U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange
Act of 1934
GROOVE BOTANICALS INC.
(Exact name of registrant as specified in its charter)
| Nevada |
|
84-1168832 |
| (State or other jurisdiction of |
|
(I.R.S. Employer |
| incorporation or organization) |
|
Identification No.) |
Registrant’s Principal Office
310 Fourth Avenue South, Suite 7000
Minneapolis, MN 55415
Registrant’s telephone number, including area code:
(612-315-5068)
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Exchange
Act: Common Stock, $0.001 per share
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, a 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 ☐ |
| Non-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 13(a) of the Exchange Act. ☐
EXPLANATORY NOTE
We are filing this General Form for Registration of Securities
on Form 10 to register our common stock, par value $0.001 per share (the “Common Stock”), pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Once this registration statement is deemed effective, we will
be subject to the requirements of Regulation 13A under the Exchange Act, which will require us to file annual reports on Form 10-K, quarterly
reports on Form 10-Q, and current reports on Form 8-K. We will be required to comply with all other obligations of the Exchange Act applicable
to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.
Unless otherwise noted, references in this registration statement
to the “Company,” “Groove,” “we,” “our,” or “us” means Groove Botanicals,
Inc.. Our principal place of business is located at 310 Fourth Avenue South, Suite 7000 Minneapolis, MN 55415, and our telephone number
is (612) 315-5068.
Groove Botanicals, Inc.. is a Nevada corporation and was originally
incorporated in Colorado in April 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 we changed our name to Snow Runner, Inc. In
November 1994 we changed our name to The Sled Dogs Company. In May 1999, we changed our state of domicile to Nevada and our name to XDOGS.COM,
Inc. On July 22, 2005, the Board of Directors and a majority of the Company's shareholders approved an amendment to our Articles of Incorporation
to change the Company's name to Avalon Oil & Gas, Inc. On March 21, 2018, the Board of Directors a majority of the Company's shareholders
approved an amendment to our Articles of Incorporation to change the Company's name to Groove Botanicals, Inc.
We are divesting our oil and gas properties and our proprietary
CB3 skin care products, Revita Wash, a gentle yet effective daily wash that removes toxins and smooths skin; Phyto Lotion, a light-weight,
long-lasting daily moisturizer that hydrates, softens, and protects; and Eye Matter, a powerfully effective eye cream that diminishes
dark circles, puffiness, expression lines, and wrinkles that contain premium hemp extracts with a broad range of cannabinoids, including
cannabidiol (CBD). These products offer a minimalist skincare routine and are designed to deliver immediate and transformative results
to all skin types. These products are 100% American made and non-toxic, paraben free, sulfate free, artificial fragrance free, dye free,
vegan, animal by-product free, and 100% pet friendly.
We will use the funds from the sale of these assets to assemble
a portfolio of early-stage propriety 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.
Management believes that the technologies available and the
specialized energy industry present a stable business model with high growth potential. We are filing this Form 10 to resume reporting
requirements to ensure our shareholders’ liquidity in their shares going forward, and to provide transparency to the market.
FORWARD-LOOKING STATEMENTS
There are statements in this registration statement that are
not historical facts. These “forward-looking statements” can be identified by the use of terminology such as “believe,”
“hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,”
“expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions.
You should be aware that these forward-looking statements are subject to risks and uncertainties beyond our control. To discuss these
risks, you should read this entire registration statement carefully, especially the risks discussed under the “Risk Factors”
section. Although management believes that the assumptions underlying the forward-looking statements included in this registration statement
are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward-looking
statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates
of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As
a result, the identification and interpretation of data and additional information and their use in developing and selecting assumptions
from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome
may vary substantially from anticipated or projected results. Accordingly, no opinion is expressed on the achievability of those forward-looking
statements. In light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking
statements contained in this registration statement will transpire. You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. We do not undertake any obligation to update or revise any forward-looking statements.
Item 1. Business.
Prior Operations
ORGANIZATIONAL HISTORY
We were incorporated in the State of Colorado in April In
May, 1999, we changed our state of domicile to Nevada and our name to XDOGS.COM, Inc.”. Until August 2, 2021 we were a reporting
company. We filed a 15-12B to suspend duty to file reports under sections 13 and 15(d) of the securities exchange act of 1934. Upon restructuring
and obtaining the necessary audits to resume reporting we are now filing this form 10 registration.
Groove Botanicals, Inc. (the "Company"), (formerly
known as Avalon Oil & Gas, Inc.), was originally incorporated in Colorado in April 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. In May 1999, we changed our
state of domicile to Nevada and our name to XDOGS.COM, Inc. On July 31, 1998, the Corporation split their shares One (1) for Fifty-Four
(54). On August 24, 2000, the Corporation split their shares One (1) for Five (5) and changed our name from XDOGS.COM to XDOGS, Inc. We
changed our symbol from XDGS to XDGI. On June 22, 2005, the Corporation changed our name from XDOGS, Inc. to Avalon Oil and Gas, Inc.
We changed our symbol from XDGI to AOGS. On July 22, 2005, the Board of Directors and a majority of the Company's shareholders approved
an amendment to our Articles of Incorporation to change the Company's name to Avalon Oil & Gas, Inc., and to increase the authorized
number of shares of our common stock from 200,000,000 shares to 1,000,000,000 shares par value of $0.001. On May 15, 2007, the Corporation
split their shares One (1) for Twenty (20). We changed our symbol from AOGS to AOGN. On June 4, 2012, the Board of Directors approved
an amendment to our Articles of Incorporation to a reverse split of the issued and outstanding shares of Common Stock of the Corporation
(“Shares”) such that each holder of Shares as of the record date of June 4, 2012 shall receive one (1) post-split Share on
the effective date of June 4, 2012 for each three hundred (300) Shares owned. The reverse split was effective on July 23, 2012. On September
28, 2012, we held a special meeting of Avalon’s shareholders and approved an amendment to the Company’s Articles of Incorporation
such that the Company would be authorized to issue up to 200,000,000 shares of common stock. We filed an amendment with the Nevada Secretary
of State on April 10, 2013, to increase our authorized shares to 200,000,000. On July 23, 2012, the Corporation split their shares One
(1) for Three Hundred (300). On May 14, 2018, the Corporation changed our name from Avalon Oil and Gas, Inc., to Groove Botanicals, Inc.
We changed our symbol from AOGN to GRVE. On August 2, 2021, we filed a Form 15-12B to suspend our duty to file reports under sections
13 and 15(d) of the securities exchange act of 1934. We have completed our 2021 and 2022 audits and are filing this Form 10 Registration
Statement to resume the filing of our annual audited financial statements and our quarterly reviewed financial statements.
Present Operations
We are divesting our oil and gas assets and our CB3 skin care
products and proprietary trademarks and will use the funds from the sale of these assets 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.
Employees
We have one full time employee, our President, Kent Rodriguez
and a part time administrative assistant. The Board retains consultants and advisors on as needed basis. They are compensated
with cash and also with the issuance of the Company’s common stock.
Facilities
Our corporate office is located at 310 Fourth Avenue South,
Suite 7000, Minneapolis, Minnesota 55415. This office space is leased from an unaffiliated third party on a month-to-month lease, for
a monthly rental of $1,200.
ITEM 1A. RISK FACTORS
Any investment in our securities is highly speculative. The
Company's business and ownership of shares of our common stock are subject to numerous risks. You should not purchase our shares
if you cannot afford to lose your entire investment. You should consider the following risks before acquiring any of our shares.
We have never been, and may never be, profitable.
During the past several years, we have attempted, without
success, to generate revenues and profits. For the year ended March 31, 2022, we had a net loss of $290,458 attributable to the issuance
of common stock for consulting services and for legal and professional expenses. There is not any assurance that we will ever be profitable
from our operations.
We need additional capital.
We need additional financing to continue operations. The amount
required depends upon our business operations, and the capital needs to assemble a portfolio of early-stage
EV Battery Technologies developed from Universities in Norway, Sweden and Finland. We may be unable to secure this additional required
financing on a timely basis, under terms acceptable to us, or at all. To obtain additional financing, we will sell additional equity securities,
which will further dilute shareholders' ownership in us. Ultimately, if we do not raise the required capital, we may need to cease operations.
We are dependent upon our key personnel.
We are highly dependent upon the services of Kent A. Rodriguez,
our President and Chief Executive Officer. If he terminated his services with us, our business would suffer.
There is only a limited trading market for our securities.
Our Common Stock is traded on the OTC Pink Sheets. The prices
quoted may not reflect the price at which you can resell your shares. Because of the low price of our stock, we are subject to rules of
the U.S. Securities and Exchange Commission that make it difficult for stockbrokers to solicit customers to purchase our stock. This reduces
the number of potential buyers of our stock and may reduce the value of your shares. There can be no assurance that a trading market for
our stock will continue or that you will ever be able to resell your shares at a profit, or at all.
Our management controls us.
Our current officers and directors own approximately 52% of
our outstanding stock and are able to affect the election of the members of our Board of Directors and make corporate decisions. Mr. Rodriguez,
by his ownership of Class A Preferred Stock, has the right to vote 51% of our voting securities. 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. Accordingly, even if we issue additional shares to third parties, Mr. Rodriguez will continue
to control at least 51% of our voting securities. This voting concentration may also have the effect of delaying or preventing a change
in our management or control or otherwise discourage potential acquirers from attempting to gain control of us. If potential acquirers
are deterred, you may lose an opportunity to profit from a possible acquisition.
A significant number of shares are eligible for public sale,
potentially depressing our stock price. Under the SEC's Rule 144, shares issued in issuances which are not registered with the SEC first
become eligible for public resale after a holding period of six months. Shareholders who are affiliates of us generally may resell only
a limited number of their privately acquired shares after six months. After six months, stockholders who are not affiliated with us may
resell any number of their privately acquired shares pursuant to Rule 144. The resale of the shares we have privately issued and their
potential for their future public resale, may depress our stock price.
Our governing documents and Nevada law may discourage the
potential acquisitions of our business. Our Board of Directors may issue additional shares of capital stock and establish their rights,
preferences and classes, in most cases without stockholder approval. In addition, we may become subject to anti-takeover provisions found
in Section 89.378-78.379 of the Nevada Business Corporation Act which may deter changes in control of our management which have not been
approved by our Board of Directors.
We have a going concern issue.
The Company has minimal revenues from our remaining oil and
gas assets. We are in need of additional cash resources to maintain our operations. We have not yet received any revenue from the sale
our CBD skincare products. These factors raise substantial doubt about our ability to continue as a going concern. The Company’s
ability to continue as a going concern is dependent on its ability to raise additional capital or obtain necessary debt financing. The
Company is presently dependent on its controlling shareholder to provide us funding for its daily operation and expenses, including professional
fees and fees charged by regulators, although he is under no obligation to do so.
The Company intends to meet the cash requirements for the
next 12 months from the issuance date of this report through a combination of debt and equity financing by way of private placements to
friends, family and business associates. The Company currently does not have any arrangements in place to complete any private placement
financings and there is no assurance that the Company will be successful in completing any such financings on terms that will be acceptable
to it.
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 the capital needs to assemble a portfolio of early
stage EV Battery Technologies developed from 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.
We have material weaknesses on internal control.
Management has assessed the effectiveness of our internal
control over financial reporting under COSO Framework 2013 as of March 31, 2022 based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded
that, as of March 31, 2022, our internal control over financial reporting was not effective. The material weaknesses identified related
to (i) lack of segregation of duties due to a lack of accounting staff and resources with appropriate knowledge of U.S. GAAP and SEC reporting
and compliance requirements; and (ii) a lack of sufficient documented financial closing policies and procedures.
Licensing our patents and technologies could take longer
than expected and cause delays
Licensing patents and technologies is extremely profitable
if done correctly. We will be searching for the best opportunities to enhance our portfolio and delays can happen when dealing with project
managers and when negotiating with large international companies.
Licensing deals require participation from many different
individuals and parties.
Our ability to proceed will also depend on how quickly and
effectively we can work with other companies and individuals when licensing and negotiating our patented technologies.
The Green Energy Market is Highly Competitive and Fragmented.
Entering the Green Energy Market is highly competitive and
there are many large companies focusing on the industry. Several small companies have entered the space and caused it to become fragmented
and the barrier for entry to the market is more complicated.
Reporting requirements under the Exchange Act and compliance
with the Sarbanes-Oxley Act of 2002, including establishing and maintaining acceptable internal controls over financial reporting, are
costly and may increase substantially.
The rules and regulations of the SEC require a public company
to prepare and file periodic reports under the Exchange Act, which will require that the Company engage in legal, accounting, auditing,
and other professional services. The engagement of such services is costly, and we are likely to incur losses that may adversely affect
our ability to continue as a going concern. Additionally, the Sarbanes-Oxley Act of 2002 requires, among other things, that we design,
implement and maintain adequate internal controls and procedures over financial reporting. The costs of complying with the Sarbanes-Oxley
Act may make it difficult for us to design, implement and maintain adequate internal controls over financial reporting. If we fail to
maintain an effective system of internal controls or discover material weaknesses in our internal control. In that case, we may not be
able to produce reliable financial reports or report fraud, which may harm our overall financial condition and result in a loss of the
investor confidence and a decline in our share price.
