GRVE Groove Botanicals Inc (PK)

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10/A

(Amendment No. 1) 

 

 

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 plan to assemble a portfolio of early-stage EV Battery Technologies developed from Universities in Norway, Sweden and Finland, and seek grants from the State of Minnesota Department of Economic Development to find and identify corporate partners to commercialize these technologies and ultimately produce revenues for the Company. The Company does not currently own any patents or technologies related to the EV battery industry, and the process to acquire patents and technologies can be costly, and as such, the Company is not guaranteed to acquire any such patents.

 

Management believes that the technologies available 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 plan to assemble a portfolio of early-stage EV Battery Technologies developed from Universities in Norway, Sweden and Finland, and seek grants from the State of Minnesota Department of Economic Development to find and identify corporate partners to commercialize these technologies and ultimately produce revenues for the Company. The Company does not currently own any patents or technologies related to the EV battery industry, and the process to acquire patents and technologies can be costly, and as such, the Company is not guaranteed to acquire any such patents.

 

As the Company continues its business development and asset acquisitions, the Company anticipates our capital needs to be between $500,000 and $5,000,000 (varying based on growth strategies).

 

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 three months ended June 30, 2023 and year ended March 31, 2023, respectively, we had a net loss of $77,145 and $110,656 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. Varying based on growth strategies, it is estimated between $500,000 and $5,000,000 will have to be raised. 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. In addition, on January 12, 2018, the Company and the Series A Holder agreed to forgive all accrued interest to date on the Series A, and to pause any accruals until April 1, 2023. 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 cash proceeds. We are in need of additional cash resources to maintain our operations. 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. Our auditors express substantial doubt about our ability to continue as a going concern.

 

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, 2023, 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, 2023, 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. The Company does not currently own any patents or technologies related to the EV battery industry, and the process to acquire patents and technologies can be costly, and the Company is not guaranteed to acquire any such patents.

 

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. The Company is prohibited from providing dividends to its common stock holders until all accrued dividends on our outstanding Series A Convertible Preferred Stock and Series B Preferred Stock are paid. There were no outstanding dividends on our Series A and Series B Preferred Stock as of March 31, 2023 and 2022.

 

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. Upon conversion of the aforementioned preferred shares, the common shares outstanding would be increased by 63,327,114 to 124,170,812 from the Conversion of the Series A Preferred Stock

 

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 three months ended June 30, 2023 and 2022

 

Selling, General, and Administrative Expenses

 

Selling, general and administrative expenses for the three months ended June 30, 2023 were $16,759 a decrease of $1,909, compared to selling, general and administrative expenses of $18,668 during the three months ended June 30, 2022. Selling, general and administrative expenses for the three months ended June 30, 2023, consisted primarily of payroll and related costs of $12,000, and other selling, general, and administrative expenses of $4,759. Selling, general and administrative expenses for the three months ended June 30, 2022 consisted primarily of payroll and related costs of $12,000 and administrative expenses of $6,668. The decrease was primarily due to a decrease in travel and other selling, general, and administrative expenses in the three months ended June 30, 2023, when compared with the three months ended June 30, 2022.

 

The Company reported operating losses of $74,645 and $40,932 in the three months ended June 30, 2023 and 2022 respectively.

 

Consulting Expense

 

Consulting expense for the three months ended June 30, 2023 and 2022 totaled $30,000 and $0 respectively. Consulting expenses in the current three months ended June 30, 2023 related to stock based compensation to a consultant by way of the issuance of 1,000,000 shares of common stock valued at $30,000.

 

Other Income/(Expense)

 

Amortization of Debt Discount

 

Amortization of debt discounts for the comparative three-month periods ended June 30, 2023, and 2022 totaled $0 and $40,781, respectively. The Company fully amortized remaining debt discounts during the fiscal year ended March 31, 2023.

 

Gain on Settlement of Debt

 

Gain on settlement of debt for the comparative three month periods ended June 30, 2023 and 2022 were $0 and $25,000, respectively. The gain on settlement of debt for the three month period ended June 30, 2022 was due to settlements of convertible debts in the period.

 

Change in Derivative Liability

 

The Company recorded a gain of $84,529 with respect to the change in derivative liabilities for the three months ended June 30, 2022, with no comparative results in the three months ended June 30, 2022.

 

Interest Income (Expense)

 

Interest expense for the comparative three months ended June 30, 2023 and 2022 totaled $2,500 and $4,071, respectively. The decrease to interest expense was directly related to a reduction to the principal balances of certain convertible debt period over period.

 

The Company recorded total other expense of $2,500 in the three months ended June 30, 2023 compared to total other net income of $64,898 in the three months ended June 30, 2022.

 

Net Loss

 

For the reasons stated above, our net loss for the three months ended June 30, 2023 totaled $77,145, compared to net income of $23,745 during the three months ended June 30, 2022.

 

For the year ended March 31, 2023 compared to the year ended March 31, 2022

 

Selling, General, and Administrative Expenses

 

Selling, general and administrative expenses for the year ended March 31, 2023, were $75,839 a decrease of $36,597, compared to selling, general and administrative expenses of $112,436 during the year ended March 31, 2022. Selling, general and administrative expenses for the fiscal year ended March 31, 2022, consisted primarily of; director compensation of $20,000, payroll and related costs of $48,000, and other selling, general, and administrative expenses of $33,965. Selling, general and administrative expenses for the fiscal year ended March 31, 2023, consisted primarily of; payroll and related costs of $48,000, advertising and promotion expenses of $5,393, and other selling, general, and administrative expenses of $9,224. The decrease was primarily due to a decrease in director compensation, advertising and promotion expenses, as well as other selling, general, and administrative expenses for the ended March 31, 2023, when compared with the year ended March 31, 2022.

 

Consulting Expense

 

Consulting expense for the year ended March 31, 2023, was $10,000, all of which was stock based compensation. 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.

 

Amortization of Debt Discount

 

Amortization of debt discounts for the fiscal year ended March 31, 2023, was $74,876 a decrease of $65,123 compared to amortization of debt discounts of $139,999 for the fiscal year ended March 31, 2022. This decrease was primarily due to the Company holding more convertible debt with outstanding discounts during the year ended March 31, 2022.

 

Gain on Settlement of Debt

 

Gain on settlement of debt for the fiscal year ended March 31, 2023, was $49,571. Gain on settlement of debt for the fiscal year ended March 31, 2022, was $52,458. The gains during both fiscal years were due to settlements of convertible debts, as well as a related contingent liability to one of those convertible debts

 

Settlement Expense

 

Settlement expense for the fiscal year ended March 31, 2023, was $10,000 and is related to a pending settlement of the Company’s two remaining convertible notes. There was no settlement expense during the fiscal year ended March 31, 2022.

 

Other Income

 

Other income for the year ended March 31, 2023, was $1,180, a decrease of $7,108 compared to other income of $8,288 for the year ended March 31, 2022.  Revenue decreased as a result of an decrease in the market price for oil and natural gas.

 

Interest Income (Expense)

 

Interest expense for the fiscal year ended March 31, 2023, was $14,690 a decrease of $41,842 compared to interest expense of 56,532 for the fiscal year ended March 31, 2022. This decrease was primarily due to more convertible debt being outstanding during the year ended March 31, 2022.

 

Net Loss

 

For the reasons stated above, our net loss for the year ended March 31, 2023, was $110,656, compared to a net loss of $290,458 during the year ended March 31, 2022.

 

Liquidity and Capital Resources

 

Going Concern

 

We are in need of additional cash resources to maintain our operations. As of June 30, 2023 and March 31, 2023, the Company had a working capital deficit of $557,048 and $455,285, respectively, and has incurred losses since inception of $34,548,410. 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. Our auditors express substantial doubt about our ability to continue as a going concern. 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 $2,366 on June 30, 2023, compared to $4,566 on March 31, 2023, and $48,534 on March 31, 2022. We met our liquidity needs through the issuance of our common stock and notes payable for cash.

 

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. The Company’s auditor has expressed that the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern.

 

Operating activities

 

Net cash used by operating activities for the three months ended June 30, 2023 was $30,365 comparedto $28,812 used in the three months ended June 30, 2022.

 

Net cash used by operating activities for the year ended March 31, 2023 was $106,621, compared to $72,905 used in the year ended March 31, 2022.

 

Financing activities

 

Our financing activities for the three months ended June 30, 2023, provided cash of $28,165 as compared to cash used in financing activities of $9,000 for the three months ended June 30, 2022. We received $29,500 from a related party, offset by repayments to related parties of $1,335 in the three months ended June 30, 2023. In the comparative three months ended June 30, 2022 we received cash from related party of $125,000, offset by repayments to related party of $4,000, and made payments to reduce convertible debt of $59,650 and payments to reduce contingent liabilities of $70,350. We plan to raise additional capital during the current fiscal year.  

 

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. 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. The source of all the previously referenced anti-dilutive shares is convertible preferred shares, specifically Series A preferred shares which can be converted into common shares which after their conversion, would be equal to 51% of the issued and outstanding common stock following the moment of conversion. Furthermore, 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. Potential common shares consist of the convertible promissory notes payable as of June 30, 2023, and March 31, 2023. As of March 31, 2023, and March 31, 2022, there were potential shares issuable upon conversion of convertible notes payable and conversion of warrants. The tables below present the anti-dilutive shares as of March 31, 2023, and March 31, 2022, as well as, the computation of basic and diluted earnings per share for the years and three months ended March 31, 2023, and 2022.

 

Description of Anti-Dilutive Instrument	Anti-Dilutive Common Shares as of March 31, 2023	Anti-Dilutive Common Shares as of March 31, 2022
Convertible Preferred Series A Shares	55,598,373	55,005,684

 

		For the Year ended March 31, 2023				For the Year ended March 31, 2022
Numerator:
Net Loss		$	(110,656	)		$	(290,458	)
Denominator:
Weighted average common shares Outstanding - basic			53,511,829				42,698,130
Dilutive common stock equivalents			—				—
Weighted average common shares Outstanding - diluted			53,514,123				52,848,598

 

		For the Three Months ended March 31, 2023				For the Three Months ended March 31, 2022
Numerator:
Net Income (Loss)		$	8,256			$	(108,707	)
Denominator:
Weighted average common shares Outstanding - basic			56,666,951				49,193,062
Dilutive common stock equivalents			—				—
Weighted average common shares Outstanding - diluted			56,669,244				59,343,530

 

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.

 

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.

In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20 that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. Two methods of transition were permitted upon adoption: full retrospective and modified retrospective. The Company has yet to adopt ASC 2020-06, however, the Company’s auditors have recommended that the Company to adopt ASC 2020-06 as of April 1, 2023. The accounting impact will be a reclassification from Additional Paid-In Capital to Retained Earnings. The Company plans to adopt ASC 2020-06 as of April 1, 2023.

 

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 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.

 

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.

 

In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20 that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. Two methods of transition were permitted upon adoption: full retrospective and modified retrospective. The Company has yet to adopt ASC 2020-06, however, the Company’s auditors have recommended that the Company adopt ASC 2020-06 as of April 1, 2023. The accounting impact will be a reclassification from Additional Paid-In Capital to Retained Earnings. The Company plans to adopt ASC 2020-06 as of April 1, 2023.

