GROOVE BOTANICALS INC. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This Annual Report on Form 10-K contains predictions, estimates and other forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “intends,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other comparable terminology. Forward-looking statements involve known and unknown risks, uncertainties and other factors including the risks set forth in the section entitled “Risk Factors” in our registration statement on Form 10-12G/A, as filed with the Securities and Exchange Commission (the “SEC”) on November 6, 2023, that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Report. You should read this Report with the understanding that our actual future results may be materially different from what we expect. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law. 7 The management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company relies primarily on its current sole officer and director, Kent Rodriguez to manage its day-to-day business and has outsourced professional services to third parties in an effort to maintain lower operational costs. Mr. Rodriguez, as the holder of the Company’s issued and outstanding shares of the Company’s Series A Preferred Stock, holds 51% of the voting rights of the Company. He will be able to influence the outcome of all corporate actions requiring the approval of our stockholders. 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, 2025 and 2024 we had the following operating expenses: For the Year ended March 31, 2025 2024 Operating expenses: Selling, General and Administrative Expenses $ 73,087 $ 73,743 Rent 15,435 18,576 Legal and Professional Expenses 42,312 95,962 Consulting Expense — 78,300 Total operating expenses $ 130,834 $ 266,581 Total operating expenses for the fiscal year ended March 31, 2025, were $130,834 compared to total operating expenses of $266,581 for the fiscal year ended March 31, 2024. The decrease in operating expenses during the fiscal year ended March 31, 2025, is mainly due to a reduction in consulting expenses from $78,300 (March 31, 2024) to $Nil (March 31, 2025). Consulting expenses recorded in the year ended March 31, 2024 were the result of a consulting agreement with an independent third party settled by shares of common stock valued at $78,300 which terminated in the period ended March 31, 2024. The Company recorded a slight reduction in general and administrative expenses from $73,743 in the fiscal year ended March 31, 2024, to $73,087 for the fiscal year ended March 31, 2025. Rent remained relatively constant for the fiscal years ended March 31, 2025, and 2024, with a slight decrease of $3,141 in the fiscal year ended March 31, 2025, due to the cancellation of previously rented storage space during the year ended March 31, 2025. Professional fees decreased from $95,962 (March 31, 2024) to $42,312 for the fiscal year ended March 31, 2025 substantially due to a reduction in audit costs and professional fees in the current fiscal year. Increased professional fees in fiscal 2024 were the result of filing a Form 10 with the SEC and the associated requirement for additional legal and accounting fees associated with these filings. Other Income (Expense) March 31, 2024 March 31, 2023 Other Income (Expense) Amortization of Debt Discount $ — $ — Change in Derivative Liability — — Gain on Settlement of Debt — 71,242 Interest Income (Expense) — (6,750 ) Miscellaneous Other Income (Expense) — — Total Other Income (Expense) $ — $ 64,492 Other income in the fiscal year ended March 31, 2025, was nil, as compared to other income in the fiscal year ended March 31, 2025, of $64,492, comprised of a gain on settlement of certain debt by the issuance of stock valued at $71,242, offset by interest expense of $6,750 with no comparable expense in the fiscal year ended March 31, 2025. 8 Net Loss Net (loss) $ (130,834 ) $ (202,089 ) Dividend on Preferred Stock (218,470 ) (218,470 ) Net (loss) attributable to common shareholders $ (349,304 ) $ (420,559 ) Basic and diluted loss per common share $ (0.01 ) $ (0.01 ) We reported a net loss of $130,834 for the fiscal year ended March 31, 2025, as compared to a net loss of $202,089 in the fiscal year ended March 31, 2024. Dividends on Preferred Stock Dividends on Preferred Stock remained constant at $218,470 for each of the fiscal years ended March 31, 2025 and 2024. These dividends on preferred stock are required subject to the designation of the preferred stock and contribute to the net loss attributable to our common stockholders. Operating Activities The following table summarizes our operating activities for the period presented: For the Year ended March 31, 2025 2024 Net cash used by operating activities $ (107,422 ) $ (86,835 ) Net cash provided from (used by) investing activities — — Net cash provided from financing activities 107,776 83,957 Net Change in Cash $ 354 $ (2,878 ) Cash Used in Operating Activities Cash used in operating activities for the year ended March 31, 2025 was $107,422 as compared to $86,835 used in the year ended March 31, 2024. Net cash used in operating activities for the fiscal year ended March 31, 2025, was primarily the result of a net loss of $130,834, offset by non-cash items including accrued payroll of $48,000, an increase in prepaid expenses of $2,024 and a decrease in accounts payable and accrued liabilities of $22,564. Net cash used in operating activities for the fiscal year ended March 31, 2024, was primarily the result of a net loss of $202,089 offset by a gain on settlement of debt of $71,242, and non-cash items, including stock issued for outside services of $78,300, accrued interest of $6,750 and accrued payroll of $48,000. Changes in working capital include an increase to accounts payable and accrued liabilities of $53,418 and a decrease in prepaid expenses of $28. Cash Provided by Investing Activities There was no cash provided by investing activities for the years ended March 31, 2025 and 2025. Cash Provided by Financing Activities March 31, 2024 March 31, 2023 Cash Flow From Financing Activities Funds received from Related Party 107,776 104,915 Funds distributed to Related Party — (958 ) Repayment of Outstanding Convertible Debt — (40,000 ) Repayment of Outstanding Contingent Liability — — Funds received for Issuance of Common Stock — 20,000 Net Cash From Financing Activities 107,776 83,957 9 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 fiscal year ended March 31, 2025 financing activities consisted solely of related party advances in the amount of $107,776. Liquidity and Capital Resources We are in need of additional cash resources to maintain our operations. As of March 31, 2025 we had cash of $2,042 and prepaid expenses of $2,478. 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. 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 $130,834 and $202,089 for the fiscal years ended March 31, 2025 and 2024, respectively. The Company’s accumulated deficit was $35,196,581 and $34,847,277 as of March 31, 2025, 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. 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. 10 Item 7A. Quantitative and Qualitative Disclosures about Market Risks. Disclosure in response to this Item is not required for a smaller reporting company.