We cannot assure you that our Common Stock will be listed
on the OTCQB or any other stock exchange.
Our common stock is currently traded on the Pink Sheets under
the symbol GRVE. Our goal is to become a fully reporting company, and be included on the OTCQB or a higher exchange, if possible. However,
we cannot assure you that we will be able to meet the initial listing standards of the OTCQB or any other stock exchange or quotation
medium or that we will be able to maintain a listing of our Common Stock on any stock exchange. After the filing of this Form 10, we expect
that our Common Stock would continue to be eligible to trade on the “pink sheets,” where our stockholders may find it more
difficult to affect a transaction in our Common Stock or obtain accurate quotations as to the market value of our Common Stock. In addition,
we would be subject to an SEC rule that, if we failed to meet the criteria outlined in such rule, imposes various practice requirements
on broker-dealers who sell securities governed by such rule to persons other than established customers and accredited investors. Consequently,
such a rule may deter broker-dealers from recommending or effecting transactions in our Common Stock, which may further affect its liquidity.
This would also make it more difficult for us to raise additional capital following a business combination.
Our Common Stock will likely be considered a “penny
stock,” which may make it more difficult for investors to sell their shares due to suitability requirements.
Our common stock is currently deemed “penny stock,”
as that term is defined under the Exchange Act. Penny stocks generally are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that the exchange or system provides
current price and volume information concerning transactions in such securities). Penny stock rules impose additional sales practice requirements
on broker-dealers who sell to persons other than established customers and “accredited investors.” The term “accredited
investor” generally refers to institutions with assets over $5,000,000 or individuals with a net worth in excess of $1,000,000 or
an annual income exceeding $200,000 or $300,000 jointly with their spouse.
The penny stock rules require a broker-dealer, before a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized disclosure document in a form prepared by the SEC, which
provides information about penny stocks and the nature and level of risks in the penny stock market. Moreover, brokers/dealers are required
to determine whether an investment in a penny stock is suitable for a prospective investor. A broker/dealer must receive a written agreement
to the transaction from the investor setting forth the identity and quantity of the penny stock to be purchased. These requirements may
reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors
in our common stock to sell shares to third parties or dispose of them. This could cause our stock price to decline.
We have never paid dividends on our Common Stock, and it
is not guaranteed that we will in the future.
We have never paid dividends on our Common Stock, we have
this option as valid to discuss on the management level and approve it. There are no assurances or guarantees that we will be able to
pay dividends.
We are an “emerging growth company” under the
JOBS Act of 2012. We cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common
stock less attractive to investors.
We are an “emerging growth company,” as defined
in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). We may take advantage of certain exemptions from various
reporting requirements that apply to other public companies that are not “emerging growth companies,” including, but not limited
to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find
our common stock less attractive, there may be a less active trading market for our common stock, and our stock price may be more volatile.
In addition, Section 107 of the JOBS Act also provides that
an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities
Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption
of specific accounting standards until those standards would otherwise apply to private companies. We are taking advantage of the extended
transition period to comply with new or revised accounting standards.
We will remain an “emerging growth company” for
up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible
debt in three years, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30.
Our status as an “emerging growth company” under
the JOBS Act of 2012 may make it more challenging to raise capital as and when we need it.
Because of the exemptions from various reporting requirements
provided to us as an “emerging growth company” and because we will have an extended transition period for complying with new
or revised financial accounting standards, we may be less attractive to investors, and it may be difficult for us to raise additional
capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that
our financial accounting is not as transparent as other companies in our industry. If we cannot raise additional capital as and when we
need it, our financial condition and results of operations may be materially and adversely affected.
We have the right to issue shares of preferred stock. If
we were to issue preferred stock, it is likely to have rights, preferences, and privileges that may adversely affect the common stock.
We have preferred stock currently issued and outstanding and
do have the ability to issue more. The issuance of these shares could adversely affect the common stock already outstanding.
Item 2. Financial Information.
Management’s Discussion and Analysis of Financial
Condition and Results of Operation.
Overview
RESULTS OF OPERATIONS AND PLAN OF OPERATION
The following discussion and analysis should be read in conjunction
with our consolidated financial statements and notes related thereto. The discussion of results, causes and trends should not be construed
to infer conclusions that such results, causes or trends necessarily will continue in the future.
For the year ended March 31, 2022 compared to the year
ended March 31, 2021
Revenues
Revenues for the year ended March 31, 2022, were $8,052, an
increase of $5,717 compared to revenue of $2,335 for the year ended March 31, 2021. Revenue increased as a result of an increase
in the market price for oil and natural gas.
Selling, General, and Administrative Expenses
Selling, general and administrative expenses for the year
ended March 31, 2022 were $111,613 an increase of $52,467, compared to selling, general and administrative expenses of $59,146 during
the year ended March 31, 2021. Selling, general and administrative expenses for 2022 consisted primarily of; director compensation
of $20,000, payroll and related costs of $48,000, and other selling, general, and administrative expenses of $43,613. The increase was
primarily due to an increase in director compensation, as well as other selling, general, and administrative expenses for the ended March
31, 2022, when compared with the year ended March 31, 2021.
Consulting Expense
Consulting expense for the year ended March 31, 2022 was $193,000, $133,000 of
which was stock-based compensation, as we issued 6,650,000 shares of our common stock to outside consultants as payment for services rendered,
the other $60,000 of consulting expense came from an issuance of convertible debt. Consulting expense for the year ended March 31, 2021
was $270,000, all of which was stock-based compensation.
Amortization of Debt Discount
Amortization of debt discounts
for the fiscal year ended March 31, 2022 was $139,999 an increase of $137,150 compared to amortization of debt discounts of $2,849 for
the fiscal year ended March 31, 2021. This increase was primarily due to the Company issuing more convertible debt at discounts during
the fiscal year ended March 31, 2022.
Consulting Expense
Consulting compensation for the year ended March 31, 2022
was $133,000, as we issued 6,650,000 shares of our common stock to outside consultants as payment for services rendered. Stock-based compensation
for the year ended March 31, 2021 was $270,000.
Amortization of Debt Discount
Amortization of debt discounts for the fiscal year ended
March 31, 2022 was $139,999 an increase of $137,150 compared to amortization of debt discounts of $2,849 for the fiscal year ended
March 31, 2021. This increase was primarily due to the Company issuing more convertible debt at discounts during the fiscal year
ended March 31, 2022.
Gain on Settlement of Debt
Gain on settlement of debt for the fiscal year ended March
31, 2022 was $52,458. There was no such gain for the fiscal year ended March 31, 2021. The gain during the fiscal year ended March 31,
2022 was due to a settlement of a convertible debt and related contingent liability.
Settlement Expense
There was no settlement expense during the fiscal year ended
March 31, 2022. Settlement expense for the fiscal year ended March 31, 2021, was $70,000, due to two different settlements arising during
that period.
EIDL Grant
We received an emergency grant of $2,000 from the U.S. Small
Business Administration for Covid 19 Relief during the year ended March 31, 2021. This grant was not available for the year ended March
31 ,2022.
Interest Income (Expense)
Interest expense for the fiscal year ended March 31, 2022
was $56,532 an increase of $37,021 compared to interest expense of $19,511 for the fiscal year ended March 31, 2021. This increase was
primarily due to the issuing more convertible debt during the fiscal year ended March 31, 2022.
Net Loss
For the reasons stated above, our net loss for the year ended
March 31, 2022, was $290,458, compared to a net loss of $341,599 during the year ended March 31, 2021.
Liquidity and Capital Resources
Going Concern
The Company has minimal revenues from our remaining oil
and gas assets. We are in need of additional cash resources to maintain our operations. As of March 31, 2022, the Company had a
working capital deficit of $454,935 and has incurred losses since inception of $34,305,992. These factors raise substantial doubt
about its ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on
its ability to raise additional capital or obtain necessary debt financing. The Company is presently dependent on its controlling
shareholder to provide us funding for its daily operation and expenses, including professional fees and fees charged by regulators,
although he is under no obligation to do so.
The Company intends to meet the cash requirements for the
next 12 months from the issuance date of this report through a combination of debt and equity financing by way of private placements, friends,
family and business associates. The Company currently does not have any arrangements in place to complete any private placement financings
and there is no assurance that the Company will be successful in completing any such financings on terms that will be acceptable to it.
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.
The financial statements have been prepared on a going concern
basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for
the foreseeable future. The Company has incurred losses and further losses are anticipated as a result of the development of business
which raises substantial doubt about the Company’s ability to continue as a going concern within the next twelve months from the
issuance date of this report. The ability to continue as a going concern is dependent upon the Company generating profitable
operations in the future and/or obtaining financing necessary to meet the Company’s obligations and repay its liabilities arising
from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing
cash on hand and loans from directors and/or private placement of the Company’s common stock.
Our cash and cash equivalents were $48,534 on March 31, 2022,
compared to $7,911 on March 31, 2021. We met our liquidity needs through the issuance of our common stock and notes payable
for cash and from the revenue derived from our oil and gas operations.
We need to raise additional capital during the fiscal year,
but currently have not acquired sufficient additional funding. Our ability to continue operations as a going concern is highly dependent
upon our ability to obtain immediate additional financing, which can’t be guaranteed. Unless additional funding is obtained,
it is highly unlikely that we can continue to operate. There is no assurance that even with adequate financing or combined operations,
we will generate revenues and be profitable.
Operating activities
Net cash used by operating activities for the year ended March
31, 2022 was $72,905, compared to $136,761 used in the year ended March 31, 2021.
Financing activities
Our financing activities for the year ended March 31, 2022
provided cash of $113,528 as compared to $54,315 for the year ended March 31, 2021. We received $50,000 from the issuance of a convertible
promissory note and $55,050 from the issuance of common stock. We plan to raise additional capital during the coming fiscal year. Cash
generated by financing activities for the year ended March 31, 2021, consisted of a $149,965 received from the issuance of common stock.
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.
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
Pursuant to ASC Topic 820, Fair Value Measurements, an entity
is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes
a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial
instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair
value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 applies to assets or liabilities for which there are
quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are
inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities
in active markets: quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less
active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated
by, observable market data.
Level 3 applies to assets or liabilities for which there are
unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Net Loss Per Share
Basic net loss per share is computed by dividing the net loss
attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss
per share gives the effect to all dilutive potential common shares outstanding during the period, including stock options, warrants and
convertible instruments. Diluted net loss per share excludes all potentially issuable shares if their effect is anti-dilutive. Because
the effect of the Company’s dilutive securities is anti-dilutive, diluted net loss per share is the same as basic loss per share
for the periods presented. The table below presents the computation of basic and diluted earnings per shares for the years ended March
31, 2022, and 2021:
| | |
For the
Year ended
31-Mar-22 | | |
For the
Year ended
31-Mar-21 | |
| Numerator: | |
| | | |
| | |
| Net Loss | |
$ | (290,458 | ) | |
$ | (341,599 | ) |
| Denominator: | |
| | | |
| | |
| Weighted average common shares Outstanding - basic | |
| 42,825,461 | | |
| 31,262,293 | |
| Dilutive common stock equivalents | |
| — | | |
| — | |
| Weighted average common shares Outstanding - diluted | |
| 42,825,461 | | |
| 31,262,293 | |
Recently Adopted Accounting Pronouncements
The Company has implemented all new accounting pronouncements
that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that
have been issued that might have a material impact on its financial position or results of operations.
Income Taxes
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities.
The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized.
On December 18, 2019, the FASB issued ASU 2019-12 which modifies
ASC 740 to simplify the accounting for income taxes. The ASU’s amendments are based on changes that were suggested by stakeholders
as part of the FASB’s simplification initiative (i.e., the Board’s effort to reduce the complexity of accounting standards
while maintaining or enhancing the helpfulness of information provided to financial statement users).
ASC 740-10-25, “Accounting for Uncertainty in Income
Taxes”, is intended to clarify the accounting for uncertainty in income taxes recognized in a company’s financial statements
and prescribes the recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740-10-25 also provides
guidance on de-ecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Under ASC
740-10-25, evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than not that
a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical
merits of that position. The second step it to measure a tax position that meets the more-likely-than-not threshold to determine the amount
of benefit to be recognized in the financial statements. A tax position is measure at the largest amount of benefit that is greater than
50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition
threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that
no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the
threshold is no longer met.
Revenue Recognition
Beneficial Conversion Feature
The Company measures its 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.
On August 5, 2020, the FASB issued ASU 2020-06 which simplifies
the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and
contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary
complexity in U.S. GAAP.
GOING CONCERN
The accompanying 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 financial statements, the Company has incurred recurring net losses since its inception and has raised limited capital.
The Company had a net loss of $290,458 and $341,599 for the fiscal years ended March 31, 2022, and March 31, 2021, respectively. The Company's
accumulated deficit was $34,305,992 and $34,015,534 as of March 31, 2022, and March 31, 2021, respectively. These factors raise substantial
doubt regarding the Company’s ability to continue as a going concern. The 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
Item 3. Properties.