GOING CONCERN

 

The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and thesatisfaction 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 $77,145 and net income of $23,745 for the three months ended June 30, 2023, and June 30, 2022, respectively. The Company's accumulated deficit was $34,548,410 and $34,416,648 as of June 30, 2023, and March 31, 2023, respectively. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustment relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company is taking certain steps to provide the necessary capital to continue its operations. These steps include but are not limited to: 1) focus on our new business model and 2) raising equity or debt financing. Our auditors express substantial doubt about our ability to continue as a going concern.

 

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 of shares owned	Nature of beneficial ownership	Percent of class	Voting Power
Series A Preferred	Kent Rodriguez Minneapolis, MN	100	Director/President	100%	51%
Common	Kent Rodriguez Minneapolis, MN	4,367	Director/President	.01%	51%
Common	Douglas Barton Minneapolis, MN	760,667	Independent Director	1.46%	0.65%
Common	Recon Technology LTD Beijing, China	2,800,000	Owner of more than 5%	5.36%	2.38%

 

As of March 31, 2023 and March 31, 2022, the related party payables of $301,100 and $94,528, respectively, were all due to the Company’s CEO Kent Rodriguez.

 

Item 5. Directors and Executive Officers.

 

Kent Rodriguez Director, President, Treasurer, Secretary, Age 66, director until March 31, 2025

 

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. Mr. Rodriguez is the related party who has provided funds to the Company, which are owed back to him and can be found within the Balance Sheets and footnotes referenced throughout this filing as related party payables. Mr. Rodriguez has been elected to serve as director of the Company until March 31, 2025.

 

Douglas Barton Independent Director, Age 78, director until March 31, 2025

 

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. Mr. Barton has been elected to serve as director of the Company until March 31, 2025.

 

The following table illustrates compensation accrued to director during the most recently ended fiscal year:

 

Name	Fees earned or paid in cash ($) (Wages Earned and Accrued)	Stock awards ($)	Option awards ($)	Non-equity incentive compensation plan ($)	Nonqualified deferred compensation earnings ($)	All other compensation ($)	Total ($)
Kent Rodriguez	$48,000	-	-	-	-	-	$48,000
Douglas Barton	-	$10,000	-	-	-	-	$10,000

 

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.

 

The following table illustrates compensation accrued to the executive team during the most recently ended fiscal year:

 

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock awards ($)	Option awards ($)	Nonequity incentive plan compensation ($)	Nonqualified deferred compensation earnings ($)	All other compensation ($)	Total ($)
Kent Rodriguez, CEO*	Fiscal Year ended March 31, 2023	$48,000	-	-	-	-	-	-	$48,000

 

 

*Total compensation accrued for Kent Rodriguez during each fiscal year is $48,000 total, which includes his compensation as CEO as well as Director.

 

Item 7. Certain Relationships and Related Transactions, and Director Independence.

 

The Company had a related party payables of $342,830 and $301,100 outstanding as of June 30, 2023, and March 31, 2023, respectively. These amounts consist of funds contributed by the management for the purpose 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 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 certain convertible debtsand are included in outstanding balances payable to related party above.

 

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 2023	.23	.043
Quarter ended March 2023	.090	.041
Quarter ended Dec 2022	.060	.039
Quarter ended Sep 2022	.065	.036
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, 2023 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 150,000 shares of common stock in exchange for $3,000 received.

On October 4, 2022, the Company issued 250,000 shares of common stock in exchange for $4,963 received.

On December 1, 2022, the Company issued 500,000 shares of common stock in exchange for consulting services. These shares were issued with an approximate value of $0.0598 per share, based on the fair market value as of their date of issuance.

On December 1, 2022, the Company issued 1,500,000 shares of common stock to three different parties in the amounts of 1,000,000, 250,000, and 250,000, in exchange for $29,970 received.

On December 1, 2022, the Company issued 250,000 shares of common stock in exchange for $4,970 received.

On January 31, 2023, the Company and Westworld Financial Capital, LLC, agreed to convert the $50,000 Convertible Promissory Note dated October 21, 2021, and all accrued interest to 2,750,000 shares of the Company’s Common Stock.

 

On January 31, 2023, the Company agreed to issue Benjamin Steele 50,000 shares of its Common Stock to maintain the Company’s website and social media presence.

 

On April 15, 2023, the Company issued 1,000,000 shares of common stock in exchange for consulting services. These shares were valued at $0.03 per shares per their corresponding consulting agreement.

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 58,643,062 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. Currently the value of the liquidation preference is $500,000 the amount of debt that the related party converted into the preferred stock. If this Preferred Stock were to be redeemed by the holder, it would result in an aggregate of the $500,000 liquidation preference, on a per share basis, this would equal $5,000 per share. The Company and Series A Preferred Holder have agreed to forgive all accrued interest and arrearages in preferred share dividends of Series A Preferred Stock through March 31, 2023. The Series A Convertible Preferred Stock provides for voting rights on an “as converted to common stock” basis. 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. In addition, on January 12, 2018, the Company and the Series A Holder agreed to forgive all accrued interest to date on the Series A, and to pause any accruals until April 1, 2023. The Holder of the Series A Preferred Stock has agreed to pause any interest accruals until April 1, 2024.

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. All accrued interest on the Series B has been settled through March 31, 2023, and none currently remains outstanding. Furthermore, no interest will begin to accrue on the Series B Preferred Stock until April 1, 2023. 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 the Series B Preferred Stock have agreed to pause any interest accruals until April 1, 2024.

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 the Company 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.

 

The financial statements as of March 31, 2023 and 2022 included herein have been audited by BF Borgers CPA PC, an independent registered public accounting firm, as stated in their report appearing herein (which report includes an explanatory paragraph as to the Company’s ability to continue as a going concern). Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

 

On March 9, 2023, the Company’s Board of Directors dismissed TAAD LLP (“TAAD”) as the Company’s independent registered public accounting firm. The decision to change accountants was approved by the Board effective February 10, 2023. TAAD’s dismissal was not the result of any disagreement between the Company and TAAD on matters of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

 

The audit reports of TAAD on the Company’s consolidated financial statements for the fiscal years ended March 31, 2020, 2021 and 2022 did not contain any adverse opinions, disclaimers of opinion, and were not qualified or modified regarding uncertainty, audit scope, or accounting principles. Throughout the fiscal years ending March 31, 2020-2022, and up to the date of dismissal, the Company and TAAD maintained a professional relationship with no disagreements on matters of accounting principles, financial statement disclosure, or audit procedures. There were no instances or circumstances that would have necessitated TAAD to reference any disagreements in their audit reports for those years. Additionally, no "reportable events" as defined in Item 304(a)(1)(v) of Regulation S-K occurred.

 

Concurrently on March 9, 2023, the Board of Directors approved the appointment of BF Borgers CPA PC (“BFB”) as the Company’s new independent registered public accounting firm, effective immediately, to perform independent audit services for the fiscal years ending March 31, 2023, and 2022. During the fiscal years ended March 31, 2021 and 2020 and through March 9, 2023, neither the Company, nor anyone on its behalf, consulted BFB regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the consolidated financial statements of the Company, and no written report or oral advice was provided to the Company by BFB that was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

 

The Company provided TAAD with a copy of the disclosure set forth above (as previously filed by the Company in a Current Report on Form 8-K with the SEC on August 28, 2023) and requested that TAAD furnish a letter addressed to the SEC stating whether or not it agrees with the above statements, however, such letter has not been provided.

 

Item 15. Financial Statements and Exhibits.

 

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of Groove Botanicals, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Groove Botanicals, Inc. as of March 31, 2023 and 2022, 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 “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2023 and 2022, 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.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 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 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 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 financial statements. We believe that our audit provides a reasonable basis for our opinion.

/S/ BF Borgers CPA PC (PCAOB ID 5041)

We have served as the Company’s auditor since 2023

Lakewood, CO

June 15, 2023

 

Groove Botanicals, Inc.
Consolidated Balance Sheets

 

		March 31, 2023				March 31, 2022
ASSETS
Current Assets:
Cash		$	4,566			$	48,534
Accounts Receivable			25				251
Prepaid Expenses			390				—
Total Current Assets			4,982				48,785
TOTAL ASSETS		$	4,982			$	48,785
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities		$	44,489			$	45,592
Interest Payable			14,678				7,900
Related Party Payable			301,000				94,528
Convertible Notes Payable			100,000				164,774
Derivative Liability			—				95,576
Contingent Liability			—				95,350
Total Current Liabilities			460,267				503,720
Total Liabilities			460,267				503,720
Stockholders’ Equity
Preferred Stock, Series A, $0.10 par value, 100 shares authorized; 100 shares issued and outstanding as of March 31, 2023, and March 31, 2022, 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, 2023, and March 31, 2022, respectively			198				198
Common Stock, $0.001 par value, 200,000,000 shares authorized; 57,643,062 and 49,193,062 shares issued and outstanding as of March 31, 2023 and March 31, 2022, respectively			57,643				49,193
Common Stock to be Issued			—				3,000
Additional paid-in capital			33,903,511				33,798,656
Accumulated deficit			(34,416,648	)			(34,305,992	)
Total stockholder’s equity			(455,285	)			(454,935	)
TOTAL LIABILITIES AND STOCKHOLDER’S DEFICIT		$	4,982			$	48,785

 

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,
		2023				2022
Expenses:
Selling, General and Administrative Expenses		$	75,839			$	112,436
Rent			17,796				14,400
Legal and Professional Expenses			53,781				96,607
Consulting Expense			10,000				193,000
Total operating expenses			157,416				416,443
Operating loss			(157,416	)			(416,443	)
Other Income (Expense)
Amortization of Debt Discount			(74,876	)			(139,999	)
Change in Derivative Liability			95,575				261,770
Gain on Settlement of Debt			49,571				52,458
Settlement Expense			(10,000	)			—
Interest Income (Expense)			(14,690	)			(56,532	)
Miscellaneous Other Income (Expense)			1,180				8,288
Total Other Income (Expense)			46,760				125,985
Net Loss		$	(110,656	)		$	(290,458	)
Basic loss per common share		$	(0.00	)		$	(0.01	)
Diluted loss per common share		$	(0.00	)		$	(0.01	)
Weighted average common shares outstanding - Basic			53,511,829				42,698,130
Weighted average common shares outstanding - Diluted			53,514,123				52,848,598

 

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, 2023, and 2022

 

	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, 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	)
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 for Cash Received in Prior Period	—			—		—			—		3,000,000			3,000			(3,000,000	)		(3,000	)		—			—			—
Issuance of Stock for Cash	—			—		—			—		2,150,000			2,150			—			—			40,813			—			42,963
Issuance of Stock for Consulting	—			—		—			—		500,000			500			—			—			9,500			—			10,000
Issuance of Stock for Conversion of Debt	—			—		—			—		2,750,000			2,750			—			—			50,592			—			53,342
Issuance of Stock for Website and Social Media Services	—			—		—			—		50,000			50			—			—			3,950			—			4,000
Net Loss	—			—		—			—		—			—			—			—			—			(110,656	)		(110,656	)
Balance, March 31, 2023	100		$	10		1,983		$	198		57,643,062		$	57,643			—		$	—		$	33,903,511		$	(34,416,648	)	$	(455,285	)

