10-Q: Groove Botanicals Faces Going Concern Doubt Amidst Strategic Pivot

Groove Botanicals, Inc. reported continued operating losses and substantial doubt regarding its ability to continue as a going concern in its Q2 2026 10-Q filing, despite plans for a new business model and potential capital raise.

Summary

• Groove Botanicals, Inc. (formerly Avalon Oil & Gas, Inc.) filed its quarterly report for the period ending September 30, 2026.
• The company continues to operate at a loss, with a net loss of $31,562 for the three months ended September 30, 2026, and $52,733 for the six months ended September 30, 2026.
• The accumulated deficit stands at $35,716,936 as of September 30, 2026, raising substantial doubt about the company's ability to continue as a going concern.
• The company is undergoing a strategic shift, intending to change its name to Nordmark Technologies, Inc., and focusing on identifying and evaluating early-stage intellectual property and applied technologies from Norwegian research ecosystems.
• No revenue has been generated, and none is expected in the near future.
• The company plans to raise up to $15,000,000 through the issuance of Series C Preferred Stock to fund operations and acquire technologies, though there are no investor commitments.
• Kent Rodriguez remains the sole officer and director, continuing to serve without salary but with paid insurance premiums.
• Significant related party payables exist, primarily to Kent Rodriguez, for accrued compensation and advances.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to the company's continued operating losses, substantial doubt about its going concern status, and lack of revenue, despite strategic shifts and planned financing.

Positives

• The company is actively pursuing a new business strategy focused on intellectual property and technology evaluation in Norway.
• A potential capital raise of up to $15,000,000 is planned via Series C Preferred Stock to fund future operations.
• Kent Rodriguez, the sole officer and director, has forgiven $12,000 in accrued compensation, treating it as a capital contribution.
• The company received a $12,500 advance from an unrelated third party.
• Legal and professional expenses decreased in the six-month period compared to the prior year, partly due to lower audit fees.
• Other income of $8,347 was recorded in the six-month period, including a settlement from a former accounting firm.

Negatives

• The company has incurred recurring net losses since inception and has raised limited capital.
• Substantial doubt exists regarding the company's ability to continue as a going concern.
• No revenue has been generated, and none is expected in the near future.
• The accumulated deficit is $35,716,936 as of September 30, 2026.
• The company has a working capital deficit of $1,618,216 as of September 30, 2026.
• There are no investor commitments for the planned Series C Preferred Stock financing.
• The company's disclosure controls and procedures were not effective due to material weaknesses, including inadequate segregation of duties and lack of a formal audit committee.

Risks

• The company's ability to continue as a going concern is in substantial doubt due to recurring net losses and limited capital.
• There is no assurance that suitable technologies will be identified, licensed, developed, or successfully commercialized.
• There is no assurance that the planned Series C Preferred Stock financing will be completed or that sufficient funds will be raised.
• If additional funds are raised by issuing equity, existing stockholders will experience dilution.
• The company lacks sufficient resources to accomplish its business objectives and expects to incur increasing operating expenses.
• The company has not generated any revenue and does not expect to in the near future.
• The company's disclosure controls and procedures are not effective due to material weaknesses.

Future Outlook

The company intends to identify and evaluate early-stage intellectual property and applied technologies from Norwegian research ecosystems for potential licensing, development, or commercialization in North America. A capital raise of up to $15,000,000 is planned through Series C Preferred Stock to fund operations and acquisitions. The company anticipates capital needs between $500,000 and $15,000,000.