Our
corporate office is located at 310 Fourth Avenue South, Suite 700, Minneapolis, MN 55415. This office space is leased from an unaffiliated
third party on a month-to-month lease, for a monthly rental of $1,200.
Item 4. Security Ownership of Certain Beneficial Owners
and Management.
| Title
of Class |
Name
and address of Beneficial Owner |
Amount
and nature of beneficial ownership |
Percent
of class |
| Series A Preferred |
Kent Rodriguez Minneapolis, MN |
100 Director/President |
100% |
| Common |
Kent Rodriguez Minneapolis, MN |
4,367 Director/President |
.01% |
| Common |
Douglas Barton Minneapolis, MN |
760,667 Independent Director |
1.46% |
| Common |
Rene Haeusler Minneapolis, MN |
780,000 Independent Director |
1.49% |
| Common |
Recon Technology LTD Beijing, China |
2,800,000 Owner of more than 5% |
5.36% |
Item 5. Directors and Executive Officers.
Kent Rodriguez Director, President,
Treasurer, Secretary
Mr. Rodriguez joined the Company as Chief
Executive Officer, Secretary, and Principal Financial Officer in May 2009. Since 1995, he has been the Managing Partner of Weyer Capital
Partners, a Minneapolis-based venture capital corporation. He has a B.A. degree in Geology from Carleton College, and an Executive MBA
from the Harvard Business School.
Douglas Barton Independent Director
Mr. Barton has served as a Director of
the Company since May 2009. From 1987 to the present, he has been the President and sole owner of Venture Communications, Inc., a private
promotion, development, and marketing consulting firm. He has a B.S. degree in Economics/History from the University of Minnesota.
Rene Haeusler Independent Director
Mr. Häusler has served as a Director
of the Company since August 2010. He is a Political and Business Consultant, is Chairman of the Board and Managing Director
of all companies of the L’Avenir Group. He also serves as Chairman of the Board of Bowl Construction A ,
Vice Chairman of the Board of CannSol Holding AG, member of the Board of Directors of T-Conseils in Liechtenstein and
Switzerland. Mr. Häusler has a Master’s degree in history, political science and constitutional law from the University of
Zurich/Switzerland. He organizes and hosts also Luncheon-Presentations for companies of various branches (Mining, Biotechnology, Fintech
a.s.o.)
Item 6. Executive Compensation.
On an annual basis the company accrues $48,000 of wages payable,
$4,000 monthly, to its CEO Kent Rodriguez. On April 1, 2020, the Company entered into an employment agreement with its CEO which designates
monthly payments due to CEO Kent Rodriguez in the amount of $4,000 each month. This agreement shall continue for four years until March
31, 2024.
Item 7. Certain Relationships and Related Transactions, and Director Independence.
The Company had a related party payable of $94,528 and $78,050
outstanding as of the fiscal years ended March 31, 2022, and March 31, 2021, respectively. These amounts consist of funds contributed
by the management for purposes 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, $4,000 monthly, to its CEO Kent Rodriguez. On April 1, 2020, the Company entered into an employment agreement with its CEO which
designates monthly payments due to CEO Kent Rodrigues in the amount of $4,000 each month. This agreement shall continue for four years
until March 31, 2024. These payables accrue no interest and have no maturity date.
On December 2, 2021, we formed two Wyoming Corporations, Biotrex,
Inc., and Maxidyne, Inc. We plan to spin-off CBD intellectual property in Biotrex, Inc., and our oil and gas assets in Maxidyne, Inc.
Item 8. Legal Proceedings.
None.
Item 9. Market Price of and Dividends on the Registrant’s
Common Equity and Related Stockholder Matters.
Our common stock is currently quoted on the OTC market "Pink Sheets"
under the symbol GRVE. For the periods indicated, the following table sets forth the high and low bid prices per share of common stock.
The below prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual
transactions.
| Period |
High |
Low |
| Quarter ended June 2022 |
.038 |
.038 |
| Quarter ended March 2022 |
.068 |
.060 |
| Quarter ended Dec 2021 |
.030 |
.030 |
| Quarter ended Sep 2021 |
.055 |
.055 |
| Quarter ended June 2021 |
.067 |
.067 |
| Quarter ended March 2021 |
.068 |
.068 |
| Quarter ended Dec 2020 |
.080 |
.073 |
| Quarter ended Sep 2020 |
.079 |
.065 |
Dividends
Holders of common stock are entitled to dividends when, as, and if declared
by the Board of Directors, out of funds legally available therefore. We have never declared cash dividends on its common stock and our
Board of Directors does not anticipate paying cash dividends in the foreseeable future as it intends to retain future earnings to finance
the growth of our businesses. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends.
Securities Authorized for Issuance Under Equity Compensation Plans
No equity compensation plan or agreements under which our common stock
is authorized for issuance has been adopted during the fiscal years ended March 30, 2021 and 2022.
Item 10. Recent Sales of Unregistered Securities.
The Company is authorized to issue 200,000,000 shares
of Common Stock, with a par value of $0.001.
On September 18, 2020, the Company issued 500,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On October 14, 2020, the Company issued 1,000,000 shares
of common stock in exchange for $49,000 received.
On October 15, 2020, the Company issued 1,000,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On October 20, 2020, the Company issued 250,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On October 22, 2020, the Company issued 500,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On January 1, 2021, the Company issued 250,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On February 23, 2021, the Company issued 200,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On March 9, 2021, the Company issued 1,500,000 shares
of common stock in exchange for bookkeeping services. These shares were issued with a value of $0.05 per share.
On March 10, 2021, the Company issued 100,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On March 10, 2021, the Company issued 100,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On March 10, 2021, the Company issued 1,000,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On March 10, 2021, the Company issued 2,000,000 shares
of common stock in exchange for $97,965 received.
Per agreements dated on August 5, 2021, the Company
issued 6,000,000 shares of common stock, 2,000,000 each to three different parties, in exchange for consulting services. These shares
were issued with a value of $0.02 per share. These issuances were pertaining to the July 23, 2021 convertible note specified in the previous
paragraph.
On September 21, 2021, the Company issued 500,000 shares
of common stock in exchange for $10,000 received.
On October 12, 2021, the Company issued 500,000 shares
of common stock as compensation for services provided by a director of the Company, as well as a $50 capital contribution received. These
shares were issued with a value of $0.02 per share.
On October 12, 2021, the Company issued 500,000 shares
of common stock as compensation for services provided by a director of the Company. These shares were issued with a value of $0.02 per
share.
On October 27, 2021, the Company issued 500,000 shares
of common stock in exchange for $10,000 received.
On November 1, 2021, the Company issued 1,000,000 shares
of common stock per a settlement and release agreement. These shares were issued with a value of $0.02 per share.
On November 4, 2021, the Company issued 500,000 shares
of common stock in exchange for $10,000 received.
On December 21, 2021, the Company issued 650,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.02 per share.
On December 30, 2021, the Company issued 1,250,000 shares of common stock
in exchange for $25,000 received.
On March 22, 2022, the Company committed 500,000 shares of common stock
to be issued, 250,000 each to two separate parties, in exchange for $10,000 received, $5,000 from each party.
On March 23, 2022, the Company committed 2,500,000
shares of common stock to be issued in exchange for $40,000 received.
On October 4, 2022, the Company issued 500,000 shares of common stock in
exchange for $5,000 received.
On October 4, 2022, the Company issued 150,000 shares of common stock in
exchange for $3,000 received.
Item 11. Description of Registrant’s Securities to be Registered.
Common Stock
As of the date of this Form 10 Information Statement, the Company had 52,593,062
shares of common stock issued and outstanding. The Company’s transfer agent is EQ Shareowner Services, Inc.
Our Certificate of Incorporation authorizes the issuance
of 200,000,000 shares of common stock, par value $0.001 per share. Our holders of shares of common stock are entitled to one vote for
each share on all matters to be voted on by the shareholders. Holders of common stock do not have cumulative voting rights. Holders of
common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the board of directors in its
discretion from legally available funds. In the event of a liquidation, dissolution or winding up of the Company, the holders of common
stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders of common stock have no preemptive
rights to purchase the Company's common stock. There are no conversion or redemption rights or sinking fund provisions with respect to
the common stock.
Series A Convertible Preferred Stock Issued to Related Party
The Company is authorized to issue 1,000,000 shares
of preferred stock, par value $0.10 per share. The 100 shares of Series A Convertible Preferred Stock Issued to Related Party (“Series
A Convertible Preferred Stock”) were issued on June 3, 2002 as payment for $500,000 in promissory notes, are convertible into the
number of shares of common stock sufficient to represent fifty-one percent (51%) of the fully diluted shares outstanding after their
issuance The holder of these shares of Series A Convertible Preferred Stock is our President, Kent Rodriguez. The Series A Convertible
Preferred Stock pays an eight percent (8%) dividend. The dividends are cumulative and payable quarterly. 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.
The Series A Convertible Preferred Stock provides for voting rights on an "as converted to common stock" basis.
Series B Preferred Stock
In March, 2013, our Board of Directors authorized the issuance of 2,000
shares of Series B Preferred Stock, (the "Series B Preferred Stock"). There is 1,983 shares issued and outstanding of Series
B Preferred Stock.
The Series B Preferred Stock accrues dividends at the
rate of 9% per annum on the original purchase price for the shares. These dividends are payable annually, beginning in January 2014. We
are prohibited from paying any dividends on our Common Stock until all accrued dividends are paid on our Series B Preferred Stock. The
Series B Preferred Stock ranks junior to the Series A Convertible Preferred Stock owned by our President and Chief Executive Officer,
as to Dividends and to a distribution of assets in the event of a liquidation of assets.
The Holders of Series B Preferred Stock do not have
any voting rights and their consent is not required to take any sort of corporate action.
Item 12. Indemnification of Directors and Officers.
Our articles of incorporation, by-laws and director
indemnification agreements provide that each person who was or is made a party or is threatened to be made a party to or is otherwise
involved (including, without limitation, as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he or she is or was a director or an officer of Brenham or, in the case of a director, is or was serving at
our request as a director, officer, or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan, whether the basis of such proceeding is alleged action in an official capacity
as a director, officer or trustee or in any other capacity while serving as a director, officer or trustee, shall be indemnified and held
harmless by us to the fullest extent authorized by the Nevada General Corporation Law against all expense, liability and loss reasonably
incurred or suffered by such.
Section 145 of the Nevada General Corporation Law
permits a corporation to indemnify any director or officer of the corporation against expenses (including attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred in connection with any action, suit or proceeding brought by reason
of the fact that such person is or was a director or officer of the corporation, if such person acted in good faith and in a manner that
he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action
or proceeding, if he or she had no reason to believe his or her conduct was unlawful. In a derivative action, ( i.e ., one brought by
or on behalf of the corporation), indemnification may be provided only for expenses actually and reasonably incurred by any director
or officer in connection with the defense or settlement of such an action or suit if such person acted in good faith and in a manner
that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification
shall be provided if such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court
in which the action or suit was brought shall determine that the defendant is fairly and reasonably entitled to indemnity for such expenses
despite such adjudication of liability.
Pursuant to Nevada Revised Statutes 78.138(7), Article Seven of our articles
of incorporation eliminates the liability of a director to us for monetary damages for such a breach of fiduciary duty as a director,
except for liabilities arising:
| 1) | A director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer;
and |
| 2) | Such breach involved intentional misconduct, fraud or a knowing violation of law. |
Item 13. Financial Statements and Supplementary Data.
Not applicable to a Smaller Reporting Company per CFR § 229.302.
Item 14. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
Item 15. Financial Statements and Exhibits.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders, Groove Botanicals, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets
of Groove Botanicals, Inc. (the "Company") as of March 31, 2022 and 2021, the related statements of operations, stockholders'
equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial
statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position
of the Company as of March 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States.
Going Concern Matter
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements,
the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of
the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable
basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current
period audit of the consolidated financial statements that were communicated or required to be communicated to the board of directors
and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate. We determined that there are no critical
audit matters.
/s/ TAAD LLP.
We have served as the Company’s auditor since 2021.
Diamond Bar, California
November 4, 2022, except for note 14 as to which the date is December 23, 2022.
Groove Botanicals, Inc.