 

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,
		2023				2022
Cash Flow From Operating Activities
Net Loss		$	(110,656	)		$	(290,458	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock Issued for Director Compensation			—				20,000
Stock Issued for Outside Services			14,000				133,000
Stock Issued for Settlement			—				20,000
Issuance of Stock for Conversion of Debt			3,342				—
Convertible Debt Issued for Services			—				105,000
Beneficial Conversion Feature			—				80,000
Amortization of Debt Discount			74,876				139,999
Change in Derivative Liability			(95,575	)			(261,770	)
Settlement of Derivative Liability			(1	)			—
Effect of Debt Discounts on Derivative Liability			—				(34,525	)
Gain on Settlement of Debt			(49,571	)			(52,458	)
Accrued Interest			6,778				11,056
Accrued Payroll			48,000				48,000
Wire Fees Charged on Funds Received for Stock Purchases			60				—
Accounts Payable and Accrued Liabilities – Related Party			3,392				—
Changes in working capital
(Increase) Decrease in Accounts Receivable			226				(251	)
Increase in Prepaid Expenses			(390	)			—
Increase (Decrease) in Accounts Payable and Accrued Liabilities			(1,102	)			9,502
Net Cash Used in Operating Activities			(106,621	)			(72,905	)
Cash Flow From Investing Activities
Net Cash From Investing Activities			—				—
Cash Flow From Financing Activities
Funds received from Related Party			168,000				742
Funds distributed to Related Party			(12,821	)			(32,264	)
Funds received for Issuance of Convertible Debt			—				50,000
Repayment of Outstanding Convertible Debt			(89,650	)			(10,000	)
Repayment of Outstanding Contingent Liability			(45,779	)			—
Funds received for Issuance of Common Stock			42,903				55,050
Funds received for Common Stock to be Issued			—				50,000
Net Cash From Financing Activities			62,653				113,528
Net Change in Cash			(43,968	)			40,623
Cash at Beginning of Period			48,534				7,911
Cash at End of Period		$	4,566			$	48,534
Net cash paid for:
Interest		$	—			$	—
Income Taxes		$	—			$	—

 

The accompanying notes are an integral part of these consolidated financial statements.

GROOVE BOTANICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MARCH 31, 2023 AND 2022

 

NOTE 1 - ORGANIZATION AND OPERATIONS

Current Operations

 

We were incorporated in the State of Colorado in April 1991. 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 2022 and 2023 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.

 

We plan to assemble a portfolio of early-stage EV Battery Technologies developed from Universities in Norway, Sweden and Finland, and seek grants from the State of Minnesota Department of Economic Development to find and identify corporate partners to commercialize these technologies and ultimately produce revenues for the Company. The Company does not currently own any patents or technologies related to the EV battery industry, and the process to acquire patents and technologies can be costly, and as such, the Company is not guaranteed to acquire any such patents.

 

Management believes that the technologies available 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.

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. Accordingly, they include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary in order to make the ^ financial statements not misleading. The consolidated balance sheet as of March 31, 2023, was derived from the Company’s consolidated financial statements at that date.

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 7 and 8. 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. The source of all the previously referenced anti-dilutive shares is convertible preferred shares, specifically Series A preferred shares which can be converted into common shares which after their conversion, would be equal to 51% of the issued and outstanding common stock following the moment of conversion. Furthermore, 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. In addition, on January 12, 2018, the Company and the Series A Holder agreed to forgive all accrued interest to date on the Series A, and to pause any accruals until April 1, 2023. Thus, no preferred dividends were accrued or paid during the years ended March 31, 2022, and 2021, then then preferred dividends had no effect on income available to common stockholders in computing basic earnings per share. Potential common shares consist of the convertible promissory notes payable as of March 31, 2023, and March 31, 2022. As of March 31, 2023, and March 31, 2022, there were potential shares issuable upon conversion of convertible notes payable and conversion of warrants. The tables below present the anti-dilutive shares as of March 31, 2023, and March 31, 2022, as well as, the computation of basic and diluted earnings per share for the years and three months ended March 31, 2023, and 2022.

 

Description of Anti-Dilutive Instrument	Anti-Dilutive Common Shares as of March 31, 2023	Anti-Dilutive Common Shares as of March 31, 2022
Convertible Preferred Series A Shares	55,598,373	55,005,684

 

		For the Year ended March 31, 2023				For the Year ended March 31, 2022
Numerator:
Net Loss		$	(110,656	)		$	(290,458	)
Denominator:
Weighted average common shares Outstanding - basic			53,511,829				42,698,130
Dilutive common stock equivalents			—				—
Weighted average common shares Outstanding - diluted			53,514,123				52,848,598

		For the Three Months ended March 31, 2023				For the Three Months ended March 31, 2022
Numerator:
Net Loss		$	8,256			$	(108,707	)
Denominator:
Weighted average common shares Outstanding - basic			56,666,951				49,193,062
Dilutive common stock equivalents			—				—
Weighted average common shares Outstanding - diluted			56,669,244				59,343,530

 

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.

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 measured 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.

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.

In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20 that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. Two methods of transition were permitted upon adoption: full retrospective and modified retrospective. The Company has yet to adopt ASC 2020-06. The accounting impact will be a reclassification from Additional Paid-In Capital to Retained Earnings. The Company plans to adopt ASC 2020-06 as of April 1, 2023.

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 $110,656 and $290,458 for the years ended March 31, 2023, and March 31, 2022, respectively. The Company’s accumulated deficit was $34,416,648 and $34,305,992 as of March 31, 2023, 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. Our auditors express substantial doubt about our ability to continue as a going concern.

NOTE 4 – CASH

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of March 31, 2023, the Company’s cash consisted of non-restricted cash.

NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments are cash , accounts receivable, accounts payable, notes payable, notes receivable and their carrying amounts are approximate their fair values based on their short-term nature. The recorded values of notes payable and notes receivable approximate their fair values, as interest approximates market rates. Furthermore, the Company has derivative liabilities, which it considers to be a level 3liability. For more information on the valuation method used for determining the value of the derivative liability, see Note 10.

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. A slight change in unobservable inputs such as volatility can significantly have a significant impact on the fair value measurement of the derivatives liabilities.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their fair values because of the short maturity of these instruments.

NOTE 6 – RELATED PARTY TRANSACTIONS

The Company had a related party payables of $301,100 and $94,528 outstanding as of March 31, 2023, and March 31, 2022, respectively. These amounts consist of funds contributed by the management for the purpose 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 June 3, 2022, the Company received a loan from a related party, the Company’s CEO Kent Rodriquez, in the amount of $125,000. These funds were wired to the Company to help it reach settlement of the debts described in Note 7.

NOTE 7 – CONVERTIBLE NOTES PAYABLE

The convertible notes payable consisted 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 had 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 had been amortized. Additionally, the note had 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. The contingent liability was booked as such due to its settlement being contingent upon the Company making the settlement payment hereafter mentioned. This transaction resulted in a gain on debt extinguishment of approximately $52,000. The convertible debt portion had no interest accrual and had 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 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 March 31, 2023, the debt has been completely paid off and no longer exists.

The convertible notes 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 at the 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 December 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. Therefore, as of both March 31, 2023, and March 31, 2022, no corresponding debt discount remained. On July 18, 2022, a Letter Agreement was drafted between the Company and the debtholder, which establishes the settlement of this debt once the Company’s Form 10 goes effective. However, being that the Form 10 has yet to go effective as of the filing of this report, the debt has not yet subsequently been settled. The balance of the Convertible Promissory Note due to the Holder remained at Thousand Dollars ($40,000) as of December 31, 2022. On January 23, 2023, the Company and the convertible note holder mutually agreed to settle this outstanding convertible note. However, as of March 31, 2023 the settlement remains pending and the convertible note is still recorded at $40,000 outstanding.

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 20,000 on this debt as of December 31, 2022. The note had a balance of $25,000 and 35,000 as of December 31, 2022, and March 31, 2022, respectively. On March 28, 2023, the Company and the convertible promissory note holder mutually agreed to settle the outstanding convertible note issued on March 23, 2021, in the original amount of $45,000, with a remaining balance of $30,000 and all accrued interest for $5,000. The $5,000 was wired on March 29, 2023.

Per agreements dated 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 December 31, 2022, the full $50,000 of the debt discount has been amortized. This note had a maturity date of September 30, 2022. Per a board resolution dated February 21, 2023, and corresponding notice of conversion dated February 22, 2023, all debt (principal and interest) related to this convertible note was converted to 2,750,000 shares of common stock, with the conversion effective as of January 31, 2023. These shares were issued to Mill End Capital, Ltd., per correspondence the CEO Kent Rodriguez sent to the Company’s Transfer Agent dated March 1, 2023.

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. On July 18, 2022, a Letter Agreement was drafted between the Company and the debtholder, which establishes the settlement of this debt once the Company’s Form 10 goes effective. However, being that the Form 10 has yet to go effective as of the filing of this report, the debt has not yet subsequently been settled. On January 23, 2023, the Company and the convertible note holder mutually agreed to settle this outstanding convertible note. However, as of March 31, 2023 the settlement remains pending and the convertible note is still recorded at $60,000 outstanding.

The Company had a convertible note payable of $100,000 and $164,774 outstanding as of the year ended March 31, 2023, and the year ended March 31, 2022, respectively.

 

		March 31, 2023				March 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			(139,650	)			(10,000	)
Debt extinguished per settlement			—				(125,350	)
Conversion of notes payable into common stock			—				—
Amortization of discounts			74,876				177,499
Convertible notes payable, net (Ending Balance)		$	100,000			$	164,774

Below is the summary of the principal balance and debt discounts as of March 31, 2023:

 

Convertible Promissory Note Holder		Start Date		End Date		Initial Note Principal Balance		Debt Discounts as of Issuance	Amortization	Debt Discounts as of March 31, 2023
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	($30,000)	-
Westworld Financial Capital, LLC		10/1/2021		9/30/2022		$50,000		$50,000	($50,000)	-
Total										-
Remaining note principal balance										$100,000
Total convertible promissory notes, net										$100,000

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 8 – 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, 2023, 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. 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. In addition, on January 12, 2018, the Company and the Series A Holder agreed to forgive all accrued interest to date on the Series A, and to pause any accruals until April 1, 2023. The Series A Convertible Preferred Stock carries liquidating preference, over all other classes of stock, equal to the amount paid for the stock plus any unpaid dividends. Currently the value of the liquidation preference is $500,000, the amount of debt that the related party converted into the preferred stock. If this Preferred Stock were to be redeemed by the holder, it would result in an aggregate of the $500,000 liquidation preference, on a per share basis, this would equal $5,000 per share. The Company and Series A Preferred Holder agreed to forgive all accrued interest and arrearages in preferred share dividends of Series A Preferred Stock through March 31, 2023.

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. All accrued dividends on the Series B has been settled through March 31, 2023, and none currently remains outstanding. Furthermore, dividends will begin to accrue on the Series B Preferred Stock until April 1, 2023.

 

NOTE 9 – COMMON STOCK

The Company is authorized to issue 200,000,000 shares of Common Stock, with a par value of $0.001.

