GROO 10-Q
Groovy Company, Inc. (GROO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from __________ to __________
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation) |
| (IRS Employer Identification Number) |
(Address of principal executive offices) (Zip Code)
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Registrant’s telephone number, including area code
Securities registered under Section 12(b) of the Exchange Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
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| 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. ☐
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No
As of November 10, 2025, there were
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GROOVY COMPANY, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 2025
INDEX
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of Groovy Company, Inc., a Wyoming corporation (the “Company”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the ongoing coronavirus pandemic, the Company’s need for and ability to obtain additional financing, product demand, market and customer acceptance, competition, pricing and development difficulties, as well as general industry and market conditions and growth rates, general economic conditions, and other factors over which we have little or no control; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).
Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INDEX TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS | PAGE |
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Consolidated Condensed Balance Sheets at March 31, 2025 and December 31, 2024 (Unaudited) | 6 |
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Notes to Consolidated Condensed Financial Statements (Unaudited) | 10 |
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Groovy Company, Inc.
Consolidated Condensed Balance Sheets
(Unaudited)
| March 31, 2025 |
| December 31, 2024 | |
ASSETS |
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Current Assets |
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Cash and cash equivalents | $ | $ | ||
Total Current Assets |
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Property, plant and equipment, net |
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Intangible assets, net |
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TOTAL ASSETS | $ | $ | ||
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current Liabilities |
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Accounts payable and accrued expenses |
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Accrued compensation |
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Accrued interest |
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Convertible note payable, net of discount of $ |
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Note payable, related party |
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Derivative liability |
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Warrant liability |
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Total Current Liabilities |
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TOTAL LIABILITIES |
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Stockholders’ Deficit |
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Preferred stock Series A: |
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Common stock: |
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Additional paid-in capital |
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Stock to be issued |
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Accumulated deficit |
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Accumulated other comprehensive income |
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Total Stockholders’ Deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ |
The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
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Groovy Company, Inc.
Consolidated Condensed Statements of Operations
(Unaudited)
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Revenues | $ | $ | ||
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Operating Expenses |
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Contractor cost |
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Management fees |
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Professional fees |
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General and administrative expense |
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Rent expense |
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Depreciation and amortization |
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Total operating expenses |
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Net loss from operations |
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Other income (expense) |
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Other income (loss) |
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Interest expense |
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Amortization of debt discount |
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Default interest expense |
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Change in derivative |
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Gain related to SPA with PNXP |
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Income taxes |
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Total income (expense) |
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Net income (loss) | $ | $ | ( | |
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Basic and diluted loss per share | $ | $ | ||
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Weighted average number of shares outstanding |
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The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
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Groovy Company, Inc.
Consolidated Condensed Statement of Stockholders’ Equity
(Unaudited)
For the three month periods ended March 31, 2025 and 2024
| Preferred Stock | Common Stock |
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Shares |
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| Accumulated Deficit |
| Other Comprehensive Income |
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Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | $ | $ | ( | |||||||
Original convertible debt discount |
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Net income (loss) |
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Balance, March 31, 2024 | $ | $ | $ | $ | $ | ( | $ | $ | ( | |||||||
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Balance, December 31, 2024 | $ | $ |
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Executed SPA with PNXP |
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Net income (loss) |
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Balance, March 31, 2025 | $ | $ | $ | $ | $ | ( | $ | $ | ( | |||||||
The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
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Groovy Company, Inc.
Consolidated Condensed Statements of Cash Flows
(Unaudited)
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| For the Three Months Ended March 31, | ||
| 2025 |
| 2024 | |
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income (loss) | $ | $ | ( | |
Adjustment to reconcile net loss to net cash provided in operations: |
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Change in fair market value of derivatives |
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Amortization of debt discount |
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Depreciation and amortization |
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Gain on extinguishment of debt |
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Change in assets and liabilities: |
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Accounts payable and accrued expenses |
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Accrued compensation |
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Accrued interest |
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Net Cash (used in) provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds (payments) notes payable, related party |
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Proceeds from SPA with PNXP |
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Net Cash provided by investing activates |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds (payments) convertible notes payable |
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Net Cash provided by financing activates |
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Foreign currency translation |
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Net change in cash and cash equivalents |
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Cash and cash equivalents Beginning of period |
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Cash and cash equivalents End of period | $ | $ | ||
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Supplemental cash flow information |
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Cash paid for interest | $ | $ | ||
Cash paid for taxes | $ | $ | ||
The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
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Groovy Company, Inc.