Consolidated Balance Sheets
| | |
March 31,
2022 | | |
March 31,
2021 | |
| ASSETS | |
| | | |
| | |
| Current Assets: | |
| | | |
| | |
| Cash and Cash Equivalents | |
$ | 48,534 | | |
$ | 7,911 | |
| Accounts Receivable | |
| 251 | | |
| — | |
| Prepaid Expenses | |
| — | | |
| 50,000 | |
| Total Current Assets | |
| 48,785 | | |
| 57,911 | |
| TOTAL ASSETS | |
$ | 48,785 | | |
$ | 57,911 | |
| | |
| | | |
| | |
| LIABILITIES & STOCKHOLDERS' EQUITY | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | |
| Accounts Payable and Accrued Liabilities | |
$ | 45,592 | | |
$ | 36,092 | |
| Interest Payable | |
| 7,900 | | |
| 69,301 | |
| Related Party Payable | |
| 94,528 | | |
| 78,050 | |
| Convertible Notes Payable | |
| 164,774 | | |
| 182,849 | |
| Derivative Liability | |
| 95,576 | | |
| 214,146 | |
| Contingent Liability | |
| 95,350 | | |
| — | |
| Total Current Liabilities | |
| 503,720 | | |
| 580,438 | |
| Total Liabilities | |
| 503,720 | | |
| 580,438 | |
| | |
| | | |
| | |
| Stockholders' Equity | |
| | | |
| | |
| Preferred Stock, Series A, $0.10 par value, 100 shares authorized; 100 shares issued and outstanding as of March 31, 2022, and March 31, 2021, respectively | |
| 10 | | |
| 10 | |
| Preferred Stock, Series B, $0.10 par value, 2,000 shares authorized; 1,983 shares issued and outstanding as of March 31, 2022, and March 31, 2021, respectively | |
| 198 | | |
| 198 | |
| Common Stock, $0.001 par value, 200,000,000 shares authorized; 49,193,062 and 37,793,062 shares issued and outstanding as of March 31, 2022 and March 31, 2021, respectively | |
| 49,193 | | |
| 37,793 | |
| Common Stock to be Issued | |
| 3,000 | | |
| — | |
| Additional paid-in capital | |
| 33,798,656 | | |
| 33,455,006 | |
| Accumulated deficit | |
| (34,305,992 | ) | |
| (34,015,534 | ) |
| Total stockholder's equity | |
| (454,935 | ) | |
| (522,527 | ) |
| TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT | |
$ | 48,785 | | |
$ | 57,911 | |
The accompanying notes are an integral part of these consolidated financial statements.
Groove Botanicals, Inc.
Consolidated Statements of Operations
| | |
For the Years Ended
March 31, | |
| | |
2022 | | |
2021 | |
| Oil and Gas Sales | |
$ | 8,052 | | |
$ | 2,335 | |
| Cost of Goods Sold | |
| — | | |
| — | |
| Gross profit | |
| 8,052 | | |
| 2,335 | |
| | |
| | | |
| | |
| Expenses: | |
| | | |
| | |
| Selling, General and Administrative Expenses | |
| 111,613 | | |
| 59,146 | |
| Rent | |
| 14,400 | | |
| 17,066 | |
| Bank Service Charges | |
| 823 | | |
| 380 | |
| Legal and Professional Expenses | |
| 96,607 | | |
| 55,343 | |
| Consulting Expense | |
| 193,000 | | |
| 270,000 | |
| Total operating expenses | |
| 416,443 | | |
| 401,935 | |
| | |
| | | |
| | |
| Operating loss | |
| (408,391 | ) | |
| (399,600 | ) |
| | |
| | | |
| | |
| Other Income (Expense) | |
| | | |
| | |
| Amortization of Debt Discount | |
| (139,999 | ) | |
| (2,849 | ) |
| Change in Derivative Liability | |
| 261,770 | | |
| 148,361 | |
| Gain on Settlement of Debt | |
| 52,458 | | |
| — | |
| Settlement Expense | |
| — | | |
| (70,000 | ) |
| EIDL Grant Income | |
| — | | |
| 2,000 | |
| Interest Income (Expense) | |
| (56,532 | ) | |
| (19,511 | ) |
| Miscellaneous Other Income (Expense) | |
| 236 | | |
| — | |
| Total Other Income (Expense) | |
| 117,933 | | |
| 58,001 | |
| | |
| | | |
| | |
| Net Loss | |
$ | (290,458 | ) | |
$ | (341,599 | ) |
| | |
| | | |
| | |
| Basic and diluted loss per common share | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
| | |
| | | |
| | |
| Weighted average common shares outstanding | |
| 42,825,461 | | |
| 31,262,293 | |
The accompanying notes are an integral part of these consolidated financial statements.
Groove Botanicals, Inc.
Consolidated Statements of Stockholders' Equity
For the Years Ended March 31, 2022, 2021, and 2020
| |
Series A
Preferred Stock |
|
Series B
Preferred Stock |
|
Common Stock |
|
Common Stock
to be Issued |
|
Additional
Paid In
Capital |
|
Accumulated
Deficit |
|
Total |
|
| |
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Amount |
|
Amount |
|
Amount |
|
| Balance, March 31, 2019 |
|
100 |
|
$ |
10 |
|
|
1,983 |
|
$ |
198 |
|
|
29,393,062 |
|
$ |
29,393 |
|
|
— |
|
$ |
— |
|
$ |
33,003,441 |
|
$ |
(33,530,940 |
) |
$ |
(497,898 |
) |
| Net Loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(142,995 |
) |
|
(142,995 |
) |
| Balance, March 31, 2020 |
|
100 |
|
$ |
10 |
|
|
1,983 |
|
$ |
198 |
|
|
29,393,062 |
|
$ |
29,393 |
|
|
— |
|
$ |
— |
|
$ |
33,003,441 |
|
$ |
(33,673,935 |
) |
$ |
(640,893 |
) |
| Balance, March 31, 2020 |
|
100 |
|
$ |
10 |
|
|
1,983 |
|
$ |
198 |
|
|
29,393,062 |
|
$ |
29,393 |
|
|
— |
|
$ |
— |
|
$ |
33,003,441 |
|
$ |
(33,673,935 |
) |
$ |
(640,893 |
) |
| Issuance of stock for services |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,400,000 |
|
|
5,400 |
|
|
— |
|
|
— |
|
|
264,600 |
|
|
— |
|
|
270,000 |
|
| Issuance of stock per subscription |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,000,000 |
|
|
3,000 |
|
|
— |
|
|
— |
|
|
146,965 |
|
|
— |
|
|
149,965 |
|
| Beneficial Conversion Feature |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
40,000 |
|
|
— |
|
|
40,000 |
|
| Net Loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(341,599 |
) |
|
(341,599 |
) |
| Balance, March 31, 2021 |
|
100 |
|
$ |
10 |
|
|
1,983 |
|
$ |
198 |
|
|
37,793,062 |
|
$ |
37,793 |
|
|
— |
|
$ |
— |
|
$ |
33,455,006 |
|
$ |
(34,015,534 |
) |
$ |
(522,527 |
) |
| Balance, March 31, 2021 |
|
100 |
|
$ |
10 |
|
|
1,983 |
|
$ |
198 |
|
|
37,793,062 |
|
$ |
37,793 |
|
|
— |
|
$ |
— |
|
$ |
33,455,006 |
|
$ |
(34,015,534 |
) |
$ |
(522,527 |
) |
| Issuance of Stock for Director Compensation |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,000,000 |
|
|
1,000 |
|
|
— |
|
|
— |
|
|
19,000 |
|
|
— |
|
|
20,000 |
|
| Issuance of Stock for Outside Services |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6,650,000 |
|
|
6,650 |
|
|
— |
|
|
— |
|
|
126,350 |
|
|
— |
|
|
133,000 |
|
| Issuance of Stock for Settlement |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,000,000 |
|
|
1,000 |
|
|
— |
|
|
— |
|
|
19,000 |
|
|
— |
|
|
20,000 |
|
| Issuance of Stock per Subscription |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,750,000 |
|
|
2,750 |
|
|
— |
|
|
— |
|
|
52,300 |
|
|
— |
|
|
55,050 |
|
| Beneficial Conversion Feature |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
80,000 |
|
|
— |
|
|
80,000 |
|
| Common Stock to be Issued |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,000,000 |
|
|
3,000 |
|
|
47,000 |
|
|
— |
|
|
50,000 |
|
| Net Loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(290,458 |
) |
|
(290,458 |
) |
| Balance, March 31, 2022 |
|
100 |
|
$ |
10 |
|
|
1,983 |
|
$ |
198 |
|
|
49,193,062 |
|
$ |
49,193 |
|
|
3,000,000 |
|
$ |
3,000 |
|
$ |
33,798,656 |
|
$ |
(34,305,992 |
) |
$ |
(454,935 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
Groove Botanicals, Inc.
Consolidated Statements of Cash Flows
| | |
For the Years Ended
March 31, | |
| | |
2022 | | |
2021 | |
| Cash Flow From Operating Activities | |
| | | |
| | |
| Net Loss | |
$ | (290,458 | ) | |
$ | (341,599 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
| Adjustment for Grant Proceeds | |
| — | | |
| (2,000 | ) |
| Stock Issued for Director Compensation | |
| 20,000 | | |
| — | |
| Stock Issued for Outside Services | |
| 133,000 | | |
| 270,000 | |
| Stock Issued for Settlement | |
| 20,000 | | |
| — | |
| Convertible Debt Issued for Services | |
| 105,000 | | |
| — | |
| Beneficial Conversion Feature | |
| 80,000 | | |
| 40,000 | |
| Amortization of Debt Discount | |
| 139,999 | | |
| 2,849 | |
| Change in Derivative Liability | |
| (261,770 | ) | |
| (148,361 | ) |
| Effect of Debt Discounts on Derivative Liability | |
| (34,525 | ) | |
| — | |
| Gain on Settlement of Debt | |
| (52,458 | ) | |
| — | |
| Accrued Interest | |
| 11,056 | | |
| 19,521 | |
| Accrued Expenses | |
| — | | |
| 18,800 | |
| Accrued Payroll | |
| 48,000 | | |
| — | |
| Changes in working capital | |
| | | |
| | |
| Increase in Accounts Receivable | |
| (251 | ) | |
| — | |
| Increase in Accounts Payable and Accrued Liabilities | |
| 9,502 | | |
| 4,929 | |
| Net Cash Used in Operating Activities | |
| (72,905 | ) | |
| (136,761 | ) |
| | |
| | | |
| | |
| Cash Flow From Investing Activities | |
| | | |
| | |
| Net Cash From Investing Activities | |
| — | | |
| — | |
| | |
| | | |
| | |
| Cash Flow From Financing Activities | |
| | | |
| | |
| Funds received from Related Party | |
| 742 | | |
| 87,750 | |
| Funds received from EIDL Grant | |
| — | | |
| 2,000 | |
| Funds distributed to Related Party | |
| (32,264 | ) | |
| (85,400 | ) |
| Funds received for Issuance of Convertible Debt | |
| 50,000 | | |
| — | |
| Repayment of Outstanding Convertible Debt | |
| (10,000 | ) | |
| (100,000 | ) |
| Funds received for Issuance of Common Stock | |
| 55,050 | | |
| 149,965 | |
| Funds received for Common Stock to be Issued | |
| 50,000 | | |
| — | |
| Net Cash From Financing Activities | |
| 113,528 | | |
| 54,315 | |
| | |
| | | |
| | |
| Net Change in Cash | |
| 40,623 | | |
| (82,446 | ) |
| | |
| | | |
| | |
| Cash at Beginning of Period | |
| 7,911 | | |
| 90,357 | |
| | |
| | | |
| | |
| Cash at End of Period | |
$ | 48,534 | | |
$ | 7,911 | |
| | |
| | | |
| | |
| Net cash paid for: | |
| | | |
| | |
| Interest | |
$ | — | | |
$ | — | |
| Income Taxes | |
$ | — | | |
$ | — | |
The accompanying notes are an integral part of these
consolidated financial statements.
Groove Botanicals, Inc.
Notes to the Consolidated Financial Statements
For the years ended March 31, 2022, and 2021
NOTE 1 - ORGANIZATION AND OPERATIONS
Current Operations
Groove Botanicals (“GRVE” or the “Company”
or the “Corporation”), a Nevada corporation, is a publicly quoted independent oil and gas producer.
Corporate History
Groove Botanicals, Inc. (the "Company"),
(formerly known as Avalon Oil & Gas, Inc.), was originally incorporated in Colorado in April 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.
In May 1999, we changed our state of domicile to Nevada and our name to
XDOGS.COM, Inc. On July 31, 1998, the Corporation split their shares One (1) for Fifty-Four (54).
On August 24, 2000, the Corporation split their shares
One (1) for Five (5) and changed our name from XDOGS.COM to XDOGS, Inc. We changed our symbol from XDGS to XDGI.
On June 22, 2005, the Corporation changed our name
from XDOGS, Inc. to Avalon Oil and Gas, Inc. We changed our symbol from XDGI to AOGS.
On July 22, 2005, the Board of Directors and a majority
of the Company's shareholders approved an amendment to our Articles of Incorporation to change the Company's name to Avalon Oil &
Gas, Inc., and to increase the authorized number of shares of our common stock from 200,000,000 shares to 1,000,000,000 shares par value
of $0.001.
On May 15, 2007, the Corporation split their shares One (1) for Twenty (20).
We changed our symbol from AOGS to AOGN.
On June 4, 2012, the Board of Directors approved an
amendment to our Articles of Incorporation to a reverse split of the issued and outstanding shares of Common Stock of the Corporation
(“Shares”) such that each holder of Shares as of the record date of June 4, 2012 shall receive one (1) post-split Share on
the effective date of June 4, 2012 for each three hundred (300) Shares owned. The reverse split was effective on July 23, 2012.
On September 28, 2012, we held a special meeting of
Avalon’s shareholders and approved an amendment to the Company’s Articles of Incorporation such that the Company would be
authorized to issue up to 200,000,000 shares of common stock. We filed an amendment with the Nevada Secretary of State on April 10, 2013,
to increase our authorized shares to 200,000,000.