On October 7, 2021, the Company issued 500,000 shares of common stock in exchange for $10,000 received.

On October 7, 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 Note 8.

 

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 17, 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 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.

On October 4, 2022, the Company issued 150,000 shares of common stock in exchange for $3,000 received.

On October 4, 2022, the Company issued 250,000 shares of common stock in exchange for $4,963 received.

On December 1, 2022, the Company issued 500,000 shares of common stock in exchange for consulting services. These shares were issued with an approximate value of $0.0598 per share, based on the fair market value as of their date of issuance.

On December 1, 2022, the Company issued 1,500,000 shares of common stock to three different parties in the amounts of 1,000,000, 250,000, and 250,000, in exchange for $29,970 received.

On December 1, 2022, the Company issued 250,000 shares of common stock in exchange for $4,970 received.

On January 31, 2023, the Company issued 2,750,000 shares of common stock for conversion of debt. For more details, see fifth paragraph of Note 8.

On February 21, 2023, the Company issued 50,000 shares of common stock for website and social media services. These shares were issued with a value of $0.08 per share.

The Company had 57,643,062 and 49,193,062 shares of common stock issued and outstanding as of March 31, 2023, and March 31, 2022, respectively. The Company had a loss per share of $0.00 and $0.01 for the years ended March 31, 2023, and March 31, 2022, respectively.

NOTE 10 – 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		0
Stock Price		$0.025 - $0.069
Exercise Price		$0.018 - $0.035
Expected Life (Years)		0.18 – 1.00
Risk-Free Interest Rate		0.04% - 0.52%
Expected Volatility		224% - 422%

 

		March 31, 2023
Annual Dividend Yield		—
Stock Price		—
Exercise Price		—
Expected Life (Years)		—
Risk-Free Interest Rate		—
Expected Volatility		—

 

Fair value of the derivative is summarized as below:

 

Beginning Balance, March 31, 2022		$	95,576
Additions			—
Mark-to-Market			(95,575	)
Cancellation of Derivative Liabilities Due to Cash Repayment			—
Reclassification to Additional Paid-In Capital Due to Conversion			(1	)
Ending Balance, March 31, 2023		$	—

 

NOTE 11: COMMITMENTS AND CONTINGENCIES

As of March 31, 2023, and 2022, 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 12 – SUBSEQUENT EVENTS

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist through the date of this filing.

Groove Botanicals, Inc.

Consolidated Balance Sheets

(Unaudited)

 

		(Unaudited)				(Audited)
		June 30,				March 31,
		2023				2022
ASSETS
Current Assets:
Cash and Cash Equivalents		$	2,366			$	4,566
Accounts Receivable			25				25
Prepaid Expenses			375				390
Total Current Assets			2,766				4,982
TOTAL ASSETS		$	2,766			$	4,982
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities		$	45,189			$	44,489
Interest Payable			17,178				14,678
Related Party Payable			342,830				301,100
Convertible Notes Payable			100,000				100,000
Dividends Payable - Related Party			54,618				—
Total Current Liabilities			559,814				460,267
Total Liabilities			559,814				460,267
Stockholders' Deficit
Preferred Stock, Series A, $0.10 par value, 100 shares			10				10
authorized; 100 shares issued and outstanding
as of June 30, 2023, and March 31, 2023
Preferred Stock, Series B, $0.10 par value, 2,000			198				198
shares authorized; 1,983 shares issued and outstanding
as of June 30, 2023, and March 31, 2023
Common Stock, $0.001 par value, 200,000,000 shares			58,643				57,643
authorized; 58,643,062 and 57,643,062 shares issued
and outstanding as of June 30, 2023 and
March 31, 2023, respectively
Additional paid-in capital			33,932,511				33,903,511
Accumulated deficit			(34,548,410	)			(34,416,648	)
Total stockholder's deficit			(557,048	)			(455,285	)
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT		$	2,766			$	4,982

 

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
		June 30,
		2023				2022
Expenses:
Selling, General and Administrative Expenses			16,759				18,668
Rent			4,644				3,927
Legal and Professional Expenses			23,242				18,558
Consulting Expense			30,000				—
Total Operating Expenses			74,645				41,153
Operating Loss			(74,645	)			(41,153	)
Other Income (Expense)
Amortization of Debt Discount			—				(40,781	)
Change in Derivative Liability			—				84,529
Gain on Settlement of Debt			—				25,000
Interest Expense			(2,500	)			(4,071	)
Miscellaneous other income			—				221
Total Other Income (Expense)			(2,500	)			64,898
Net Income (Loss)		$	(77,145	)		$	23,745
Basic Earnings (Loss) per Common Share		$	(0.00	)		$	0.00
Diluted Earnings (Loss) per Common Share		$	(0.00	)		$	0.00
Weighted Average Common Shares Outstanding - Basic			58,478,227				51,929,326
Weighted Average Common Shares Outstanding - Diluted			58,480,570				51,933,238

 

The accompanying notes are an integral part of these unaudited consolidated financial statements 

 

Groove Botanicals, Inc.

Consolidated Statements of Stockholders' Equity

For the Three Months Ended June 30, 2022

 

	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, 2022 (Audited)		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 for Cash Received in Prior Period		—			—			—			—			3,000,000			3,000			(3,000,000	)		(3,000	)		—			—			—
Net Income		—			—			—			—			—			—			—			—			—			23,745			23,745
Balance, June 30, 2022 (Unaudited)		100		$	10			1,983		$	198			52,193,062		$	52,193			—		$	—		$	33,798,656		$	(34,282,247	)	$	(431,190	)

 

 

Groove Botanicals, Inc.

Consolidated Statements of Stockholders' Equity

For the Three Months Ended June 30, 2023

 

	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, 2023 (Audited)		100		$	10			1,983		$	198			57,643,062		$	57,643			—		$	—		$	33,903,511		$	(34,416,648	)	$	(455,285	)
Issuance of Stock for Consulting		—			—			—			—			1,000,000			1,000			—			—			29,000			—			30,000
Accrual of Preferred Dividends to Related Party		—			—			—			—			—			—			—			—			—			(54,618	)		(54,618	)
Net Loss		—			—			—			—			—			—			—			—			—			(77,145	)		(77,145	)
Balance, June 30, 2023 (Unaudited)		100		$	10			1,983		$	198			58,643,062		$	58,643			—		$	—		$	33,932,511		$	(34,548,410	)	$	(557,048	)

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

 

Groove Botanicals, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

		For the Three Months Ended
		June 30,
		2023				2022
Cash Flow From Operating Activities
Net Income (Loss)		$	(77,145	)		$	23,745
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of Debt Discount			—				40,781
Change in Derivative Liability			—				(84,529	)
Gain on Settlement of Debt			—				(25,000	)
Stock-Based Compensation for Consulting			30,000				—
Accrued Interest			2,500				4,071
Accrued Payroll			12,000				12,000
Accounts Payable and Accrued Liabilities - Related Party			1,565				80
Changes in working capital
Decrease in Accounts Receivable			—				210
Decrease in Prepaid Expenses			16				—
Increase (Decrease) in Accounts Payable and Accrued Liabilities			699				(170	)
Net Cash Used in Operating Activities			(30,365	)			(28,812	)
Cash Flow From Investing Activities
Net Cash Provided by (Used in) Investing Activities			—				—
Cash Flow From Financing Activities
Funds Received from Related Party			29,500				125,000
Funds Distributed to Related Party			(1,335	)			(4,000	)
Repayment of Outstanding Convertible Debt			—				(59,650	)
Repayment of Outstanding Contingent Liability			—				(70,350	)
Net Cash Provided by (Used in) Financing Activities			28,165				(9,000	)
Net Change in Cash			(2,200	)			(37,812	)
Cash at Beginning of Period			4,566				48,534
Cash at End of Period		$	2,366			$	10,721
Net cash paid for:
Interest		$	—			$	—
Income Taxes		$	—			$	—

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

 

GROOVE BOTANICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  

FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 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 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. The audited consolidated balance sheet as of March 31, 2023, was derived from the Company’s audited consolidated financial statements at that date.

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. 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. The Company has excluded some instruments from its dilutive shares calculations due to the instruments being anti-dilutive. These instruments previously referenced are convertible preferred shares, specifically Series A preferred shares which can be converted into common shares which after their conversion, would be equal to 51% of the issued and outstanding common stock following the moment of conversion. Furthermore, on January 12, 2018, our Board of Directors agreed that the 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.

 

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 measured 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.

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.

In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20 that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. Two methods of transition were permitted upon adoption: full retrospective and modified retrospective. The Company has yet to adopt ASC 2020-06, however, the Company’s auditors have recommended that the Company adopt ASC 2020-06 as of April 1, 2023. The accounting impact will be a reclassification from Additional Paid-In Capital to Retained Earnings. The Company plans to adopt ASC 2020-06 as of April 1, 2023.

 

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 $77,145 and net income of $23,745 for the three months ended June 30, 2023, and June 30, 2022, respectively. The Company's accumulated deficit was $34,548,410 and $34,416,648 as of June 30, 2023, and March 31, 2023, respectively. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustment relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company is taking certain steps to provide the necessary capital to continue its operations. These steps include but are not limited to: 1) focus on our new business model and 2) raising equity or debt financing. Our auditors express substantial doubt about our ability to continue as a going concern.

 

NOTE 4 – CASH

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of June 30, 2023, the Company’s cash consisted of non-restricted cash.

NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments are cash, accounts receivable, accounts payable, notes payable, notes receivable and their carrying amounts are approximate their fair values based on their short-term nature. The recorded values of notes payable and notes receivable approximate their fair values, as interest approximates market rates. Furthermore, the Company had derivative liabilities in its prior fiscal year, which it considered to be a level 3 liability. For more information on the valuation method used for determining the value of the derivative liability, see Note 11.

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. A slight change in unobservable inputs such as volatility can significantly have a significant impact on the fair value measurement of the derivatives liabilities.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their fair values because of the short maturity of these instruments.

NOTE 6 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The Company had accounts payable and accrued liabilities of $45,189 and $44,489 outstanding as of June 30, 2023, and March 31, 2023, 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 $342,830 and $301,100 outstanding as of June 30, 2023, and March 31, 2023, respectively. These amounts consist of funds contributed by the management for the purpose 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 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 notes payable consisted 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 had 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 had been amortized. Additionally, the note had 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 had no interest accrual and had 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 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 June 30, 2023, the debt has been completely paid off and no longer exists.

The convertible notes 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 at the 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 December 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. Therefore, as of both December 31, 2022, and March 31, 2021, no corresponding debt discount remained. Details regarding a subsequent settlement of this note can be found in footnote #13 of this report. The balance of the Convertible Promissory Note due to the Holder remained at Thousand Dollars ($40,000) as of December 31, 2022. On January 23, 2023, the Company and the convertible note holder mutually agreed to settle this outstanding convertible note. However, as of June 30, 2023, the settlement remains pending, and the convertible note is still recorded at $40,000 outstanding.

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 20,000 on this debt as of December 31, 2022. The note had a balance of $25,000 and 35,000 as of December 31, 2022, and March 31, 2022, respectively. On March 28, 2023, the Company and the convertible promissory note holder mutually agreed to settle the outstanding convertible note issued on March 23, 2021, in the original amount of $45,000, with a remaining balance of $30,000 and all accrued interest for $5,000. The $5,000 was wired on March 29, 2023. As of June 30, 2023, the debt has been completely paid off and no longer exists.

