraph (a), from 0.4% to 0.51% so that upon conversion the number of shares of common stock to be exchanged shall equal 51% of then issued and outstanding common stock. In addition, on January 12, 2018, the Company and the Series A Holder agreed to forgive all accrued interest to date on the Series A, and to pause any accruals until April 1, 2023. The Series A Convertible Preferred Stock carries liquidating preference, over all other classes of stock, equal to the amount paid for the stock plus any unpaid dividends. Currently the value of the liquidation preference is $ 500,000 , the amount of debt that the related party converted into the preferred stock. If this Preferred Stock were to be redeemed by the holder, it would result in an aggregate of the $500,000 liquidation preference, on a per share basis, this would equal $ 5,000 per share. The Company and Series A Preferred Holder agreed to forgive all accrued interest and arrearages in preferred share dividends of Series A Preferred Stock through March 31, 2023. Dividends began to accrue on the Series A Preferred Stock as of April 1, 2023. During each of the three- and six-month periods ended September 30, 2024 and 2023, the holder of the Series A preferred shares accrued $ 10,000 and $ 20,000 in preferred dividends from the Series A preferred shares. A total of $ 60,000 and $ 40,000 in dividends was outstanding at September 30, 2024 and March 31, 2024, respectively. Series B Preferred Stock holds designations of being ranked junior to the Series A Preferred Stock, cash dividends at the rate of 9% of the amount per share of Series B Preferred Stock per annum in the form of “Preferred Dividends”, a dividend received deduction for federal income tax purposes, liquidation preferences ranked junior to the Series A Preferred Stock, redemption of the Series B Preferred Stock by the Company at 105% of the Stated Value, plus accrued and unpaid Dividends, if prior to the two year anniversary of the Issuance Date, or at 100% of the State Value, plus accrued and unpaid Dividends, if on or after the two year anniversary of the Issuance Date, no voting rights, and right to notice of certain corporate action. All accrued dividends on the Series B were settled through March 31, 2023, and none remained outstanding at March 31, 2023. Dividends began to accrue on the Series B Preferred Stock as of April 1, 2023. During each of the three and six-month periods ended September 30, 2024 and 2023, the holders of the Series B preferred shares accrued $ 44,617 .50 and $ 89,235 , respectively, in preferred dividends from the Series B preferred shares. A total of $ 267,705 and $ 178,470 in dividends was outstanding at September 30, 2024 and March 31, 2024, respectively. NOTE 8 – COMMON STOCK The Company is authorized to issue 200,000,000 shares of Common Stock, with a par value of $ 0.001 . The Company had 59,643,062 shares of common stock issued and outstanding as of September 30, 2024, and March 31, 2024. Shares issued in the six months ended September 30, 2024: There were no shares issued during the six-month period ended September 30, 2024. Shares issued in the six months ended September 30, 2023: On April 15, 2023, the Company issued 1,000,000 shares of common stock in exchange for consulting services. These shares were valued at $ 0.0783 per share, the fair market value on the date of issuance. NOTE 9: COMMITMENTS AND CONTINGENCIES As of September 30, 2024, the Company has a month-to-month verbal lease agreement with the landlord, in which the Company pays $1,200 on a monthly basis. 11 NOTE 10 – SUBSEQUENT EVENTS Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist through the date of this filing other than as set out below.