On July 23, 2012, the Corporation split their shares One (1) for Three Hundred
(300).
On May 14, 2018, the Corporation changed our name from
Avalon Oil and Gas, Inc., to Groove Botanicals, Inc. We changed our symbol from AOGN to GRVE. The Corporation is not and has never been
deemed a shell company (as defined in Rule 12b-2 of the Act).
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.
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
Pursuant to ASC Topic 820, Fair Value Measurements,
an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure
fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that
is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
| |
· |
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. |
| |
· |
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets: quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. |
| |
· |
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
Net Loss Per Share
Basic net loss per share is computed by dividing the
net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted
loss per share gives the effect to all dilutive potential common shares outstanding during the period, including stock options, warrants
and convertible instruments. Diluted net loss per share excludes all potentially issuable shares if their effect is anti-dilutive. Because
the effect of the Company’s dilutive securities is anti-dilutive, diluted net loss per share is the same as basic loss per share
for the periods presented.
The table below presents the computation of basic and diluted earnings per
shares for the years ended March 31, 2022, and 2021:
| |
|
For the year ended
March 31, 2022 |
|
|
For the year ended
March 31, 2021 |
|
| Numerator: |
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(290,458 |
) |
|
$ |
(341,599 |
) |
| Denominator: |
|
|
|
|
|
|
|
|
| Weighted average common shares outstanding—basic |
|
|
42,825,461 |
|
|
|
31,262,293 |
|
| Dilutive common stock equivalents |
|
|
— |
|
|
|
— |
|
| Weighted average common shares outstanding—diluted |
|
|
42,825,461 |
|
|
|
31,262,293 |
|
| Net loss per share: |
|
|
|
|
|
|
|
|
| Basic |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
| Diluted |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
Recently Adopted Accounting Pronouncements
The Company has implemented all new accounting pronouncements
that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that
have been issued that might have a material impact on its financial position or results of operations.
Income Taxes
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities.
The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized.
On December 18, 2019, the FASB issued ASU 2019-12 which
modifies ASC 740 to simplify the accounting for income taxes. The ASU’s amendments are based on changes that were suggested by stakeholders
as part of the FASB’s simplification initiative (i.e., the Board’s effort to reduce the complexity of accounting standards
while maintaining or enhancing the helpfulness of information provided to financial statement users).
ASC 740-10-25, “Accounting for Uncertainty in
Income Taxes”, is intended to clarify the accounting for uncertainty in income taxes recognized in a company’s financial statements
and prescribes the recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740-10-25 also provides
guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
Under ASC 740-10-25, evaluation of a tax position is
a two-step process. The first step is to determine whether it is more-likely-than not that a tax position will be sustained upon examination,
including the resolution of any related appeals or litigation based on the technical merits of that position. The second step it to measure
a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements.
A tax position is measure at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.
Tax positions that previously failed to meet the more-likely-than-not
recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions
that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which
the threshold is no longer met.
Revenue Recognition
The Company recognizes revenues from the sales of oil
and natural gas to its customers and presents them disaggregated on the Company’s Consolidated Statements of Operations. The Company
enters into contracts with customers to sell its oil and natural gas production. Revenue on these contracts is recognized in accordance
with the five-step revenue recognition model prescribed in Accounting Standard Codification (“ASC”) 606. Specifically, revenue
is recognized when the Company’s performance obligations under these contracts are satisfied, which generally occurs with the transfer
of control of the oil and natural gas to the purchaser. Control is generally considered transferred when the following criteria are met:
(i) transfer of physical custody, (ii) transfer of title, (iii) transfer of risk of loss and (iv) relinquishment of any repurchase rights
or other similar rights. Given the nature of the products sold, revenue is recognized at a point in time based on the amount of consideration
the Company expects to receive in accordance with the price specified in the contract. Consideration under the oil and natural gas marketing
contracts is typically received from the purchaser one to two months after production.
Beneficial Conversion Feature
The Company measures its 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.
On August 5, 2020, the FASB issued ASU 2020-06 which
simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments
and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification initiative, which aims to reduce unnecessary
complexity in U.S. GAAP.
NOTE 3 - GOING CONCERN
The accompanying 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 financial statements, the Company has incurred recurring net losses since its inception and has raised limited capital.
The Company had a net loss of $290,458 and $341,599 for the fiscal years ended March 31, 2022, and March 31, 2021, respectively. The Company's
accumulated deficit was $34,305,992 and $34,015,534 as of March 31, 2022, and March 31, 2021, respectively. These factors raise substantial
doubt regarding the Company’s ability to continue as a going concern. The 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.
NOTE 4 – CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash equivalents. As of March 31, 2022, the Company’s cash and
cash equivalents consisted of non-restricted cash, as well as funds held in short-term investments.
NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments are cash and cash
equivalents, accounts receivable, accounts payable, notes payable, notes receivable and long-term debt and their carrying amounts are
approximate their fair values based on their short-term nature. The recorded values of notes payable, notes receivable and long-term debt
approximate their fair values, as interest approximates market rates.
NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company had accounts payable and accrued liabilities
of $45,592 and $36,091 outstanding as of the fiscal years ended March 31, 2022, and March 31, 2021, respectively. These amounts consist
of joint interest billings to the Company from its partner Operators, pertaining to costs associated with their oil and gas operations.
NOTE 7 – RELATED PARTY TRANSACTIONS
The Company had a related party payable of $94,528
and $78,050 outstanding as of the fiscal years ended March 31, 2022, and March 31, 2021, respectively. These amounts consist of funds
contributed by the management for purposes 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, $4,000 monthly, to its CEO Kent Rodriguez. On April 1, 2020, the Company entered into an employment agreement with its
CEO which designates monthly payments due to CEO Kent Rodrigues in the amount of $4,000 each month. This agreement shall continue for
four years until March 31, 2024. These payables accrue no interest and have no maturity date. During the years ended March 31, 2022, and
March 31, 2021, related parties imputed interest was $1,890 and $468, respectively.
On December 2, 2021, we formed two Wyoming Corporations,
Biotrex, Inc., and Maxidyne, Inc. We plan to spin-off CBD intellectual property in Biotrex, Inc., and our oil and gas assets in Maxidyne,
Inc.
NOTE 8 – CONVERTIBLE NOTES PAYABLE
The convertible note payable consists of a $230,000
Convertible Promissory Note issued on January 30, 2018 to a third party in exchange for cash. Beginning on the issuance date of the Note,
the outstanding principal balance of this note accrued annual interest at 10%. The note has a maturity date of January 30, 2019. The note
was booked with a debt discount of the full principal balance of $230,000, plus an excess amount booked to interest in the amount of $27,957,
as of March 31, 2019. As of March 31, 2021, this entire debt discount has been amortized. Additionally, the note has a variable conversion
price per share of a 40% discount to lowest trading price of the previous five trading days prior to the conversion date. Subsequently
there was a settlement agreement on June 3, 2021, in which the Company recognized an outstanding convertible debt and related contingent
liability pertaining to an outstanding settlement in the amounts of approximately $54,650 and $95,350, respectively. This recognition
came as part of a settlement agreement reached on June 3, 2021, in which the prior $230,000 convertible note, as well as approximately
$72,458 of related interest was settled into a new convertible debt of $54,650, a contingent liability of $95,350, and two cash payments
of $50,000 each to the note holder, which were made on July 20, 2020, and March 10, 2021. This transaction resulted in a gain on debt
extinguishment of approximately $52,000. The convertible debt portion has no interest accrual and has a variable conversion price per
share of a 60% discount to the average of the previous five-day trading closing bid price. There was also an amendment of the settlement
agreement on June 3, 2022, both pertaining to this previously referenced Note; more detail disclosed in Subsequent Event Footnote #14.
The convertible note payable also 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 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 March 31, 2022, this entire
debt discount has been amortized, with $37,151 and $2,849 being amortized during the years ended March 31, 2022 and March 31, 2021, respectively.
This note is currently in default.
On July 23, 2021, the Company issued a convertible
promissory note in the amount of $45,000, with an annual interest rate of 8% and a variable conversion price per share of a 40% discount
to the average of the previous three-day trading closing bid price, in exchange for professional and legal services to be rendered. 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. Also, as part of this agreement, common stock was
granted equal to 14.9% of the outstanding common shares at the time of issuance, and the stock was transferred in three equal parts to
affiliates holding the note; this transaction is detailed in the next paragraph. The note has a maturity date of March 31, 2023 The Company
has made a total repayment of $10,000 on this debt as of March 31, 2022.
Per agreements dated on August 5, 2021, the Company
issued 6,000,000 shares of common stock, 2,000,000 each to three different parties, in exchange for consulting services. These shares
were issued with a value of $0.02 per share. These issuances were pertaining to the July 23, 2021 convertible note specified in the previous
paragraph.
On October 1, 2021, the Company issued a convertible
promissory note in the amount of $50,000, with an annual interest rate of 5% and a fixed conversion price of $0.02 per share, in exchange
for $50,000 received. The note was booked with a debt discount of the full principal balance of $50,000. As of March 31, 2022, $24,863
of the debt discount has been amortized. This note has a maturity date of September 30, 2022.
On March 7, 2022, the Company issued a 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.
The Company had a convertible note payable of $164,774
and $182,849 outstanding as of the fiscal years ended March 31, 2022, and March 31, 2021, respectively.
| | |
March 31,
2022 | | |
March 31,
2021 | |
| Beginning Balance | |
$ | 182,849 | | |
$ | 230,000 | |
| Convertible notes issued for services | |
| 105,000 | | |
| 40,000 | |
| Convertible notes issued for cash | |
| 50,000 | | |
| | |
| Discount on convertible notes | |
| (215,224 | ) | |
| (40,000 | ) |
| Repayments | |
| (10,000 | ) | |
| (100,000 | ) |
| Portion of repayments held as prepaid expenses for future settlement | |
| | | |
| 50,000 | |
| Debt extinguished per settlement | |
| (125,350 | ) | |
| — | |
| Conversion of notes payable into common stock | |
| — | | |
| — | |
| Amortization of discounts | |
| 177,499 | | |
| 2,849 | |
| Convertible notes payable, net (Ending Balance) | |
$ | 164,774 | | |
$ | 182,849 | |
Below is the summary of the principal balance and debt
discounts as of March 31, 2021:
| Convertible Promissory Note Holder |
Start Date |
End Date |
Initial Note
Principal
Balance |
Debt Discounts
as of Issuance |
Amortization |
Debt Discounts
as of March 31,
2021 |
| Robert Hymers III |
3/5/2021 |
6/30/2022 |
$40,000 |
$40,000 |
($2,849) |
$37,151 |
| Carebourn Capital, L.P. |
1/30/2018 |
1/30/2019 |
$230,000 |
$230,000 |
($180,000) |
$50,000 |
| Total |
|
|
|
|
|
$87,151 |
| Remaining note principal balance |
|
|
|
|
|
$270,000 |
| Total convertible promissory notes, net |
|
|
|
|
|
$182,849 |
Below is the summary of the principal balance and debt discounts as of March 31,
2022:
| Convertible Promissory Note Holder |
Start Date |
End Date |
Initial Note
Principal
Balance |
Debt Discounts
as of Issuance |
Amortization |
Debt Discounts
as of March 31,
2022 |
| Robert Hymers III |
3/5/2021 |
6/30/2022 |
$40,000 |
$40,000 |
($40,000) |
- |
| RaiseRight LLC |
7/23/2021 |
3/31/2023 |
$45,000 |
$45,000 |
($23,288) |
$21,712 |
| Carebourn Capital, L.P. |
1/30/2018 |
1/30/2019 |
$230,000 |
$230,000 |
($230,000) |
- |
| Robert Hymers |
3/7/2022 |
3/7/2023 |
$60,000 |
$30,000 |
($1,973) |
$28,027 |
| Westworld Financial Capital, LLC |
10/1/2021 |
9/30/2022 |
$50,000 |
$50,000 |
($24,863) |
$25,137 |
| Total |
|
|
|
|
|
$74,876 |
| Remaining note principal balance |
|
|
|
|
|
$239,650 |
| Total convertible promissory notes, net |
|
|
|
|
|
$164,774 |
NOTE 9 – 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 March 31, 2022, there were 100 and 1,983 shares issued and outstanding for Series A Preferred Stock
and Series B Preferred Stock, respectively. As of March 31, 2021, there were 100 and 1,983 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.
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.
NOTE 10 – COMMON STOCK
The Company is authorized to issue 200,000,000 shares
of Common Stock, with a par value of $0.001.
On September 18, 2020, the Company issued 500,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On October 14, 2020, the Company issued 1,000,000 shares
of common stock in exchange for $49,000 received.
On October 15, 2020, the Company issued 1,000,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On October 20, 2020, the Company issued 250,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On October 22, 2020, the Company issued 500,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On January 1, 2021, the Company issued 250,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On February 23, 2021, the Company issued 200,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On March 9, 2021, the Company issued 1,500,000 shares
of common stock in exchange for bookkeeping services. These shares were issued with a value of $0.05 per share.
On March 10, 2021, the Company issued 100,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On March 10, 2021, the Company issued 100,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On March 10, 2021, the Company issued 1,000,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.05 per share.