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 December 31, 2022, the full $50,000 of the debt discount has been amortized. This note had a maturity date of September 30, 2022. Per a board resolution dated February 21, 2023, and corresponding notice of conversion dated February 22, 2023, all debt (principal and interest) related to this convertible note was converted to 2,750,000 shares of common stock, with the conversion effective as of January 31, 2023. These shares were issued to Mill End Capital, Ltd., per correspondence the CEO Kent Rodriguez sent to the Company’s Transfer Agent dated March 1, 2023. As of June 30, 2023, the debt has been completely satisfied and no longer exists.

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. Details regarding a subsequent pending settlement of this note can be found in footnote #13 of this report. On January 23, 2023, the Company and the convertible note holder mutually agreed to settle this outstanding convertible note. However, as of June 30, 2023, the settlement remains pending, and the convertible note is still recorded at $60,000 outstanding.

The Company had a convertible note payable of $100,000 outstanding as of June 30, 2023, and March 31, 2023.

Below is the summary of the principal balance and debt discounts as of June 30, 2023:

Convertible Promissory Note Holder		Start Date		End Date		Initial Note Principal Balance		Debt Discounts as of Issuance	Amortization	Debt Discounts as of June 30, 2023
Robert Hymers III		3/5/2021		6/30/2022		$40,000		$40,000	($40,000)	-
Robert Hymers III		3/7/2022		3/7/2023		$60,000		$30,000	($17,014)	-
Total										-
Remaining note principal balance										$100,000
Total convertible promissory notes, net										$100,000

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 June 30, 2023 and March 31, 2023, 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. 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. In addition, on January 12, 2018, the Company and the Series A Holder agreed to forgive all accrued interest to date on the Series A, and to pause any accruals until April 1, 2023. The Series A Convertible Preferred Stock carries liquidating preference, over all other classes of stock, equal to the amount paid for the stock plus any unpaid dividends. Currently the value of the liquidation preference is $500,000, the amount of debt that the related party converted into the preferred stock. If this Preferred Stock were to be redeemed by the holder, it would result in an aggregate of the $500,000 liquidation preference, on a per share basis, this would equal $5,000 per share. The Company and Series A Preferred Holder agreed to forgive all accrued interest and arrearages in preferred share dividends of Series A Preferred Stock through March 31, 2023. Dividends began to accrue on the Series A Preferred Stock as of April 1, 2023. During the three months ended June 30, 2023, the holder of the Series A preferred shares accrued $10,000 in preferred dividends from the Series A preferred shares.

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. All accrued dividends on the Series B has been settled through March 31, 2023, and none currently remains outstanding. Dividends began to accrue on the Series B Preferred Stock as of April 1, 2023. During the three months ended June 30, 2023, the holder of the Series B preferred shares accrued $44,618 in preferred dividends from the Series B preferred shares.

 

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 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.

On April 15, 2023, the Company issued 1,000,000 shares of common stock in exchange for consulting services. These shares were valued at $0.03 per shares per their corresponding consulting agreement.

The Company had 58,643,062 and 57,643,062 shares of common stock issued and outstanding as of June 30, 2023, and March 31, 2023, respectively. The Company had a basic and diluted loss per share of $0.00 for the three months ended June 30, 2023, and a basic and diluted earnings per share of $0.00 for the three months ended June 30, 2022.

NOTE 11 – DERIVATIVE FINANCIAL INSTRUMENTS

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. 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. 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. As of June 30, 2023, and March 31, 2023, the Company had no outstanding derivative liabilities.

NOTE 12: COMMITMENTS AND CONTINGENCIES

As of June 30, 2023, 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

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist through the date of this filing apart from the following:

None Noted.

EXHIBIT INDEX

 

Exhibit Number		Exhibit Description
3.1(a)		Articles of Incorporation
3.1(b)		Articles of Merger
3.1(c)		Agreement and Plan of Merger
3.1(d)		Amended Articles of Incorporation
3.1(e)		Amended and Restated Certificate of Incorporation of the Registrant
3.2		Bylaws of the Registrant
4.1(a)		Certificate of Designation of Series and Determination of Rights and Preferences of Series A Convertible Preferred Stock
4.1(b)		Certificate of Designation
4.1(c)		Amendment to Certificate of Designation After Issuance of Class or Series dated 3/14/2014
4.1(d)		Amendment to Certificate of Designation After Issuance of Class or Series dated 01/12/2018
10.1		Convertible Promissory Note Between Groove Botanicals, Inc. and Robert L. Hymers, III Dated March 5, 2021
10.2		Convertible Redeemable Note Between Groove Botanicals, Inc. and Robert L. Hymers, III Dated March 7, 2022
10.3		Letter Agreement Between Groove Botanicals, Inc. and Robert L. Hymers, III Dated July 18, 2022
21.1		Subsidiaries of the Registrant
23.1		Consent of Independent Registered Public Accounting Firm
99-1		Form 8-K filed on August 29, 2023 to Disclose Changes in Company’s Certifying Accountant

 

 

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: October 19, 2023
President/Director
Groove Botanicals Inc.

 

 

 

Exhibit 3.1(e)

Exhibit 10.1

 

CONVERTIBLE PROMISSORY NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.

 

GROOVE BOTANICALS, INC.

 

Convertible Promissory Note

Issuance Date: March 5, 2021

USD $ 40,000

 

This Convertible Promissory Note is entered into between Groove Botanicals, Inc., a Nevada corporation (the “Company”), with an address of 310 Fourth Avenue South, Suite 700, Minneapolis, MN 55415 on the one hand, and Robert L. Hymers, III (“Hymers”), with an address of 520 S. Grand Avenue, Ste. 320, Los Angeles, CA 90071. Hymers is referred to herein as the “Holder”).

 

The Principal Amount and interest outstanding shall be due and payable on the date that is 12 months from the Issuance Date.

 

The due date of any outstanding Principal Amount and interest are referred to herein as the “Maturity Date,” respectively.

 

All payments under or pursuant to this Note refer to and shall be made in United States Dollars in immediately available funds to the Holders at the address of the Holders first set forth above or at such other place as the Holders may designate from time to time in writing to the Company or by wire transfer of funds to the Holders’ account (s).

 

ARTICLE I

 

Section 1.1 Interest. Beginning on the issuance date of this Note (the “Issuance Date”), the outstanding principal balance of this Note shall bear annual interest at 10 percent. Interest shall commence on the sixth (6^th) monthly anniversary of the Issuance Date,

 

Section 1.2 Payment on Non-Business Days. Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of California, such payment may be due on the next succeeding business day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

 

Section 1.3 Transfer. This Note may be transferred or sold, subject to the provisions of Section 4.8 of this Note, or pledged, hypothecated or otherwise granted as security by the Holders.

 

Section 1.4 Replacement. Upon receipt of a duly executed, notarized and unsecured written statement from the Holders with respect to the loss, theft or destruction of this Note (or any replacement hereof), and without requiring an indemnity bond or other security, or, in the case of a mutilation of this Note, upon surrender and cancellation of such Note, the Company shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Note.

ARTICLE II

EVENTS OF DEFAULT; REMEDIES

Section 2.1 Events of Default. Beginning on the 6^th monthly anniversary of Issuance Date, the occurrence of any of the following events shall be an “Event of Default” under this Note:

(a)       the Company shall fail to make the payment of any amount of principal outstanding on the date such payment is due hereunder;

(b)       the Company shall fail to make any payment of interest for a period of three (3) days after the date such interest is due;

(c)       the suspension from listing, or the failure of the Common Stock to be listed on at least one of the OTC Markets QB tier, Nasdaq SmailCap Market, Nasdaq National Market, American Stock Exchange or The New York Stock Exchange, Inc. for a period of five (5) consecutive Trading Days;

(d)       the Company’s notice to the Holders, including by way of public announcement, at any time, of its inability to comply or its intention not to comply with proper requests for conversion of this Note into shares of Common Stock;

(e)       the Company shall fail to (i) timely deliver the shares of Common Stock upon conversion of the Note or any accrued and unpaid interest, or (ii) make the payment of any fees and/or liquidated damages under this Note or the Purchase Agreement, which failure in the case of items (i) and (ii) of this Section 2.1(e) is not remedied within three (3) business days after the incurrence thereof;

(f)       default shall be made in the performance or observance of (i) any material covenant, condition or agreement contained in this Note (other than as set forth in clause (e) of this Section 2.1) and such default is not fully cured within five (5) business days after the occurrence thereof or (ii) any material covenant, condition or agreement contained in the Purchase Agreement or any other Transaction Document which is not covered by any other provisions of this Section 2.1 and such default is not fully cured within five (5) business days after the occurrence thereof;

(g)       any material representation or warranty made by the Company herein or in the Purchase Agreement or any other Transaction Document shall prove to have been false or incorrect or breached in a material respect on the date as of which made;

(h)       the Company shall (A) default in any payment of any amount or amounts of principal of or interest on any Indebtedness (other than the Indebtedness hereunder) the aggregate principal amount of which Indebtedness is in excess of $100,000 or (B) default in the observance or performance of any other agreement or condition relating to any Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the Holders or Holders or beneficiary or beneficiaries of such Indebtedness to cause with the giving of notice if required, such Indebtedness to become due prior to its stated maturity;

(i)       the Company shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce in writing to any petition filed against it in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (vi) issue a notice of bankruptcy or winding down of its operations or issue a press release regarding same, or (vii) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing;

(j)       a proceeding or case shall be commenced in respect of the Company, without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets in connection with the liquidation or dissolution of the Company or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue un-dismissed, or un-stayed and in effect, for a period of sixty (60) days or any order for relief shall be entered in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic) against the Company or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Company and shall continue un-dismissed, or un-stayed and in effect for a period of sixty (60) days; or

(k)       the failure of the Company to instruct its transfer agent to remove any legends from shares of Common Stock eligible to be sold under Rule 144 of the Securities Act and issue such un-legended certificates to the Holders within five (5) business days of the Holders’ request so long as the Holders has provided reasonable assurances and opinions of counsel to the Company that such shares of Common Stock can be resold pursuant to Rule 144; or

(l)       the failure of the Company to pay any amounts due to the Holders herein within three (3) business days of receipt of notice to the Company.

(m)       The Company has a closing price for its Common Stock of less than $0.02 per share.

Section 2.2 Remedies Upon An Event of Default. If an Event of Default shall have occurred and shall be continuing, the Holders of this Note may at any time at its option, (a) declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Company; provided, however, that upon the occurrence of an Event of Default described in (i) Sections 2.1 (k) or (1), the outstanding principal balance and interest hereunder shall be automatically due and payable and (ii) Sections 2.1 (a)-(j) and 2.1(m)-(n), demand the prepayment of this Note pursuant to Section 3.6 hereof, (b) subject to Section 3.4 hereof, demand that the principal amount of this Note then outstanding shall be converted into shares of Common Stock at a Conversion Price (as defined in Section 3.2(a) hereof) per share calculated pursuant to Section 3.1 hereof assuming that the date that the Event of Default occurs is the Conversion Date and demand that all accrued and unpaid interest under this Note shall be converted into shares of Common Stock in accordance with Section 1.2 hereof, or (c) exercise or otherwise enforce any one or more of the Holders’ rights, powers, privileges, remedies and interests under this Note. No course of delay on the part of the Holders shall operate as a waiver thereof or otherwise prejudice the right of the Holders. No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise. In the event of a breach of Section 8(m) the principal amount of this Note shall be increased by 100%.

