10-Q: Groove Botanicals Reports Net Loss for Q3 2025, Cites Going Concern Uncertainty

Groove Botanicals, Inc. reports a net loss for the quarter ended December 31, 2024, and acknowledges substantial doubt about its ability to continue as a going concern.

Summary

• Groove Botanicals, Inc. filed its quarterly report on Form 10-Q for the period ended December 31, 2024.
• The company reported a net loss of $33,031 for the three months ended December 31, 2024, compared to a net gain of $13,796 for the same period in 2023.
• For the nine months ended December 31, 2024, the company reported a net loss of $99,404, compared to a net loss of $142,476 for the same period in 2023.
• The company has an accumulated deficit of $35,110,533 as of December 31, 2024.
• The company's auditors have expressed substantial doubt about its ability to continue as a going concern.
• The company is focusing on a new business model involving early-stage EV battery technologies and seeking equity or debt financing to address its capital needs, estimated between $500,000 and $5,000,000.
• The company's disclosure controls and procedures were deemed ineffective due to inadequate segregation of duties and the lack of a formal audit committee.
• Kent Rodriguez, the CEO and CFO, extended his employment contract for two years to March 31, 2026, on the same terms and conditions.
• The company plans to assemble a portfolio of early-stage EV Battery Technologies developed from Universities in Norway, Sweden and Finland, and seek grants from the State of Minnesota Department of Economic Development to find and identify corporate partners to commercialize these technologies and ultimately produce revenues for the Company.
• As of February 7, 2025, there were 59,643,062 shares of the registrant's common stock outstanding.

Sentiment

Score: 3

Explanation: The document presents a concerning financial situation with net losses, an accumulated deficit, and a going concern warning. While the company is pursuing a new business model, the risks and uncertainties outweigh the potential positives.

Positives

• Operating expenses decreased for both the three and nine months ended December 31, 2024, compared to the same periods in 2023.
• The company settled convertible notes payable, resulting in a gain on settlement of debt in the prior fiscal year.
• The company is actively pursuing a new business model in the EV battery technology sector.
• The net loss for the nine months ended December 31, 2024 was lower than the net loss for the nine months ended December 31, 2023 ($99,404 vs $142,476).

Negatives

• The company reported a net loss for the quarter and nine-month period ended December 31, 2024.
• The company has a significant accumulated deficit of $35,110,533 as of December 31, 2024.
• Auditors have expressed substantial doubt about the company's ability to continue as a going concern.
• The company's disclosure controls and procedures were deemed ineffective.
• The company has not generated any revenue since its inception and does not expect to generate any revenue from the sale of products in the near future.

Risks

• The company's ability to continue as a going concern is uncertain.
• The company's new business model is dependent on acquiring and commercializing early-stage EV battery technologies, which may be costly and unsuccessful.
• The company's disclosure controls and procedures are ineffective, increasing the risk of financial misstatements.
• The company relies heavily on its sole officer and director, Kent Rodriguez.
• The company needs additional cash resources to maintain its operations.

Future Outlook

The company plans to assemble a portfolio of early-stage EV Battery Technologies developed from Universities in Norway, Sweden and Finland, and seek grants from the State of Minnesota Department of Economic Development to find and identify corporate partners to commercialize these technologies and ultimately produce revenues for the Company. The Company anticipates capital needs to be between $500,000 and $5,000,000.

Management Comments

• Management believes that the technologies available in the specialized energy industry present a stable business model with high growth potential and we are actively working towards an impactful acquisition in this space.
• The Company relies primarily on its current sole officer and director, Kent Rodriguez to manage its day-to-day business and has outsourced professional services to third parties in an effort to maintain lower operational costs.

Industry Context

The company is attempting to pivot to the EV battery technology sector, which is currently experiencing significant growth and investment. However, the company faces competition from established players and other startups in this space.

Comparison to Industry Standards

• It's difficult to compare Groove Botanicals' performance to industry standards due to its early stage and lack of revenue.
• Many early-stage companies in the EV battery technology sector rely on venture capital funding and strategic partnerships to develop and commercialize their technologies.
• Companies like QuantumScape, Solid Power, and StoreDot are examples of companies in the EV battery space that have attracted significant investment and attention.
• Groove Botanicals' ability to secure funding and partnerships will be crucial to its success in this competitive landscape.

Management Changes

Related Party Transactions

• The company had related party payables of $577,949 as of December 31, 2024.
• On an annual basis the Company accrues $48,000 of wages payable to its CEO, Kent Rodriguez, under the terms of a four-year employment agreement entered into April 1, 2020, which designates monthly payments due Mr. Rodriguez in the amount of $4,000.
• During each of the threeand nine-month periods ended December 31, 2024, and 2023, the Company accrued $ 10,000 and $ 30,000 , respectively in preferred dividends from the Series A preferred shares to Mr. Kent Rodriguez, the holder of the Series A Preferred shares.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial condition and going concern uncertainty.
• Employees' jobs are at risk if the company is unable to secure financing and continue operations.
• Creditors face the risk of non-payment if the company is unable to meet its obligations.

Next Steps

• The company needs to secure additional financing to continue its operations.
• The company needs to successfully acquire and commercialize early-stage EV battery technologies.
• The company needs to improve its disclosure controls and procedures.
• The company needs to establish strategic partnerships to support its growth.

Key Dates