Management Comments

• "We are an early-stage company. We intend to identify and evaluate early-stage intellectual property and applied technologies that may originate from, or be developed within, the research ecosystems of Norwegian universities, university hospitals, applied research institutions, and related technology-transfer or innovation organizations..."
• "We have selected an initial geographic focus on Norway as we believe a concentrated review of a defined research ecosystem may allow us to evaluate opportunities more efficiently."
• "We are negotiating a Framework Agreement with Ard Innovation AS (ARD). ARD is a technology transfer office (TTO) based in s, Norway..."
• "We are also negotiating a Framework Agreement with Inven2. Inven2 is headquartered in Oslo, Norway and is the largest technology transfer office in Norway."
• "We have not entered into any formal licensing agreements or formal arrangements with any of these institutions or any other Norwegian research organization except as described above and have not identified any specific technology or intellectual property rights under contract, and do not have proprietary or exclusive access to any technology pipeline."
• "Once the Series C Preferred Stock are designated and available for issuance the Company intends to complete a financing using the Series C Preferred Stock to raise up to $15,000,000 for operations, including acquiring technologies that management intends to identify."
• "As of the date of this filing, Mr. Kent Rodriguez is the Companys sole officer and director. The Company intends to appoint other directors and officers to the Board with experience in acquisitions and financing."
• "We are in need of additional cash resources to maintain our operations."
• "We do not currently have sufficient resources to accomplish any of these conditions necessary for us to generate revenue and expect to incur increasing operating expenses."
• "We will require substantial additional funds for operations and to fund our business objectives."

Industry Context

StockSavvy.ai notes that Groove Botanicals is attempting a significant pivot from its historical operations to a technology scouting and licensing model, focusing on the Norwegian innovation ecosystem. This strategy is common for early-stage companies seeking to leverage external R&D without the high costs of internal development. However, the lack of any existing agreements or identified IP, coupled with the substantial doubt about going concern, presents a high-risk profile.

Comparison to Industry Standards

• The company's strategy of focusing on technology transfer from universities and research institutions is a recognized model, employed by various venture capital firms and corporate venturing arms. However, successful execution typically requires established relationships with these institutions and a clear pipeline of promising technologies, which Groove Botanicals currently lacks.
• Companies in the early-stage technology development and licensing sector often rely on significant seed and Series A funding rounds. Groove Botanicals' planned $15 million raise via preferred stock, without existing investor commitments, faces a challenging market, especially given its current financial distress and lack of operational history in this new focus area.
• The company's financial performance, characterized by consistent net losses and a growing accumulated deficit, is typical of early-stage ventures. However, the severity of the going concern doubt and the absence of any revenue place it at the more precarious end of the spectrum compared to similarly positioned companies with more tangible progress or funding secured.

Corporate Governance

Legal Proceedings

• There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.

Related Party Transactions

• Related party payables of $796,155 as of September 30, 2026, consist of accrued and unpaid compensation ($248,000) and advances ($548,155) from Kent Rodriguez.
• Kent Rodriguez forgave $12,000 of accrued compensation for April 1, 2026, to June 30, 2026, which was treated as a capital contribution.
• The company continues to pay Kent Rodriguez's medical and dental insurance premiums.
• Dividends accrued on Series A Preferred Stock held by Kent Rodriguez totaled $140,000 as of September 30, 2026.
• Dividends accrued on Series B Preferred Stock were reclassified from 'dividends payable, related party' to 'dividends payable' on July 1, 2026, after Kent Rodriguez assigned his interest in Avalon 2015-1, LP.

Stakeholder Impact

• Shareholders: Potential dilution from future equity financing. Continued uncertainty regarding the company's ability to generate revenue and achieve profitability.
• Creditors: Significant related party payables and a working capital deficit raise concerns about the company's ability to meet its obligations.
• Management (Kent Rodriguez): Continues to serve without salary but has significant related party payables and holds Series A Preferred Stock with accrued dividends.
• Suppliers: The company's precarious financial situation may impact its ability to pay suppliers on time.

Next Steps

• Identify and evaluate early-stage intellectual property and applied technologies from Norwegian research ecosystems.
• Negotiate and finalize Framework Agreements with Ard Innovation AS (ARD) and Inven2.
• Complete a financing using Series C Preferred Stock to raise up to $15,000,000.
• Appoint additional directors and officers with experience in acquisitions and financing.
• File definitive Information Statement with the SEC on or about December 9, 2026.
• Effect corporate actions (Series A Amendment and Series C Authorization) on or about December 30, 2026, upon filing applicable Nevada documents.

Key Dates

Recommendation

The company exhibits severe financial distress, with substantial doubt about its going concern status, a lack of revenue, and a growing accumulated deficit. While a strategic pivot is underway, there are no concrete agreements or secured funding, making the future highly uncertain and the risk of complete loss for shareholders significant.

Keywords

intellectual property, technology commercialization, Norwegian research, corporate reorganization, preferred stock, capital raise, going concern, operating loss