ARTICLE III

CONVERSION; ANTIDILUTION; PREPAYMENT

Section 3.1 Conversion Option.

(a)       At any time after the Issuance Date, this Note shall be convertible (in whole or in part), at the option of the Holders (the “Conversion Option”), into such number of fully paid and non-assessable shares of Common Stock (the “Conversion Rate”) as is determined by dividing that portion of the outstanding principal balance and any accrued interest due under this Note as of such date that the Holders elect to convert by the Conversion Price (as defined in Section 3.2(a) hereof) then in effect on the date on which the Holders delivers a notice of conversion (the “Conversion Notice”), duly executed, to the Company (the “Voluntary Conversion Date”), provided, however, that the Conversion Price shall be subject to adjustment as described in Section 3.5 below. With respect to partial conversions of this Note, the Company shall keep written records of the amount of this Note converted as of each Conversion Date. In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 4.99% of the outstanding shares of

the Common Stock of the Company. Furthermore, upon the occurrence of an Event of Default (as defined in Section 2.1 hereof), then to the extent permitted by law, the Company will pay interest to the Holders, payable on demand, on the outstanding principal balance of the Note from the date of the Event of Default until such Event of Default is cured at the rate of the lesser of fifteen percent (15%) and the maximum applicable legal rate per annum.

Section 3.2 Conversion Price.

(a)       The term “Conversion Price” is $0.02 per share.

(b)       Registration Rights. If at any time the Company shall determine to prepare and file with the Commission a registration statement (a “Registration Statement”) relating to an offering for its own account or the account of others under the Securities Act of any of its equity on Form S-1, the Company shall cause the registration under the Securities Act of all the shares issuable upon conversion of this Note

Section 3.3 Mechanics of Conversion

(a)       Not later than three (3) Trading Days after any Conversion Date, the Company or its designated transfer agent, as applicable, shall issue and deliver to the Depository Trust Company (“DTC”) account on the Holders’ behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) as specified in the Conversion Notice, registered in the name of the Holders’ or its designees, for the number of shares of Common Stock to which the Holders shall be entitled. In the alternative, not later than three (3) Trading Days after any Conversion Date, the Company shall deliver to the applicable Holders by express courier a certificate or certificates which shall be free of restrictive legends and trading restrictions representing the number of shares of Common Stock being acquired upon the conversion of this Note (the “Delivery Date”). Notwithstanding the foregoing to the contrary, the Company or its transfer agent shall only be obligated to issue and deliver the shares to the DTC on the Holders’ behaves via DWAC (or certificates free of restrictive legends) if such conversion is in connection with a sale and the Holders have complied with the applicable prospectus delivery requirements. If in the case of any Conversion Notice such certificate or certificates are not delivered to or as directed by the applicable Holders by the Delivery Date, the applicable Holders shall be entitled by written notice to the Company at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Company shall immediately return this Note if tendered for conversion, whereupon the Company and the applicable Holders shall each be restored to its position immediately prior to the delivery of such notice of revocation, except that any amounts described in Sections 3.3(b) and (c) shall be payable through the date notice of rescission is given to the Company.

(b)       The Company understands that a delay in the delivery of the shares of Common Stock upon conversion of this Note beyond the Delivery Date could result in economic loss to the Holders. If the Company fails to deliver to the applicable Holders such shares via DWAC or a certificate or certificates pursuant to this Section hereunder by the Delivery Date, the Company shall pay to such Holders, in cash, an amount per Trading Day for each Trading Day until such shares are delivered via DWAC or certificates are delivered, together with interest on such amount at a rate of 10% per annum, accruing until such amount and any accrued interest thereon is paid in full, equal to the greater of (A) (i) 1% of the aggregate principal amount of the Note requested to be converted for the first five (5) Trading Days after the Delivery Date and (ii) 2% of the aggregate principal amount of the Note requested to be converted for each Trading Day thereafter and (B) $2,000 per day (which amount shall be paid as liquidated damages and not as a penalty). Nothing herein shall limit a Holders’ right to pursue actual damages for the Company’s failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holders shall have the right to pursue all remedies available to it at law or in equity (including, without limitation, a decree of specific performance and/or injunctive relief). Notwithstanding anything to the contrary contained herein, the applicable Holders shall be entitled to withdraw a Conversion Notice, and upon such withdrawal the Company shall only be obligated to pay the liquidated damages accrued in accordance with this Section 3.3(b) through the date the Conversion Notice is withdrawn.

Section 3.4 Adjustment of Conversion Price.

(a)       The Conversion Price shall be subject to adjustment from time to time as follows:

(i)       Adjustments for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Issuance Date, effect a stock split of the outstanding Common Stock, the applicable Conversion Price in effect immediately prior to the stock split shall be proportionately decreased. If the Company shall at any time or from time to time after the Issuance Date, combine the outstanding shares of Common Stock, the applicable Conversion Price in effect immediately prior to the combination shall be proportionately increased. Any adjustments under this Section 3.5(a)(i) shall be effective at the close of business on the date the stock split or combination occurs.

(ii)       Adjustments for Certain Dividends and Distributions. If the Company shall at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of Holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, and in each event, the applicable Conversion Price in effect immediately prior to such event shall be decreased as of the time of such issuance or, in the event such record date shall have been fixed, as of the close of business on such record date, by multiplying, the applicable Conversion Price then in effect by a fraction:

(1)       the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date; and

(2)       the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

(iii)       Adjustment for Other Dividends and Distributions. If the Company shall at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of Holders of Common Stock entitled to receive a dividend or other distribution payable in other than shares of Common Stock, then, and in each event, an appropriate revision to the applicable Conversion Price shall be made and provision shall be made (by adjustments of the Conversion Price or otherwise) so that the Holders of this Note shall receive upon conversions thereof, in addition to the number of shares of Common Stock receivable thereon, the number of securities of the Company which they would have received had this Note been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the Conversion Date, retained such securities (together with any distributions payable thereon during such period), giving application to all adjustments called for during such period under this Section 3.5(a)(iii) with respect to the rights of the Holders of this Note; provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or distributions.

(iv)       Adjustments for Reclassification, Exchange or Substitution. If the Common Stock issuable upon conversion of this Note at any time or from time to time after the Issuance Date shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for in Sections 3.5(a)(i), (ii) and (iii), or a reorganization, merger, consolidation, or sale of assets provided for in Section 3.5(a)(v)), then, and in each event, an appropriate revision to the Conversion Price shall be made and provisions shall be made (by adjustments of the Conversion Price or otherwise) so that the Holders shall have the right thereafter to convert this Note into the kind and amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by Holders of the number of shares of Common Stock into which such Note might have been converted immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.

(v)       Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. If at any time or from time to time after the Issuance Date there shall be a capital reorganization of the Company (other than by way of a stock split or combination of shares or stock dividends or distributions provided for in Section 3.5(a)(i), (ii) and (iii), or a reclassification, exchange or substitution of shares provided for in Section 3.5(a)(iv)), or a merger or consolidation of the Company with or into another corporation where the Holders of outstanding voting securities prior to such merger or consolidation do not own over fifty percent (50%) of the outstanding voting securities of the merged or consolidated entity, immediately after such merger or consolidation, or the sale of all or

substantially all of the Company’s properties or assets to any other person (an “Organic Change”), then as a part of such Organic Change an appropriate revision to the Conversion Price shall be made and provision shall be made (by adjustments of the Conversion Price or otherwise) so that the Holders shall have the right thereafter to convert such Note into the kind and amount of shares of stock and other securities or property of the Company or any successor corporation resulting from Organic Change. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3.5(a)(v) with respect to the rights of the Holders after the Organic Change to the end that the provisions of this Section 3.5(a)(v) (including any adjustment in the applicable Conversion Price then in effect and the number of shares of stock or other securities deliverable upon conversion of this Note) shall be applied after that event in as nearly an equivalent manner as may be practicable.

(vi)       Consideration for Stock. In case any shares of Common Stock or any Common Stock Equivalents shall be issued or sold:

(1)       in connection with any merger or consolidation in which the Company is the surviving corporation (other than any consolidation or merger in which the previously outstanding shares of Common Stock of the Company shall be changed to or exchanged for the stock or other securities of another corporation), the amount of consideration therefor shall be, deemed to be the fair value, as determined reasonably and in good faith by the Board of Directors of the Company, of such portion of the assets and business of the non-surviving corporation as such Board may determine to be attributable to such shares of Common Stock, Convertible Securities, rights or warrants or options, as the case may be; or

(2)       in the event of any consolidation or merger of the Company in which the Company is not the surviving corporation or in which the previously outstanding shares of Common Stock of the Company shall be changed into or exchanged for the stock or other securities of another corporation, or in the event of any sale of all or substantially all of the assets of the Company for stock or other securities of any corporation, the Company shall be deemed to have issued a number of shares of its Common Stock for stock or securities or other property of the other corporation computed on the basis of the actual exchange ratio on which the transaction was predicated, and for a consideration equal to the fair market value on the date of such transaction of all such stock or securities or other property of the other corporation. If any such calculation results in adjustment of the applicable Conversion Price, or the number of shares of Common Stock issuable upon conversion of the Note, the determination of the applicable Conversion Price or the number of shares of Common Stock issuable upon conversion of the Note immediately prior to such merger, consolidation or sale, shall be made after giving effect to such adjustment of the number of shares of Common Stock issuable upon conversion of the Note. In the event Common Stock is issued with other shares or securities or other assets of the Company for consideration which covers both, the consideration computed as provided in this Section 3.5(viii) shall be allocated among such securities and assets as determined in good faith by the Board of Directors of the Company.

(b)       Record Date. In case the Company shall take record of the Holders of its Common Stock for the purpose of entitling them to subscribe for or purchase Common Stock or Convertible Securities, then the date of the issue or sale of the shares of Common Stock shall be deemed to be such record date.

(c)       Certain Issues Excepted. Anything herein to the contrary notwithstanding, the Company shall not be required to make any adjustment to the Conversion Price in connection with (i) securities issued (other than for cash) in connection with a merger, acquisition, or consolidation, (ii) securities issued pursuant to a bona fide firm underwritten public offering of the Company’s securities, (iii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date hereof or issued pursuant to the Purchase Agreement, (iv) the shares of Common Stock issuable upon the exercise of Warrants, (v) securities issued in connection with strategic license agreements or other partnering arrangements so long as such issuances are not for the purpose of raising capital, (vi) Common Stock issued or options to purchase Common Stock granted or issued pursuant to the Company’s stock option plans and employee stock purchase plans as they now exist and (vii) the payment of any accrued interest in shares of Common Stock pursuant to this Note.