Notes to the Unaudited Consolidated Condensed Financial Statements
March 31, 2025
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
Groovy Company, Inc. (“the Company”) was incorporated in the State of Nevada on July 8, 2009, under the name Santa Pita Corp. The Company’s original mission was to operate an internet portal for dentists and patients to access dental information, as well as a teeth-whitening business.
On July 30, 2012, the Company redirected its focus toward precious metal exploration and mining. Mineral exploration commenced with the execution of a mineral claim acquisition agreement between GEXPLO, SRL (the “Vendor”) and the Company, whereby the Company agreed to acquire from the Vendor a one hundred percent interest in a claim located in the Dominican Republic. Concurrent with this strategic shift, the Company was renamed Santo Mining Corp.
On April 2, 2015, Santo Mining Corp. entered into a “Plan of Exchange” Agreement with Cathay Cigars of Asia Corporation (“Cathay”), a Florida corporation. Pursuant to the terms of this agreement, the Company agreed to acquire 100% of the capital stock of Cathay in exchange for the issuance of 300,000 shares of Series A Preferred Stock of the Company, effectively transferring majority voting power to Cathay.
Santo Mining Corp. redomiciled to the State of Florida in July 2015. From July 2015 to August 2017, the Company evolved from an exporter and distributor of cigars and tobacco to Asia into a software development company specializing in blockchain and cryptocurrency NFTs, operating from Ho Chi Minh City (Saigon), Vietnam.
In July 2021, the Company redomiciled to the State of Wyoming, where it maintains an active business registration in good standing. Concurrently, the Company relocated its operational headquarters from Ho Chi Minh City (Saigon), Vietnam, to Medellín-Bogotá, Colombia. Through its subsidiary, Santo Blockchain Labs of Colombia, S.A.S., the Company continued its principal focus on blockchain, cryptography, artificial intelligence, web3, and fourth industrial revolution (4IR) software development.
On February 7, 2024, the Company filed with the State of Wyoming to change its name from Santo Mining Corp. to Groovy Company, Inc.
On February 19, 2025, the Company entered into an Exchange Agreement with Pineapple Express Cannabis Company. Under this agreement, the Company exchanged all its assets for an 87% controlling interest in Pineapple Express Cannabis Company. The Company will maintain and continue to develop the Groovy Platform as a Service (PaaS) for Pineapple Express Cannabis Company.
Currently, the Company has focused its endeavors on the development and operation of OTCM Protocol, a blockchain-based platform that creates digital meme tokens referred to as Security Meme Tokens that are backed by Series “M” Preferred Shares of over-the-counter traded companies. Our goal is to combine traditional securities custody with blockchain tokenization.
The Company has one other subsidiary, BlackFlamingo Ventures, LLC (Florida). This subsidiary focuses on providing essential administrative and logistical support for the Company’s operations. Its specialization in Latin America, Asia, and USA has a focus on facilitating cross-border transactions, navigating international regulations, and managing supply chain logistics.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating cost and allow it to continue as a going concern. The ability of the Company to continue as a going
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concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company includes obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany accounts and transactions have been eliminated.
Reclassification of Prior Period Presentation
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
Fiscal Year End
The Company elected December 31, as its fiscal year ending date.
Use of Estimates
The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents at March 31, 2025 and December 31, 2024 were $
Cash Flows Reporting
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.
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Foreign Currency Translation
The functional currency of our wholly owned subsidiaries is the currency of the primary economic environment in which the Company operates. