UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarterly period ended:
For the transition period from __________ to __________
Commission File Number:
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of August 13, 2025 there were shares of the registrant’s common stock outstanding.
GROOVE BOTANICALS, INC.TABLE OF CONTENTS
| Page | |||||
| PART I – FINANCIAL INFORMATION | |||||
| Item 1. | Financial Statements (Unaudited) | 3 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | |||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 17 | |||
| Item 4. | Controls and Procedures | 18 | |||
| PART II – OTHER INFORMATION | |||||
| Item 1. | Legal Proceedings | 18 | |||
| Item 1A. | Risk Factors | 18 | |||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 18 | |||
| Item 3. | Defaults Upon Senior Securities | 18 | |||
| Item 4. | Mine Safety Disclosures | 18 | |||
| Item 5. | Other Information | 18 | |||
| Item 6. | Exhibits | 18 | |||
| SIGNATURES | 19 | ||||
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Groove Botanicals, Inc.
Condensed Consolidated Balance Sheets
Unaudited
| June 30, 2025 | March 31, 2025 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid Expenses | ||||||||
| Total Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable and Accrued Liabilities | $ | $ | ||||||
| Related Party Payable | ||||||||
| Dividends payable | ||||||||
| Dividends payable, related party | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred Stock, Series A, $par value, shares authorized; shares issued and outstanding as of June 30, 2025, and March 31, 2025 | ||||||||
| Preferred Stock, Series B, $ par value, shares authorized; shares issued and outstanding as of June 30, 2025, and March 31, 2025 | ||||||||
| Common Stock, $ par value, shares authorized. and shares issued and outstanding as of June 30, 2025, and March 31, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholder’s equity | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDER’S DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Groove Botanicals, Inc.
Unaudited Condensed Consolidated Statements of Operations
| For the Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Expenses: | ||||||||
| Selling, General and Administrative Expenses | $ | $ | ||||||
| Rent | ||||||||
| Legal and Professional Expenses | ||||||||
| Consulting Expense | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | |||||
| Net (loss) | $ | ( | ) | $ | ( | |||
| Dividend on Preferred Stock | ( | ) | ( | |||||
| Net (loss) attributable to common shareholders | $ | ( | ) | $ | ( | |||
| Basic and diluted loss per common share | $ | ) | $ | |||||
| Weighted average common shares outstanding – Basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Groove Botanicals, Inc.
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
For the Three Months Ended June 30, 2025, and 2024
| 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 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Accrued dividend | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net (loss) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| 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, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Accrued dividend | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net (loss) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
Groove Botanicals, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
| For the Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash Flow From Operating Activities | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Accrued Payroll | ||||||||
| Changes in working capital | ||||||||
| Decrease (Increase) in Prepaid Expenses | ||||||||
| Increase (Decrease) in Accounts Payable and Accrued Liabilities | ||||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flow From Investing Activities | — | — | ||||||
| Net Cash From Investing Activities | ||||||||
| Cash Flow From Financing Activities | ||||||||
| Funds received from Related Party | ||||||||
| Funds distributed to Related Party | ( | ) | ||||||
| Net Cash From Financing Activities | ||||||||
| Net Change in Cash | ||||||||
| Cash at Beginning of Period | ||||||||
| Cash at End of Period | $ | $ | ||||||
| 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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND 2024
(Unaudited)
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.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2025.
In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three and nine-month periods have been made. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year.
Basis of Consolidation
The Company’s condensed 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
GROOVE BOTANICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND 2024
(Unaudited)
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.
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.
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 anti-dilutive 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.
8
GROOVE BOTANICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND 2024
(Unaudited)
Recent Accounting Standard Adopted:
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 – Improvements to Reportable Segment Disclosures, which enhances the disclosures required for reportable segments in annual and interim financial statements, including additional, more detailed information about a reportable segment’s expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-07 for the year ended March 31, 2025 retrospectively to all periods presented in the financial statement. The adoption of this ASU had no impact on reportable segments identified and had no effect on the Company’s financial position, results of operations, or cash flows.
Recent Accounting Standard Not Yet Adopted:
In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09 – Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The standard is effective for public companies for annual periods beginning after December 15, 2024. Early adoption is available. The Company is still evaluating the full extent of the potential impact of the adoption of ASU 2023-09 but believes it will not have a material impact on its financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, – Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This ASU requires disclosures about specific types of expenses included in the expense captions presented on the face of the statement of operations as well as disclosures about selling expenses. The standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company will evaluate the full extent of the adoption of ASU 2024-03 but believes it will not have a material impact on its consolidated financial statements and disclosures.
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 $
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 June 30, 2025, the Company’s cash consisted of non-restricted cash.
9
GROOVE BOTANICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND 2024
(Unaudited)
NOTE 5 – RELATED PARTY TRANSACTIONS
The Company had related party payables of $
During each of the three months ended June 30, 2025, and 2024,
the Company accrued $
NOTE 6 – PREFERRED STOCK
The Company is authorized to issue 1,000,000 shares of Preferred Stock. We have authorized shares of Series A Preferred Stock and shares of Series B Preferred Stock, respectively, both with a par value of $. As of June 30, 2025, and June 30, 2024, there were and shares issued and outstanding for Series A Preferred Stock and Series B Preferred Stock, respectively.
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 the 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 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 $
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
10
GROOVE BOTANICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND 2024
(Unaudited)
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 the three months ended June 30, 2025, and 2024, the holders of the Series B preferred
shares accrued $
A summary of accrued dividends payable with respect to the Series A and B Preferred shares on the Company’s balance sheets are set out below. Dividends accrued for the benefit of the Company’s CEO are included in Dividends payable, related party:
| June 30, 2025 $ | March 31, 2025 $ | |||||||
| Dividends payable | ||||||||
| Dividends payable, related party | ||||||||
NOTE 7 – COMMON STOCK
The Company is authorized to issue shares of Common Stock, with a par value of $.
The Company did not issue any shares of common stock during the three months ended June 30, 2025, or June 30, 2024, and had shares of common stock issued and outstanding as of June 30, 2025, and March 31, 2025, respectively.
NOTE 8 – COMMITMENTS AND CONTINGENCIES
As of June 30, 2025, the
NOTE 9 – 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.
11
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q 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.
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 following discussion of our financial condition and results of operations should be read in conjunction with the notes to the consolidated unaudited financial statements appearing elsewhere in this Report and the Company’s audited financial statements for the fiscal year ended March 31, 2025, as filed with the SEC in its Annual Report on Form 10-K on July 16, 2025, and its Amendment No. 1 on Form 10-K/A on August 14, 2025, along with the accompanying notes. As used in this Quarterly Report, the terms “we,” “us,” “our” and the “Company” means Groove Botanicals, Inc.
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.
Plan of Operations
On September 14, 2023, we filed a registration statement on Form 10-12g which was deemed effective by the Securities and Exchange Commission (“SEC”) on November 8, 2023.
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.
We do not currently have any products. We are working to assemble a portfolio of early-stage EV Battery Technologies.
As the Company continues its business development and asset acquisitions, the Company anticipates our capital needs to be between $500,000 and $5,000,000 (varying based on growth strategies).
Results of Operations
Three Months Ended June 30, 2025, and June 30, 2024
12
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.
Net Loss
We reported a net loss of $38,170 in the three months ended June 30, 2025 as compared to a loss of $36,539 in the three months ended June 30, 2024 and a net loss attributable to our common stockholders of $92,787 and $91,156, respectively, in the three months ended June 30, 2025 and 2024 which includes accrued dividends on our Series A and B Preferred stock of $54,617 in the three months ended June 30, 2025 and 2024, respectively.
| Three Months ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net sales | $ | — | $ | — | ||||
| Operating expenses: | ||||||||
| Selling, General and Administrative Expenses | 18,965 | 16,599 | ||||||
| Rent | 3,600 | 4,644 | ||||||
| Legal and Professional Expenses | 15,605 | 14,546 | ||||||
| Consulting Expense | — | 750 | ||||||
| Total operating expenses | 38,170 | 36,539 | ||||||
| Income (loss) from operations | (38,170 | ) | (36,539 | ) | ||||
| Net income (loss) | $ | (38,170 | ) | $ | (36,539 | ) | ||
| Dividends on Preferred Stock | (54,617 | ) | (54,617 | ) | ||||
| Net (loss) attributable to common stockholders | $ | (92,787 | ) | $ | (91,156 | ) | ||
Operating Expenses
Total operating expenses for the three months ended June 30, 2025 increased slightly over the three months ended June 30, 2024, totaling $38,170 at June 30, 2025 compared to total operating expenses of $36,539 at June 30, 2024. There was a slight increase in professional and accounting fees from $14,546 (2024) to $15,605 (2025), mainly due to an increase in audit fees offset by a refund of legal fees and a decrease in accounting fees. The increase in audit fees was mainly due to fees invoiced during the period for our March 31, 2025 financial statements. Rent expense decreased from $4,644 (2024) to $3,600 (2025) while general and administrative expenses increased from $16,599 to $18,965.
Dividends on Preferred Stock
Dividends on Preferred Stock for the period ended June 30, 2025, and 2024 remained constant, at $54,617 for each period. 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
| For the Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net Cash Used in Operating Activities | $ | (19,786 | ) | (20,744 | ) | |||
| Net Cash From Investing Activities | — | — | ||||||
| Net Cash From Financing Activities | 20,481 | 21,694 | ||||||
| Net Change in Cash | 695 | 950 | ||||||
| Cash at End of Period | $ | 2,737 | $ | 2,638 | ||||
13
Net cash used by operating activities was $19,786 for the three months ended June 30, 2025, compared to $20,744 for the three months ended June 30, 2024.
Net cash used in operating activities for the three months ended June 30, 2025, was primarily the result of a net loss of $38,170, offset by non-cash items including accrued payroll of $12,000, and changes in working capital related to a decrease in prepaid expenses of $1,529 and an increase in accounts payable and accrued liabilities of $4,855.
Net cash used in operating activities for the three months ended June 30, 2024, was primarily the result of a net loss of $36,539 offset by non-cash items, including accrued payroll of $12,000, and changes in working capital including an increase to accounts payable and accrued liabilities of $3,757 and a decrease in prepaid expenses of $38.
Investing Activities
There was no investing activity during each of the three months ended June 30, 2025 and 2024.
Financing Activities
Net cash provided by financing activities was $20,481 for the three months ended June 30, 2025, compared to $21,694 for the three months ended June 30, 2024. During the three months ended June 30, 2025, the Company received $22,677 in proceeds from a related party in the form of unsecured advances and repaid $2,196 to a related party to reduce unsecured advances payable. During the three months ended June 30, 2024, the Company received net proceeds of $21,694 from a related party in the form of unsecured advances.
Liquidity and Capital Resources
We are in need of additional cash resources to maintain our operations. As of June 30, 2025, we had cash of $2,737 and prepaid expenses of $949. 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 $38,170 and $36,539 for the three-month periods ended June 30, 2025, and 2024, respectively. The Company’s accumulated deficit was $35,289,368 and $35,196,581 as of June 30, 2025, and March 31, 2025, 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 have no off-balance sheet arrangements.
14
Critical Accounting Estimates
The financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe are reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. Our significant accounting policies are more fully discussed in Note 2 to our unaudited condensed financial statements contained herein.
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.
Recent Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 – Improvements to Reportable Segment Disclosures, which enhances the disclosures required for reportable segments in annual and interim financial statements, including additional, more detailed information about a reportable segment’s expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-07 for the year ended March 31, 2025 retrospectively to all periods presented in the financial statements. The adoption of this ASU had no impact on reportable segments identified and had no effect on the Company’s financial position, results of operations, or cash flows.
Recent Accounting Standard Not Yet Adopted:
In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09 – Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The standard is effective for public companies for annual periods beginning after December 15, 2024. Early adoption is available. The Company is still evaluating the full extent of the potential impact of the adoption of ASU 2023-09, but believes it will not have a material impact on its financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, – Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). This ASU requires disclosures about specific types of expenses included in the expense captions presented on the face of the statement of operations as well as disclosures about selling expenses. The standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company will evaluate the full extent of the adoption of ASU 2024-03, but believes it will not have a material impact on its consolidated financial statements and disclosures.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company and are not required to provide this information.
15
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of June 30, 2025, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, based on the material weaknesses discussed below, our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Act Commission’s rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our internal controls and procedures are not effective for the following reasons: (i) there is an inadequate segregation of duties consistent with control objectives as management is comprised of only one person, who is the Company’s principal executive officer and principal financial officer and, (ii) the Company does not have a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.
In order to mitigate the foregoing material weakness, we have engaged an outside accounting consultant with significant experience in the preparation of financial statements in conformity with GAAP to assist us in the preparation of our financial statements to ensure that these financial statements are prepared in conformity with GAAP. We will continue to monitor the effectiveness of this action and make any changes that our management deems appropriate.
We would need to hire additional staff to provide greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will continue to reassess this matter to determine whether improvement in segregation of duty is feasible. In addition, we would need to expand our board to include independent members.
Going forward, we intend to evaluate our processes and procedures and, where practicable and resources permit, implement changes in order to have more effective controls over financial reporting.
Changes in Internal Control over Financial Reporting
During the period covered by this report, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
16
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
ITEM 1A. RISK FACTORS
The Company is a smaller reporting company and is not required to provide this information.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There were no shares issued during the three-month period ended June 30, 2025 or the three month period ended June 30, 2024. Total issued and outstanding shares of common stock are 59,643,062 at June 30, 2025 and 2024.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable
ITEM 5. OTHER INFORMATION
17
ITEM 6. EXHIBITS
| Exhibit Number | Exhibit | |
| 31 | Certification of the Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32 | Certification of the Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) | |
| 101 | Inline XBRL (Extensible Business Reporting Language). The following materials from this Quarterly Report on Form 10-Q for the period ended September 30, 2024, are formatted in Inline XBRL: (i) condensed balance sheets of Groove Botanicals, Inc., (ii) condensed statements of operations of Groove Botanicals, Inc., (iii) condensed statements of operations and comprehensive income/(loss) of Groove Botanicals, Inc., (iv) condensed statements of changes in equity of Groove Botanicals, Inc., (v) consolidated statements of cash flows of Groove Botanicals, Inc. and (vi) notes to condensed financial statements of Groove Botanicals, Inc. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document. | |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL. |
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| GROOVE BOTANICALS, INC. | |||
| Date: August , 2025 | By: | /s/ Kent Rodriguez | |
| Ken Rodriguez | |||
| Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer) | |||
19