(d)       No Impairment. The Company shall not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any

other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith, assist in the carrying out of all the provisions of this Section 3.5 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the Holders against impairment. In the event a Holders shall elect to convert any Note as provided herein, the Company cannot refuse conversion based on any claim that such Holders or any one associated or affiliated with such Holders has been engaged in any violation of law, violation of an agreement to which such Holders is a party or for any reason whatsoever, unless, an injunction from a court, or notice, restraining and or adjoining conversion of all or of said Note shall have issued and the Company posts a surety bond for the benefit of such Holders in an amount equal to one hundred thirty percent (130%) of the amount of the Note the Holders has elected to convert, which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holders in the event it obtains judgment.

(e)       Certificates as to Adjustments. Upon occurrence of each adjustment or readjustment of the Conversion Price or number of shares of Common Stock issuable upon conversion of this Note pursuant to this Section 3.5, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holders a certificate setting forth such adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon written request of the Holders, at any time, furnish or cause to be furnished to the Holders a like certificate setting forth such adjustments and readjustments, the applicable Conversion Price in effect at the time, and the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon the conversion of this Note. Notwithstanding the foregoing, the Company shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one percent (1%) of such adjusted amount.

(f)       Issue Taxes. The Company shall pay any and all issue and other taxes, excluding federal, state or local income taxes, that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of this Note pursuant thereto; provided, however, that the Company shall not be obligated to pay any transfer taxes resulting from any transfer requested by the Holders in connection with any such conversion.

(g)       Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. In lieu of any fractional shares to which the Holders would otherwise be entitled, the Company shall pay cash equal to the product of such fraction multiplied by the average of the Closing Bid Prices of the Common Stock for the five (5) consecutive Trading Days immediately preceding the Conversion Date.

(h)       Reservation of Common Stock. The Company shall at all times when this Note shall be outstanding, reserve and keep available out of its authorized but unissued Common Stock, such number of shares of Common Stock equal to 2,000,000 shares.

(i)       Regulatory Compliance. If any shares of Common Stock to be reserved for the purpose of conversion of this Note or any interest accrued thereon require registration or listing with or approval of any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise before such shares may be validly issued or delivered upon conversion, the Company shall, at its sole cost and expense, in good faith and as expeditiously as possible, endeavor to secure such registration, listing or approval, as the case may be.

Section 3.6 Prepayment.

(a)       Prepayment Upon an Event of Default. Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default described in Sections 2.1(a)-(j) and 2.1(m)-(o) hereof, the Holders shall have the right, at such Holders’ option, to require the Company to prepay in cash all or a portion of this Note at a price equal to one hundred thirty percent (130%) of the aggregate principal amount of this Note plus all accrued and unpaid interest applicable at the time of such request (the “Event of Default Prepayment Price”). Nothing in this Section 3.6(a) shall limit the Holders’ rights under Section 2.2 hereof.

7

(b)       Prepayment at the Election of the Company. Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the Issuance Date and ending on the date which is one hundred and eighty (180) days following the issue date, the Company shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holders of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 3.6(j). Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holders of the Note at its registered addresses and shall state: (1) that the Company is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Company shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holders as specified by the Holders in writing to the Company at least one (1) business day prior to the Optional Prepayment Date. If the Company exercises its right to prepay the Note, the Company shall make payment to the Holders of an amount in cash (the “Optional Prepayment Amount”) equal to 130%, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date.

Section 3.8 No Rights as Shareholders. Nothing contained in this Note shall be construed as conferring upon the Holders, prior to the conversion of this Note, the right to vote or to receive dividends or to consent or to receive notice as a shareholders in respect of any meeting of shareholders for the election of directors of the Company or of any other matter, or any other rights as a shareholders of the Company.

ARTICLE IV

MISCELLANEOUS

Section 4.1 Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telex (with correct answer back received), telecopy or facsimile at the address or number designated in the Purchase Agreement (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The Company will give written notice to the Holders at least ten (10) days prior to the date on which the Company takes a record (x) with respect to any dividend or distribution upon the Common Stock, (y) with respect to any pro rata subscription offer to Holders of Common Stock or (z) for determining rights to vote with respect to any Organic Change, dissolution, liquidation or winding-up and in no event shall such notice be provided to such Holders prior to such information being made known to the public. The Company will also give written notice to the Holders at least ten (10) days prior to the date on which any Organic Change, dissolution, liquidation or winding-up will take place and in no event shall such notice be provided to the Holders prior to such information being made known to the public.

Section 4.2 Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the State of California, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Note shall not be interpreted or construed with any presumption against the party causing this Note to be drafted.

Section 4.3 Headings. Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.

Section 4.4 Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Holders’ right to pursue actual damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holders thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable and material harm to

the Holders and that the remedy at law for any such breach may be inadequate. Therefore the Company agrees that, in the event of any such breach or threatened breach, the Holders shall be entitled, in addition to all other available rights and remedies, at law or in equity, to seek and obtain such equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.

Section 4.5 Enforcement Expenses. The Company agrees to pay all costs and expenses of enforcement of this Note, including, without limitation, reasonable attorneys’ fees and expenses.

Section 4.6 Binding Effect. The obligations of the Company and the Holders set forth herein shall be binding upon the successors and assigns of each such party, whether or not such successors or assigns are permitted by the terms hereof.

Section 4.7 Amendments. This Note may not be modified or amended in any manner except in writing executed by the Company and the Holders.

Section 4.8 Compliance with Securities Laws. The Holders of this Note acknowledges that this Note is being acquired solely for the Holders’ own account and not as a nominee for any other party, and for investment, and that the Holders shall not offer, sell or otherwise dispose of this Note. This Note and any Note issued in substitution or replacement therefor shall be stamped or imprinted with a legend in substantially the following form:

“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL IN THE FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.”

Section 4.9 Consent to Jurisdiction. Each of the Company and the Holders (i) hereby irrevocably submits to the exclusive jurisdiction of the State of California for the purposes of any suit, action or proceeding arising out of or relating to this Note and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Holders consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under the Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 4.9 shall affect or limit any right to serve process in any other manner permitted by law. Each of the Company and the Holders hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Note shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party.

Section 4.10 Parties in Interest. This Note shall be binding upon, inure to the benefit of and be enforceable by the Company, the Holders and its successors and permitted assigns.

Section 4.11 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holders in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

Section 4.12 Company Waivers. Except as otherwise specifically provided herein, the Company and all others that may become liable for all or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands’ and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals of

extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their liability herein and do further consent to the release of any person liable hereon, all without affecting the liability of the other persons, firms or Company liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.

(a)       No delay or omission on the part of the Holders in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver of such rights or any other right of the Holders, nor shall any waiver by the Holders of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.

(b)       THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDERS OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

Dated: March 5, 2021	GROOVE BOTANICALS, INC.
	By:	/s/ Kent Rodriguez
		Kent Rodriguez
		CEO, CFO

 

FORM OF

NOTICE OF CONVERSION

(To be Executed by the Registered Holders in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $__________________ of the principal amount of the above Note No. ___ into shares of Common Stock of Groove Botanicals, Inc. (the “Company”) according to the conditions hereof, as of the date written below.

Date of Conversion: _____________________________________

Applicable Conversion Price: ______________________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holders on the Date of Conversion: __________________________________________

Signature: ___________________________________________

Print Name: __________________________________________

Address: ______________________________________________

______________________________________________

 

Exhibit 10.2

 

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “1933 ACT”)

US $60,000.00

GROOVE BOTANICALS, INC.
10% CONVERTIBLE REDEEMABLE NOTE
DUE MARCH 7, 2023

FOR VALUE RECEIVED, GROOVE BOTANICALS, INC. (the “Company”) promises to pay to the order of ROBERT L. HYMERS, III and its authorized successors and permitted assigns (“Holder”), the aggregate principal face amount of Sixty Thousand Dollars exactly (U.S. $60,000.00) on March 7, 2023 (“Maturity Date”) and to pay interest on the principal amount outstanding hereunder at the rate of 10% per annum commencing on March 7, 2022 (“Issuance Date”). The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at 520 S. Grand Ave. Suite 320, Los Angeles, CA 90071, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

This Note is subject to the following additional provisions:

1.       This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay

 

any tax or other governmental charges payable in connection therewith.

2.       The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

3.       This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (“Act”) and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company’s records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted (“Notice of Conversion”) in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

4. (a) The Holder of this Note is entitled, at its option, at any time after cash payment, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company’s common stock (the “Common Stock”) at a price (“Conversion Price”) for each share of Common Stock equal to $0.02 (the “Conversion Price”). To the extend the Company issues shares of its Common Stock at a price less than $0.02 per share, the Conversion Price shall be adjusted to the lowest price the Common Stock is issued at. By way of example, if the Company issues Common Stock (whether through sale, conversion or otherwise) at a price equal to $0.005 per share, the Conversion Price shall be adjusted to $0.005). In no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 4.99% of the outstanding shares of the Common Stock of the Company. The Conversion Price, and any other economic terms will be adjusted on a ratchet basis if the Company offers a more favorable Conversion Price, prepayment rate, interest rate, (whether through a straight discount or in combination with an original issue discount), additional securities, look back period or other more favorable term to another party for any financings while this Note is in effect, including but not limited to defaults, penalties and the remedy for such defaults or penalties.

(b)       Interest on any unpaid principal balance of this Note shall be paid at the rate of 10% per annum. Interest shall be paid by the Company in Common Stock (“Interest Shares”). Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

(c)       The Note may not be prepaid.

(d)       Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital

 

reorganization or other change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a “Sale Event”), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

5. (e) In case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

6.       No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

7.       The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

8.       The Company agrees to pay all costs and expenses, including reasonable attorneys’ fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

9.       If one or more of the following described “Events of Default” shall occur:

(a)       The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

(b)       Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect;

 

or

(c)       The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or

(d)       The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

(e)       A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or

(f)       Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

(g)       One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or

(h)       The Company shall have defaulted on or breached any term of any other purchase agreement or note or similar debt instrument into which the Company has entered and failed to cure such default within the appropriate grace period; or

(i)       The Company shall have its Common Stock delisted from an exchange (including the OTC Market exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934 act reports with the SEC;

(j)       If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;

(k)       The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of its receipt of a Notice of Conversion; or

(l) (1) The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.

(m)       The Company shall not be “current” in its filings with the Securities and Exchange Commission; or

(n)       The Company shall lose the “bid” price for its stock and a market (including the OTC marketplace or other exchange)

Then, or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder’s sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4^th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10^th day. In an event of a breach of Section 8(h) the Holder may elect to utilize the same remedy available under the defaulted interest and such remedy shall be incorporated by reference into the terms of this Note. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. Further, if a breach of Section 8(m) occurs or is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period as a base price for the conversion instead of the Conversion Price.

If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

9.       In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

10.       Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

11.       The Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a “shell issuer.

Further. The Company will instruct its counsel to either (i) write a 144 opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.

12. The Company shall issue irrevocable transfer agent instructions reserving 3,000,000 shares of its Common Stock for conversions under this Note (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all transfer agent costs associated with issuing and delivering the share certificates to the Holder, as well as maintaining the Share Reserve. If such amounts are to be paid by the Holder, it may deduct such amounts from the principal amount being converted. The company should at all times reserve a minimum of four times the amount of shares required if the note would be fully converted. The Holder may reasonably request increases from time to time to reserve such amounts. The Company will instruct its transfer agent to provide the outstanding share information to the Holder in connection with its conversions.