On March 10, 2021, the Company issued 2,000,000 shares
of common stock in exchange for $97,965 received.
Per agreements dated on August 5, 2021, the Company
issued 6,000,000 shares of common stock, 2,000,000 each to three different parties, in exchange for consulting services. These shares
were issued with a value of $0.02 per share. These issuances were pertaining to the July 23, 2021 convertible note specified in the previous
paragraph.
On September 21, 2021, the Company issued 500,000 shares
of common stock in exchange for $10,000 received.
On October 12, 2021, the Company issued 500,000 shares
of common stock as compensation for services provided by a director of the Company, as well as a $50 capital contribution received. These
shares were issued with a value of $0.02 per share.
On October 12, 2021, the Company issued 500,000 shares
of common stock as compensation for services provided by a director of the Company. These shares were issued with a value of $0.02 per
share.
On October 27, 2021, the Company issued 500,000 shares
of common stock in exchange for $10,000 received.
On November 1, 2021, the Company issued 1,000,000 shares
of common stock per a settlement and release agreement. These shares were issued with a value of $0.02 per share.
On November 4, 2021, the Company issued 500,000 shares
of common stock in exchange for $10,000 received.
On December 21, 2021, the Company issued 650,000 shares
of common stock in exchange for consulting services. These shares were issued with a value of $0.02 per share.
On December 30, 2021, the Company issued 1,250,000
shares of common stock in exchange for $25,000 received.
On March 22, 2022, the Company committed 500,000 shares
of common stock to be issued, 250,000 each to two separate parties, in exchange for $10,000 received, $5,000 from each party.
On March 23, 2022, the Company committed 2,500,000
shares of common stock to be issued in exchange for $40,000 received.
During the fiscal year ended March 31, 2022, the Company
issued 1,000,000 shares of common stock as director compensation, these issuances had an aggregate value of $20,000. During the fiscal
year ended March 31, 2022, the Company issued 6,650,000 shares of common stock in exchange for services rendered, these issuances had
an aggregate value of $133,000. During the fiscal year ended March 31, 2022, the Company issued 1,000,000 shares of common stock to satisfy
prior settlement, these issuances had an aggregate value of $20,000. During the fiscal year ended March 31, 2022, the Company issued 2,750,000
shares of common stock in exchange for cash received, these issuances had an aggregate value of $55,050. During the fiscal year ended
March 31, 2021, the Company issued 5,400,000 shares of common stock in exchange for services rendered, these issuances had an aggregate
value of $270,000. During the fiscal year ended March 31, 2021, the Company issued 3,000,000 shares of common stock in exchange for cash
received, these issuances had an aggregate value of $149,965. The Company had 49,193,062 and 37,793,062 shares of common stock issued
and outstanding as of March 31, 2022, and March 31, 2021, respectively. The Company had a loss per share of $0.01 and $0.01 for the fiscal
years ended March 31, 2022, and March 31, 2021, respectively.
NOTE 11 – DERIVATIVE FINANCIAL INSTRUMENTS
The fair value of derivative instruments is recorded
and shown separately under liabilities. Changes in the fair value of derivatives liability are recorded in the consolidated statement
of operations under other (income) expense.
Our Company evaluates all of its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments
that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each
reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial
instruments, the Company uses Black-Scholes Option Pricing model to value the derivative instruments at inception and on subsequent valuation
dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity,
is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or
non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance
sheet date.
NOTE 12: COMMITMENTS AND CONTINGENCIES
As of March 31, 2022 and 2021, the Company has a month-to-month
verbal lease agreement with the landlord, in which the Company is obligated to pay $1,200 on a monthly basis.
NOTE 13: INCOME TAXES
Deferred income taxes arise from the temporary differences
between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue
Code should a significant change in ownership occur.
For the years ended March 31, 2021 and 2020, the Company
incurred net losses and therefore has no tax liability. The Company has net operating loss carry-forwards of approximately $995,000 that
will be carried forward and can be used through the year 2041 and beyond to offset future taxable income. In the future, the cumulative
net operating loss carry forward for income tax purposes may differ from the cumulative financial statement loss due to timing differences
between financial and tax reporting.
At March 31, 2022 and 2021, the Company has net operating
loss carry forwards of approximately $995,000 and $530,000, respectively, that may be offset against future taxable income, if any. These
carry-forwards are subject to review by the Internal Revenue Service. As of March 31, 2022 and 2021, the deferred tax asset of approximately
$209,000 and $111,000, respectively, created by the net operating losses has been offset by a 100% valuation allowance because the likelihood
of realization of the tax benefit cannot be determined. The change in the valuation allowance in 2022 and 2021 was approximately $98,000
and $88,000 respectively.
There is no current or deferred tax expense for the
years ended March 31, 2022 and 2021. The Company has not filed its tax returns for the years ended 2006 through 2021; however, management
believes there are no taxes due as of March 31, 2022 and 2021.
The Company includes interest and penalties arising
from the underpayment of income taxes in general and administrative expense in the consolidated statements of operations.
The provision for Federal income tax consists of the
following for the years ended March 31, 2022 and 2021:
| | |
March 31, | |
| | |
2022 | | |
2021 | |
| Net loss | |
$ | (290,458 | ) | |
$ | (341,599 | ) |
| Permanent differences | |
| (174,229 | ) | |
| (77,512 | ) |
| Valuation allowance | |
| 464,687 | | |
| 419,111 | |
| Net provision for income tax | |
$ | — | | |
$ | — | |
The cumulative tax effect at the expected federal rate
of 21% of significant items comprising our net deferred tax amount is as follows on March 31, 2022 and 2021:
| | |
March 31, | |
| | |
2022 | | |
2021 | |
| Deferred tax asset attributable to: | |
| | | |
| | |
| Net operating loss carry forward | |
$ | 208,872 | | |
$ | 111,287 | |
| Valuation allowance | |
| (208,872 | ) | |
| (111,287 | ) |
| Net deferred tax asset | |
$ | — | | |
$ | — | |
NOTE 14 – SUBSEQUENT EVENTS
On May 19, 2022, the Company made a repayment of $2,500 toward
its convertible note that was initially issued on July 23, 2021 in the amount of $45,000.
On June 21, 2022, the Company made another repayment of $2,500
toward this convertible note, bringing its outstanding principal balance to $30,000 as of June 21, 2022.
On June 3, 2022, the Company received a loan from a related
party in the amount of $125,000. These funds were wired to the Company to help it reach settlement of the debts described in the following
paragraph.
On June 3, 2022, the Company satisfied one of its outstanding
convertible debts and related contingent liability in the amounts of approximately $55,000 and $95,000, respectively, via a settlement
payment of $125,000, this resulted in a gain on the settlement of debt in the amount of $25,000. Both of these debts arose on June 3,
2021, when a previous $230,000 convertible note, as well as approximately $72,000 of related interest was then restructured via a settlement
agreement into a new convertible debt, related contingent liability, and two corresponding cash payments of $50,000 each.
On October 2, 2022, the Company issued 250,000 shares of common
stock in exchange for $5,000 received (at .$02 per share price).
On October 4, 2022, the Company issued 150,000 shares of common
stock in exchange for $3,000 received (at .$02 per share price).
On October 31, 2022, the Company made a repayment of $2,500
toward its convertible note that was initially issued on July 23, 2021 in the amount of $45,000, bringing its outstanding principal balance
to $27,500 as of October 31, 2022.
| GROOVE BOTANICALS, INC. |
|
CONSOLIDATED BALANCE SHEETS
(Unaudited) |
| | |
September 30, | | |
March 31, | |
| | |
2022 | | |
2022 | |
| | |
| | |
| |
| ASSETS | |
| | | |
| | |
| | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash and Cash Equivalents | |
$ | 3,426 | | |
$ | 48,534 | |
| Accounts Receivable | |
| 41 | | |
| 251 | |
| | |
| | | |
| | |
| Total Current Assets | |
| 3,467 | | |
| 48,785 | |
| | |
| | | |
| | |
| Total Assets | |
$ | 3,467 | | |
$ | 48,785 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS' DEFICIT | |
| | | |
| | |
| | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | |
| Accounts Payable and Accrued Liabilities | |
$ | 45,110 | | |
$ | 45,592 | |
| Interest Payable | |
| 15,706 | | |
| 7,900 | |
| Related Party Payable | |
| 265,608 | | |
| 94,528 | |
| Convertible Notes Payable | |
| 167,014 | | |
| 164,774 | |
| Derivative Liability | |
| 42,820 | | |
| 95,576 | |
| Contingent Liability | |
| — | | |
| 95,350 | |
| Total Current Liabilities | |
| 536,258 | | |
| 503,720 | |
| | |
| | | |
| | |
| Total Liabilities | |
| 536,258 | | |
| 503,720 | |
| | |
| | | |
| | |
| Shareholders' Deficit | |
| | | |
| | |
| Preferred Stock, Series A, $0.10 par value, 100 shares | |
| 10 | | |
| 10 | |
| authorized, 100 shares issued or outstanding as of | |
| | | |
| | |
| September 30, 2022, and March 31, 2022, respectively | |
| | | |
| | |
| Preferred Stock, Series B, $0.10 par value, 2,000 shares | |
| 198 | | |
| 198 | |
| authorized, 1,983 shares issued or outstanding as of | |
| | | |
| | |
| September 30, 2022, and March 31, 2022, respectively | |
| | | |
| | |
| Common Stock, $0.001 par value, 200,000,000 shares | |
| 52,193 | | |
| 49,193 | |
| authorized, 52,193,062 and 49,193,062 issued | |
| | | |
| | |
| and outstanding as of September 30, 2022, and | |
| | | |
| | |
March 31, 2022, respectively
Common Stock to be Issued | |
| — | | |
| 3,000 | |
| Additional Paid-In Capital | |
| 33,798,656 | | |
| 33,798,656 | |
| Accumulated Deficit | |
| (34,383,848 | ) | |
| (34,305,992 | ) |
| Total Shareholders' Deficit | |
| (532,791 | ) | |
| (454,935 | ) |
| | |
| | | |
| | |
| Total Liabilities and Shareholders' Deficit | |
$ | 3,467 | | |
$ | 48,785 | |
The accompanying notes are an integral part of these unaudited
consolidated financial statements
GROOVE BOTANICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| | |
For the Three Months Ended | | |
For the Six Months Ended | |
| | |
September 30, | | |
September 30, | |
| | |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| | |
| | |
| | |
| | |
| |
| OIL AND GAS SALES | |
$ | 513 | | |
$ | 653 | | |
$ | 734 | | |
$ | 7,229 | |
| | |
| | | |
| | | |
| | | |
| | |
| EXPENSES | |
| | | |
| | | |
| | | |
| | |
| Selling, General and Administrative Expenses | |
| 20,894 | | |
| 16,953 | | |
| 39,493 | | |
| 42,742 | |
| Rent | |
| 4,581 | | |
| 3,600 | | |
| 8,508 | | |
| 7,200 | |
| Bank Service Charges | |
| 410 | | |
| 330 | | |
| 480 | | |
| 360 | |
| Legal and Professional Expenses | |
| 19,611 | | |
| 51,803 | | |
| 38,169 | | |
| 52,775 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total Expenses | |
| 45,496 | | |
| 72,686 | | |
| 86,650 | | |
| 103,077 | |
| | |
| | | |
| | | |
| | | |
| | |
| OPERATING LOSS | |
| (44,983 | ) | |
| (72,033 | ) | |
| (85,916 | ) | |
| (95,848 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| OTHER INCOME (EXPENSE) | |
| | | |
| | | |
| | | |
| | |
| Amortization of Debt Discount | |
| (21,109 | ) | |
| (36,406 | ) | |
| (61,890 | ) | |
| (46,379 | ) |
| Change in Derivative Liability | |
| (31,773 | ) | |
| (35,111 | ) | |
| 52,756 | | |
| 196,976 | |
| Gain on Settlement of Debt | |
| — | | |
| — | | |
| 25,000 | | |
| 52,458 | |
| Interest Expense | |
| (3,735 | ) | |
| (2,278 | ) | |
| (7,806 | ) | |
| (50,910 | ) |
| Miscellaneous Other Income | |
| — | | |
| — | | |
| — | | |
| 235 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total Other Income (Loss) | |
| (56,617 | ) | |
| (73,795 | ) | |
| 8,060 | | |
| 152,380 | |
| | |
| | | |
| | | |
| | | |
| | |
| NET INCOME (LOSS) | |
| (101,600 | ) | |
| (145,828 | ) | |
| (77,856 | ) | |
| 56,532 | |
| | |
| | | |
| | | |
| | | |
| | |
| Basic and Diluted Earnings per Common Share | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | 0.00 | |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted Average Common Shares Outstanding: Basic and Diluted | |
| 52,193,062 | | |
| 37,793,062 | | |
| 52,061,914 | | |
| 37,793,062 | |
The accompanying notes are an integral part of these unaudited
consolidated financial statements
GROOVE BOTANICALS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(UNAUDITED)
| |
| |
| |
| |
| |
Common Shares | |
Common Stock
To be issued | |
| |
| |
| |
| |
Series A Preferred Shares | |
Series A Preferred Amount | |
Series B Preferred Shares | |
Series B Preferred Amount | |
Shares | |
Amount | |
Shares | |
Amount | |
Additional
Paid-In
Capital | |
Accumulated
Deficit | |
Total | |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| Balance, March 31, 2021 |
| 100 | |
$ | 10 | |
| 1,983 | |
$ | 198 | |
| 37,793,062 | |
$ | 37,793 | |
| — | |
| — | |
| 33,455,006 | |
$ | (34,015,534 | ) |
$ | (522,527 | ) |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Issuance of Stock per Subscription |
| | |
| | |
| | |
| | |
| | |
| | |
| 500,000 | |
| 500 | |
| 9,500 | |
| | |
| 10,000 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Net Income |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| 56,532 | |
| 56,532 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Balance, September 30, 2021 |
| 100 | |
$ | 10 | |
| 1,983 | |
$ | 198 | |
| 37,793,062 | |
$ | 37,793 | |
| 500,000 | |
| 500 | |
| 33,464,506 | |
$ | (33,959,002 | ) |
$ | (455,995 | ) |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Balance, March 31, 2022 |
| 100 | |
$ | 10 | |
| 1,983 | |
$ | 198 | |
| 49,193,062 | |
$ | 49,193 | |
| 3,000,000 | |
$ | 3,000 | |
$ | 33,798,656 | |
$ | (34,305,992 | ) |
$ | (454,935 | ) |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Issuance of Stock per Subscription |
| | |
| | |
| | |
| | |
| 3,000,000 | |
| 3,000 | |
| (3,000,000 | ) |
| (3,000 | ) |
| | |
| | |
| — | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Net Loss |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| (77,856 | ) |
| (77,856 | ) |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Balance, September 30, 2022 |
| 100 | |
$ | 10 | |
| 1,983 | |
$ | 198 | |
| 52,193,062 | |
$ | 52,193 | |
| — | |
| — | |
$ | 33,798,656 | |
$ | (34,383,848 | ) |
$ | (532,791 | ) |
The accompanying notes are
an integral part of these unaudited consolidated financial statements
GROOVE BOTANICALS, INC.