13.       The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

14.       If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable provision shall automatically be revised to equal the maximum rate of interest or other amount deemed interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it will not seek to claim or take advantage of any law that would prohibit or forgive the Company from paying all or a portion of the principal or interest on this Note.

15.       This Note shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and wholly to be performed within the State of California and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of California or in the Federal courts sitting in the county or city of Los Angeles, or the Federal courts within the districts of Los Angeles. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.

 

Dated: 3/7/22

GROOVE BOTANICALS, INC.

 

By: Kent Rodriguez

 

Title: CEO

EXHIBIT A

NOTICE OF CONVERSION

(To be Executed by the Registered Holder in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $___________ of the above Note into ___________ Shares of Common Stock of GROOVE BOTANICALS, INC. (“Shares”) according to the conditions set forth in such Note, as of the date written below.

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

Date of Conversion: ________________________________________________

Applicable Conversion Price: __________________________________________

Signature: _____________________________________________________

[Print Name of Holder and Title of Signer]

Address: _______________________________________________________

_______________________________________________________

SSN or ON: ___________________________________________________________

Shares are to be registered in the following name: _____________________________

Name: _______________________________________________________

Address: ______________________________________________________

Tel: ____________________________

Fax: ____________________________

SSN or EIN: ______________________

Shares are to be sent or delivered to the following account:

Account Name: _____________________________________________________

Address: ______________________________________________________

 

 

Exhibit 10.3

 

LETTER AGREEMENT

 

This Letter Agreement (“Agreement”) is entered into by and between GROOVE BOTANICALS, INC. (“GRVE”) a Nevada corporation located at 310 Fourth Avenue South, Suite 7000, Minneapolis, MN 55415, and Robert L. Hymers, III, 520 South Grand Avenue, Suite 320, Los Angeles, CA 90071 (“Hymers”). This Agreement is effective as of July 18, 2022. GRVE and Hymers may be collectively referred to as the “Parties.”

 

RECITALS

 

 

WHEREAS, the Parties executed a Consulting Agreement and a Convertible Promissory Note the amount of $40,000 dated March 5, 2021, and a Consulting Agreement and a Convertible Promissory Note the amount of $60,000 dated March 7, 2022.

 

WHEREAS, Hymers has received a common stock grant of 1,500,000 shares in GRVE Common Stock (“Hymers Stock”) on March 9, 2021, as additional compensation.

 

WHEREAS, GRVE and Hymers deem it to be in their respective best interests to resolve any and all matters between the Parties upon the terms and conditions set forth herein, including the application of California law to this Agreement; and,

 

NOW THEREFORE, in consideration for the mutual promises and covenants contained herein, the sufficiency of which is hereby acknowledged, GRVE and Hymers hereto agree as follows:

 

Section 1. Incorporation of the Recitals clauses.

 

GRVE and Hymers acknowledge that all of the representations set forth in the Recitals of this Agreement are incorporated herein by reference and made a material part of this Agreement with the same force and effect as if more fully set forth here. GRVE and Hymers agree to waive any rule of contract construction or legal presumption that would prohibit any court of competent jurisdiction from construing or enforcing this Agreement based upon the contents of the Recitals above.

 

Section 2. Payment, Assignment, Release of Reserve Shares and Release of All Claims.

 

2.1.       Payment. The Parties agree to settle any and all amounts owed pursuant to 1) the Consulting Agreement and Convertible Promissory Note in the amount of $40,000 dated March 5, 2021; and 2) the Consulting Agreement and a Convertible Promissory Note in the amount of $60,000 dated March 7, 2022; as follows:

 

$10,000.00 to be paid to Hymers upon execution of this Agreement, with an additional payment of $40,000 30 days after GRVE’s Form 10 has gone effective.

 

2.2.       Release of Share Reserve. Hymers agrees to cancel the reservation of 3,000,000 shares of GRVE Common Stock at EQ Shareowner Service per the attached.

 

2.3.       Release of All Claims. In exchange for GRVE’s execution of this Letter Agreement and the full satisfaction of the payments in Section 2.1 of this Agreement, Hymers agrees on behalf of himself, and his successors, assigns, officers, directors, shareholders, attorneys, employees, agents, independent contractors, affiliates, control persons, administrators, and any and all persons or business entities acting by and through them, as the case may be, to irrevocably and unconditionally remise, release, acquit, satisfy and forever discharge GRVE, specifically including GRVE’s agents, directors, officers, affiliates, employees representatives, insurance carriers, attorneys, divisions and subsidiaries, (and all agents, directors, officers, employees, representatives, insurance carriers, and attorneys of such divisions and subsidiaries), and its predecessors, successors, administrators and assigns, and all persons acting by, through, under, or in concert with any of them (collectively "Releases"), of and from any and all claims, actions, causes of action, suits, debts, charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, and expenses (including attorney fees and costs actually incurred), of any nature whatsoever, known or unknown, in law or equity, arising out from the Consulting Agreement and Convertible Promissory Note the amount

 

Page 1 of 4

of $40,000 dated March 5, 2021, and the Consulting Agreement and Convertible Promissory Note the amount of $60,000 dated March 7, 2022.

 

2.4.       Except as for any specific rights created by virtue of this Agreement Hymers promises not to institute any future suits or proceedings at law or in equity or any arbitration or administrative proceedings against GRVE for or on account of any claim or cause of action.

 

2.5.       Upon satisfaction of the payments in Section 2.1 of this Agreement, this is intended as a full and complete release and discharge of any or all claims that Hymers may or might have or had against GRVE arising out amounts owed to Hymers and Hymers does so in full and final release and discharge of any and all such noted specified claims and Hymers intends to and does forever hereby release and discharge GRVE of and from any and all liability of any nature whatsoever for all damages to Hymers , specifically including, but not limited to, all past, present and future rights to recover for sums of money arising out from the all of the debt owed to Hymers , as well as for all consequences, effects and results thereto and resulting damages to each other, whether the same or any circumstances pertaining thereto are now known or unknown to Hymers , expected or unexpected by Hymers , or have already appeared or developed or may now be latent or may in the future appear or develop or become known to Hymers .

 

2.6 This Agreement constitutes a compromise, settlement, and release of any claims and is being entered into solely to further avoid inconvenience and expense. GRVE denies any liability to Hymers with respect to any such claim or any other matter. Therefore, this Agreement is not to be and shall never be construed or deemed an admission or concession by GRVE of liability or culpability at any time for any purpose concerning any claim being compromised, settled, and released, or any other matter.

 

Section 3. Miscellaneous Provisions.

 

3.1.       Notices. All notices, offers of other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as properly given or made (i) if delivered personally; or (ii) confirmed electronic mail; or (iii) after the expiration of the second business day following deposit with documented overnight delivery service; or (iv) five business days of transmission by regular mail. All notices given or made pursuant hereto shall be so given or made to the parties at the following addresses:

 

If to GRVE:

 

310 Fourth Avenue South, Suite 7000

Minneapolis, MN

55415 k.rodriguez@avalonoilinc.com

 

If to Hymers:

 

520 South Grand Avenue, Suite 320
Los Angeles, CA 90071
roberthymers@yahoo.com

 

The address of any party hereto may be changed by a notice in writing given in accordance with the provisions hereof.

 

3.2.       Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, illegal or unenforceable, such provision shall be severed and enforced to the extent possible or modified in such a way as to make it enforceable, and the invalidity, illegality or unenforceability thereof shall not affect the validity, legality or enforceability of the remaining provisions of this Agreement.

 

3.3.       Binding on Affiliated Third Parties. This Agreement shall inure to the benefit of and shall be binding upon GRVE and Hymers and their respective agents, representatives, executors, administrators, trustees, personal representatives, partners, directors, officers, shareholders, agents, attorneys, insurers, employees, representatives, predecessors, successors, heirs and assigns.

 

 

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3.4.       Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflict of laws. Any controversy or claim arising out of or relating to this Settlement Agreement or the breach thereof, shall be settled by court action in the state or federal courts sitting in Los Angeles, CA. The prevailing party in any such action shall recover all costs and attorney fees.

 

3.5.       Counterparts. This Agreement may be executed in multiple counterparts, all of which shall be deemed originals, and with the same effect as if all Parties had signed the same document. All of such counterparts shall be construed together with and shall constitute one Agreement, but in making proof, it shall only be necessary to produce one such counterpart. A facsimile transmission shall be as valid and enforceable as an original.

 

3.6.       Entire Understanding. This Agreement is the entire, final, and complete agreement of the Parties relating to the subject of this Agreement, and supersedes and replaces all prior or existing written and oral agreements between the Parties or their representatives relating thereto.

 

3.7.       Further Assurances. The Parties agree to execute and deliver to each other such other documents, and to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement.

 

3.8.       Amendments. This Agreement shall not be amended or otherwise modified unless in writing signed by all of the Parties hereto.

 

3.9.       Acknowledgment. GRVE and Hymers acknowledges (i) Each has read this Agreement and have consulted with their respective attorneys concerning its contents and legal consequences and have requested any change in language necessary or desirable to effectuate their intent and expectations so that the rule of construction of contracts construing ambiguities against the drafting party shall be inapplicable; (ii) They have taken all corporate actions and obtained all corporate authorizations, consents and approvals as are conditions precedent to their authority to execute this Agreement, and thus warrant that they are fully authorized to bind the Party for which they execute this Agreement; and, (iii) There has been and will be no assignment or other transfer of any claim released herein, or any part thereof, and each Party agrees to defend, indemnify and hold harmless the other party from any claims, obligations, or other liabilities, including specifically attorney’s fees and costs incurred, which result from the assertion by any third party of a right to any claim which is released by this Agreement. The foregoing warranties and representations shall survive the execution and delivery of this Agreement.

 

3.10.       Assignment. This Agreement shall be binding upon and inure to the benefit of each Party hereto or to such Party's heirs, executors, administrators, successors and assigns and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement.

 

3.11.       Confidentiality. Each of the Parties represents and agrees that it will keep the terms, provisions and amounts in this Agreement confidential and that it will not, without the consent of the other Party, disclose, divulge or furnish such confidential information to any person other than their immediate families, their attorney and accountant (all of whom will be informed of and bound by this confidentiality provision) except as required by law or, if necessary, to any applicable taxing authorities.

 

 

[Signature Page to Follow]

 

 

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IN WITNESS WHEREOF, the parties have signed this agreement upon the date first written above.

 

 

GROOVE BOTANICALS, INC.

 

 

By: /s/ Kent Rodriguez                             

 

Name: Kent Rodriguez
Title: CEO

 

 

Robert Hymers III

 

 

By: /s/ Robert Hymers III                                  

 

Name: Robert Hymers III

 

 

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Exhibit 23.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

 

We hereby consent to the incorporation in Amendment No. 1 to this Registration Statement on Form 10 of our report dated June 15, 2023, relating to the consolidated financial statements of Groove Botanicals, Inc. as of March 31, 2023 and March 31, 2022 and to all references to our firm included in this Registration Statement.

 

 

 

Certified Public Accountants

Lakewood, CO

June 15, 2023

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