CONSOLIDATED STATEMENTS OF CASHFLOWS
(UNAUDITED)
| | |
FOR THE SIX MONTHS ENDED | |
| | |
SEPTEMBER 30, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Cash Flow from Operating Activities: | |
| | | |
| | |
| | |
| | | |
| | |
| Net Income (Loss) | |
$ | (77,856 | ) | |
$ | 56,532 | |
| Adjustments to reconcile net income (loss) to | |
| | | |
| | |
| net cash used in operating activities | |
| | | |
| | |
| Amortization of Debt Discount | |
| 61,890 | | |
| 46,379 | |
| Change in Derivative Liability | |
| (52,756 | ) | |
| (196,976 | ) |
| Effect of Debt Discount on Derivative Liability | |
| — | | |
| 143,200 | |
| Effect of Valuation Adjustments on Debt Discounts | |
| — | | |
| (102,724 | ) |
| Gain on Settlement of Debt | |
| (25,000 | ) | |
| (52,458 | ) |
| Accrued Interest | |
| 7,806 | | |
| 5,434 | |
| Accrued Payroll | |
| 24,000 | | |
| 24,000 | |
| Accounts Payable and Accrued liabilities – Related Party | |
| 80 | | |
| — | |
| | |
| | | |
| | |
| Changes in working capital items: | |
| | | |
| | |
| Decrease in Accounts Receivable | |
| 210 | | |
| — | |
| Decrease in Prepaid Expenses | |
| — | | |
| 50,000 | |
| Increase (Decrease) in Accounts Payable and Accrued Liabilities | |
| (482 | ) | |
| 14,196 | |
| | |
| | | |
| | |
| Net Cash Used In Operating Activities | |
| (62,108 | ) | |
| (12,417 | ) |
| | |
| | | |
| | |
| | |
| | | |
| | |
| Net Cash Flow from Financing Activities | |
| | | |
| | |
| Funds Received from Related Party | |
| 151,000 | | |
| 500 | |
| Funds Distributed to Related Party | |
| (4,000 | ) | |
| (3,500 | ) |
| Funds Received from Issuance of Common Stock | |
| — | | |
| 10,000 | |
| Repayment of Convertible Debt | |
| (59,650 | ) | |
| — | |
| Repayment of Contingent Liability | |
| (70,350 | ) | |
| — | |
| | |
| | | |
| | |
| Net Cash Flow Provided by Financing Activities | |
| 17,000 | | |
| 7,000 | |
| | |
| | | |
| | |
| Net Change in Cash: | |
| (45,108 | ) | |
| (5,417 | ) |
| | |
| | | |
| | |
| Beginning Cash of period: | |
| 48,534 | | |
| 7,911 | |
| | |
| | | |
| | |
| Ending Cash of period: | |
$ | 3,425 | | |
$ | 2,494 | |
| | |
| | | |
| | |
| Supplemental Disclosures of Cash Flow Information: | |
| | | |
| | |
| Cash paid for interest | |
$ | — | | |
$ | — | |
| Cash paid for tax | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| Supplemental Disclosures of Non-Cash Financing Activities: | |
| | | |
| | |
| Debt Accrued per Service Agreement | |
$ | — | | |
$ | 45,000 | |
The accompanying notes are an integral part of these unaudited
consolidated financial statements
GROOVE BOTANICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(UNAUDITED)
NOTE 1 - ORGANIZATION AND OPERATIONS
Current Operations
Groove Botanicals (“GRVE” or the “Company”
or the “Corporation”), a Nevada corporation, is a publicly quoted independent oil and gas producer.
Corporate History
Groove Botanicals, Inc. (the "Company"),
(formerly known as Avalon Oil & Gas, Inc.), was originally incorporated in Colorado in April 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
In May 1999, we changed our state of domicile to Nevada and our name to
XDOGS.COM, Inc.
On July 31, 1998, the Corporation split their shares One (1) for Fifty-Four
(54).
On August 24, 2000, the Corporation split their shares
One (1) for Five (5) and changed our name from XDOGS.COM to XDOGS, Inc. We changed our symbol from XDGS to XDGI.
On June 22, 2005, the Corporation changed our name
from XDOGS, Inc. to Avalon Oil and Gas, Inc. We changed our symbol from XDGI to AOGS.
On July 22, 2005, the Board of Directors and a majority
of the Company's shareholders approved an amendment to our Articles of Incorporation to change the Company's name to Avalon Oil &
Gas, Inc., and to increase the authorized number of shares of our common stock from 200,000,000 shares to 1,000,000,000 shares par
value of $0.001.
On May 15, 2007, the Corporation split their shares
One (1) for Twenty (20). We changed our symbol from AOGS to AOGN.
On June 4, 2012, the Board of Directors approved an
amendment to our Articles of Incorporation to a reverse split of the issued and outstanding shares of Common Stock of the Corporation
(“Shares”) such that each holder of Shares as of the record date of June 4, 2012 shall receive one (1) post-split Share on
the effective date of June 4, 2012 for each three hundred (300) Shares owned. The reverse split was effective on July 23, 2012.
On September 28, 2012, we held a special meeting of
Avalon’s shareholders and approved an amendment to the Company’s Articles of Incorporation such that the Company would be
authorized to issue up to 200,000,000 shares of common stock. We filed an amendment with the Nevada Secretary of State on April
10, 2013, to increase our authorized shares to 200,000,000.
On July 23, 2012, the Corporation split their shares
One (1) for Three Hundred (300).
On May 14, 2018, the Corporation changed our name from
Avalon Oil and Gas, Inc., to Groove Botanicals, Inc. We changed our symbol from AOGN to GRVE.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited
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
interim unaudited financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The unaudited consolidated financial statements
include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary in order to make
the condensed financial statements not misleading. Notes to the consolidated financial statements which
would substantially duplicate the disclosures contained in the annual financial statements for the most recent fiscal period, as reported
in the Annual Report, have been omitted. The unaudited
consolidated balance sheet as of September 30, 2022 was derived from the Company’s audited consolidated financial statements at
that date. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated
financial statements and related notes thereto for the year ended March 31, 2022. Interim results for the three and six months ended September
30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2023.
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
Pursuant to ASC Topic 820, Fair Value Measurements, an
entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC
820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair
value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant
to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
| · | Level 1 applies to assets or liabilities
for which there are quoted prices in active markets for identical assets or liabilities. |
| · | Level 2 applies to assets or liabilities
for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets
or liabilities in active markets: quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent
transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally
from, or corroborated by, observable market data. |
| · | Level 3 applies to assets or liabilities
for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the
assets or liabilities. |
Net Loss Per Share
Basic net loss per share is computed by dividing the net
loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted loss per share gives the effect to all dilutive potential common shares outstanding during the period, including stock options,
warrants and convertible instruments. Diluted net loss per share excludes all potentially issuable shares if their effect is anti-dilutive.
Because the effect of the Company’s dilutive securities is anti-dilutive, diluted net loss per share is the same as basic loss
per share for the periods presented. For more information regarding
potential shares to be issued pertaining to convertible debt and preferred stock and how these figures may be calculated, see Notes 8
and 9. Under the provisions of ASC 260, “Earnings per Share,” basic loss per common share is computed by dividing net loss
available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted
net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised
or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject
to anti-dilution limitations. Potential common shares consist of the convertible promissory notes payable as of September 30, 2022 and
March 31, 2022. As of September 30, 2022 and March 31, 2022, there were no potential shares issuable upon conversion of convertible
notes payable. As of September 30, 2022 and March 31, 2022, there were no potential shares issuable upon conversion of warrants.
Recently Adopted Accounting Pronouncements
The Company has implemented
all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are
any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Income Taxes
Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards,
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax
assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current
and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets will not be realized.
On December 18, 2019,
the FASB issued ASU 2019-12 which modifies ASC 740 to simplify the accounting for income taxes. The ASU’s amendments
are based on changes that were suggested by stakeholders as part of the FASB’s simplification initiative (i.e., the Board’s
effort to reduce the complexity of accounting standards while maintaining or enhancing the helpfulness of information provided to financial
statement users).
ASC 740-10-25, “Accounting
for Uncertainty in Income Taxes”, is intended to clarify the accounting for uncertainty in income taxes recognized in a company’s
financial statements and prescribes the recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC
740-10-25 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure
and transition.
Under ASC 740-10-25,
evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position
will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that
position. The second step it to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit
to be recognized in the financial statements. A tax position is measure at the largest amount of benefit that is greater than 50 percent
likely of being realized upon ultimate settlement.
Tax positions that previously
failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold
is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first
subsequent financial reporting period in which the threshold is no longer met.
Revenue Recognition
The Company recognizes
revenues from the sales of oil and natural gas to its customers and presents them disaggregated on the Company’s Consolidated Statements
of Operations. The Company enters into contracts with customers to sell its oil and natural gas production. Revenue on these contracts
is recognized in accordance with the five-step revenue recognition model prescribed in Accounting Standard Codification (“ASC”)
606. Specifically, revenue is recognized when the Company’s performance obligations under these contracts are satisfied, which generally
occurs with the transfer of control of the oil and natural gas to the purchaser. Control is generally considered transferred when the
following criteria are met: (i) transfer of physical custody, (ii) transfer of title, (iii) transfer of risk of loss and (iv) relinquishment
of any repurchase rights or other similar rights. Given the nature of the products sold, revenue is recognized at a point in time based
on the amount of consideration the Company expects to receive in accordance with the price specified in the contract. Consideration under
the oil and natural gas marketing contracts is typically received from the purchaser one to two months after production.
Beneficial Conversion Feature
The Company measures
its 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.
On August 5, 2020, the
FASB issued ASU 2020-06 which simplifies the accounting for certain financial instruments with characteristics of liabilities
and equity, including convertible instruments and contracts on an entity’s own equity. The ASU is part of the FASB’s simplification
initiative, which aims to reduce unnecessary complexity in U.S. GAAP.
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 ($77,856) and net income of $56,532 for the six months ended September 30, 2022, and September 30, 2021,
respectively. The Company's accumulated deficit was $34,383,848 and $34,305,992 as of September 30, 2022, and March 31, 2022, 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.
NOTE 4 – CASH AND CASH EQUIVALENTS
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, 2022, the Company's cash and cash equivalents consisted of non-restricted cash, as well as funds held in short-term investments.
NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments are cash and cash equivalents, accounts
receivable, accounts payable, and notes payable and their carrying amounts are approximate their fair values based on their short-term
nature. The recorded values of these instruments approximate their fair values, as interest approximates market rates.
NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company had accounts payable and accrued
liabilities of $45,110 and $45,592 outstanding as of September 30, 2022, and March 31, 2022, respectively. These amounts consist of billings
to the Company from its various service providers.
NOTE 7 – RELATED PARTY TRANSACTIONS
The Company had a related party payables of
$265,608 and $94,528 outstanding as of September 30, 2022, and March 31, 2022, respectively. These amounts consist of funds contributed
by the management for purposes 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, $4,000 monthly, to its CEO Kent Rodriguez. On April 1, 2020, the Company entered into an employment agreement with its CEO which
designates monthly payments due to CEO Kent Rodriguez in the amount of $4,000 each month. This agreement shall continue for four years
until March 31, 2024. These payables accrue no interest and have no maturity date.
On December 2, 2021, we
formed two Wyoming Corporations, Biotrex, Inc., and Maxidyne, Inc. We plan to spin-off CBD intellectual property in Biotrex, Inc.,
and our oil and gas assets in Maxidyne, Inc.
On June 3, 2022, the Company
received a loan from a related party in the amount of $125,000. These funds were wired to the Company to help it reach settlement of the
debts described in the following paragraph.
NOTE 8 – CONVERTIBLE NOTES PAYABLE
The convertible note payable
consists of a $230,000 Convertible Promissory Note issued on January 30, 2018 to a third party in exchange for cash. Beginning on the
issuance date of the Note, the outstanding principal balance of this note accrued annual interest at 10%. The note has a maturity date
of January 30, 2019. The note was booked with a debt discount of the full principal balance of $230,000, plus an excess amount booked
to interest in the amount of $27,957, as of March 31, 2019. As of March 31, 2021, this entire debt discount has been amortized. Additionally,
the note has a variable conversion price per share of a 40% discount to lowest trading price of the previous five trading days prior to
the conversion date. Subsequently there was a settlement agreement on June 3, 2021, in which the Company recognized an outstanding convertible
debt and related contingent liability pertaining to an outstanding settlement in the amounts of approximately $54,650 and $95,350, respectively.
This recognition came as part of a settlement agreement reached on June 3, 2021, in which the prior $230,000 convertible note, as well
as approximately $72,458 of related interest was settled into a new convertible debt of $54,650, a contingent liability of $95,350, and
two cash payments of $50,000 each to the note holder, which were made on July 20, 2020, and March 10, 2021. This transaction resulted
in a gain on debt extinguishment of approximately $52,000. The convertible debt portion has no interest accrual and has a variable conversion
price per share of a 60% discount to the average of the previous five-day trading closing bid price. There was also an amendment of the
settlement agreement on June 3, 2022, the Company satisfied one of its outstanding convertible debts and related contingent liability
in the amounts of approximately $55,000 and $95,000, respectively, via a settlement payment of $125,000, this resulted in a gain on the
settlement of debt in the amount of $25,000. Both of these debts arose on June 3, 2021, when a previous $230,000 convertible note, as
well as approximately $72,000 of related interest was then restructured via a settlement agreement into a new convertible debt, related
contingent liability, and two corresponding cash payments of $50,000 each. As of September 30, 2022, the debt has been completed paid
off and no longer exists.
The convertible
note payable also 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 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 September 30, 2022, this entire debt
discount has been amortized, with $37,151 and $2,849 being amortized during the years ended March 31, 2022 and March 31, 2021, respectively.
Therefore, as of both September 30, 2022 and March 31, 2021, no corresponding debt discount remained. This loan is currently in default.
On
July 23, 2021, the Company issued a convertible promissory note in the amount of $45,000, with an annual interest rate of 8% and a variable
conversion price per share of a 40% discount to the average of the previous three-day trading closing bid price, in exchange for professional
and legal services to be rendered. 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. Also, as part of this
agreement, common stock was granted equal to 14.9% of the outstanding common shares at the time of issuance, and the stock was transferred
in three equal parts to affiliates holding the note; this transaction is detailed in the next paragraph. The note has a maturity date
of March 31, 2023. The Company has made a total repayment of $15,000 on this debt as of September
30, 2022. The note had a balance of $30,000 and 35,000 as of September 30, 2022 and March 31, 2022, respectively.
Per agreements dated on
August 5, 2021, the Company issued 6,000,000 shares of common stock, 2,000,000 each to three different parties, in exchange for consulting
services. These shares were issued with a value of $0.02 per share. These issuances were pertaining to the July 23, 2021 convertible note
specified in the previous paragraph.
On
October 1, 2021, the Company issued a convertible promissory note in the amount of $50,000, with an annual interest rate of 5% and a fixed
conversion price of $0.02 per share, in exchange for $50,000 received. The note was booked with a debt discount of the full principal
balance of $50,000. As of September 30, 2022, the full $50,000 of the debt discount has been amortized. This note had a maturity date
of September 30, 2022. The note had a balance of $50,000 as of
September 30, 2022 and March 31, 2022. This loan is currently in default.
On March 7, 2022, the Company
issued a 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.
The Company had
a convertible note payable of $167,014 and $164,774 outstanding as of September 30, 2022, and March 31, 2022, respectively.
| | |
Sep 30,
2022 | | |
Mar 31,
2022 | |
| Beginning Balance | |
$ | 164,774 | | |
$ | 182,849 | |
| Convertible notes issued for services | |
| — | | |
| 105,000 | |
| Convertible notes issued for cash | |
| — | | |
| 50,000 | |
| Discount on convertible notes | |
| — | | |
| (215,224 | ) |
| Repayments | |
| (59,650 | ) | |
| (10,000 | ) |
| Debt extinguished per settlement | |
| — | | |
| (125,350 | ) |
| Conversion of notes payable into common stock | |
| — | | |
| — | |
| Amortization of discounts | |
| 61,890 | | |
| 177,499 | |
| Convertible notes payable, net (Ending Balance) | |
$ | 167,014 | | |
$ | 164,774 | |
Below is the summary of the principal balance and debt discounts as
of September 30, 2022:
Convertible
Promissory
Note Holder |
|
Start Date |
|
End Date |
|
Initial Note Principal Balance |
|
Debt Discounts
as of Issuance |
Amortization |
Debt Discounts as of September 30, 2022 |
| Robert Hymers III |
|
3/5/2021 |
|
6/30/2022 |
|
$40,000 |
|
$40,000 |
($40,000) |
- |
| RaiseRight LLC |
|
7/23/2021 |
|
3/31/2023 |
|
$45,000 |
|
$45,000 |
($45,000) |
- |
| Robert Hymers |
|
3/7/2022 |
|
3/7/2023 |
|
$60,000 |
|
$30,000 |
($17,014) |
$12,986 |
| Westworld Financial Capital, LLC |
|
10/1/2021 |
|
9/30/2022 |
|
$50,000 |
|
$50,000 |
($50,000) |
- |
| Total |
|
|
|
|
|
|
|
|
|
$12,986 |
| Remaining note principal balance |
|
|
|
|
|
|
|
|
|
$180,000 |
| Total convertible promissory notes, net |
|
|
|
|
|
|
|
|
|
$167,014 |
Below is the summary of the principal balance and debt discounts as
of March 31, 2022:
Convertible
Promissory
Note Holder |
|
Start Date |
|
End Date |
|
Initial Note Principal Balance |
|
Debt Discounts
as of Issuance |
Amortization |
Debt Discounts as of March 31, 2022 |
| Robert Hymers III |
|
3/5/2021 |
|
6/30/2022 |
|
$40,000 |
|
$40,000 |
($40,000) |
- |
| RaiseRight LLC |
|
7/23/2021 |
|
3/31/2023 |
|
$45,000 |
|
$45,000 |
($23,288) |
$21,712 |
| Carebourn Capital, L.P. |
|
1/30/2018 |
|
1/30/2019 |
|
$230,000 |
|
$230,000 |
($230,000) |
- |
| Robert Hymers |
|
3/7/2022 |
|
3/7/2023 |
|
$60,000 |
|
$30,000 |
($1,973) |
$28,027 |
| Westworld Financial Capital, LLC |
|
10/1/2021 |
|
9/30/2022 |
|
$50,000 |
|
$50,000 |
($24,863) |
$25,137 |
| Total |
|
|
|
|
|
|
|
|
|
$74,876 |
| Remaining note principal balance |
|
|
|
|
|
|
|
|
|
$239,650 |
| Total convertible promissory notes, net |
|
|
|
|
|
|
|
|
|
$164,774 |
NOTE 9 – 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, 2022, there were 100 and 1,983 shares issued and outstanding for Series
A Preferred Stock and Series B Preferred Stock, respectively. As of March 31, 2022, there were 100 and 1,983 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.
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.
NOTE 10 – COMMON STOCK
The Company is authorized to issue 200,000,000
shares of Common Stock, with a par value of $0.001.
On September 21, 2021,
the Company issued 500,000 shares of common stock in exchange for $10,000 received.
On April 8, 2022, the Company
issued 500,000 shares of common stock, 250,000 each to two separate parties, of which it had previously committed in exchange for $10,000
it had received, $5,000 from each party, received on March 22, 2022.
On April 8, 2022, the Company
issued 2,500,000 shares of common stock, of which it had previously
committed in exchange for $40,000 it had received on March 23, 2022.
The Company had 52,193,062 and 49,193,062 shares
of common stock issued and outstanding as of September 30, 2022, and March 31, 2022, respectively. The Company had a loss per share of
$0.00 and $0.00 for the six months ended September 30, 2022, and September 30, 2021, respectively.
NOTE
11 – DERIVATIVE FINANCIAL INSTRUMENTS
The fair value of derivative
instruments is recorded and shown separately under liabilities. Changes in the fair value of derivatives liability are recorded in the
consolidated statement of operations under other (income) expense.
Our Company evaluates all
of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair
value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations.
For stock-based derivative financial instruments, the Company uses Black-Scholes Option Pricing model to value the derivative instruments
at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should
be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified
in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required
within 12 months of the balance sheet date.
| | |
March 31,
2022 | |
| Annual Dividend Yield | |
| — | |
| Expected Life (Years) | |
| 0.24 | |
| Risk-Free Interest Rate | |
| 2.42% | |
| Expected Volatility | |
| 362.25% | |
| | |
September 30,
2022 | |
| Annual Dividend Yield | |
| — | |
| Expected Life (Years) | |
| 0.50 | |
| Risk-Free Interest Rate | |
| 4.06% | |
| Expected Volatility | |
| 319.00% | |
Fair value of the derivative
is summarized as below:
| Beginning Balance, March 31, 2022 | |
$ | 95,576 | |
| Additions | |
| — | |
| Mark-to-Market | |
| (52,756 | ) |
| Cancellation of Derivative Liabilities Due to Cash Repayment | |
| (67,490 | ) |
| Reclassification to Additional Paid-In Capital Due to Conversion | |
| — | |
| Ending Balance, September 30, 2022 | |
$ | 42,820 | |
NOTE
12: COMMITMENTS AND CONTINGENCIES
As of September 30, 2022, and 2021, the Company
has a month-to-month verbal lease agreement with the landlord, in which the Company is obligated to pay $1,200 on a monthly basis.
In the normal course of business, we are subject
to potential claims and disputes related to our business, including disputes with third parties over financing arrangements, as well as
over service agreements with contractors. Some of these matters may be covered by our insurance and risk management programs or may result
in claims or adjustments with our carriers. Management does not believe that the outcome of any of the legal proceedings to which the
Company is a party will have a material adverse effect on its financial position or results of operations.
On January 30, 2018, the Company issued a $230,000
Convertible Promissory Note to a third party in exchange for cash. Subsequently there was a settlement agreement on June 3, 2021, in which
the Company recognized an outstanding convertible debt and related contingent liability pertaining to an outstanding settlement in the
amount of $54,650 and $95,350, respectively. This recognition came as part of a settlement agreement reached on June 3, 2021, in which
the prior $230,000 convertible note, as well as approximately $72,458 of related interest was settled into a new convertible debt of $54,650,
a contingent liability of $95,350, and two cash payments of $50,000 each to the note holder, which were made on July 20, 2020, and March
10, 2021. This transaction resulted in a gain on debt extinguishment of approximately $52,000. The convertible debt portion has no interest
accrual and has a variable conversion price per share of a 60% discount to the average of the previous five-day trading closing bid price.
On June 3, 2022, the Company received a loan from a related party in the amount of $125,000. There funds were wired to the Company to
help it reach settlement of the debts described earlier within this paragraph.
On June 3, 2022, the Company satisfied the convertible
debt and related contingent liability mentioned in the preceding paragraph in the amounts of $54,650 and $95,350, respectively, via a
settlement payment of $125,000, this resulted in a gain on the settlement of debt in the amount of $25,000.
NOTE 13 – SUBSEQUENT
EVENTS
On October 4, 2022, the
Company issued 150,000 shares of common stock in exchange for $3,000 later received on October 11, 2022.
On October 4, 2022, the
Company issued 250,000 shares of common stock in exchange for $4,963 later received on October 27, 2022.
On October 5, 2022, the
Company received a loan of $2,000 from
its CEO, Kent Rodriguez. This loan has no explicit interest rate or maturity date, and is due on demand.
On October 31, 2022, the
Company made a repayment of $2,500 toward its convertible note that was initially issued on July 23, 2021 in the amount of $45,000, bringing
its outstanding principal balance to $27,500 as of October 31, 2022.
On November 18, 2022, the
Company received a loan of $5,000 from its CEO, Kent Rodriguez.
This loan has not explicit interest rate or maturity date, and is due on demand.
SIGNATURES
Pursuant to the
requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
| /s/ Kent Rodriguez |
|
Date: December 23, 2022 |
| President/Director |
|
|
| Groove Botanicals Inc. |
|
|
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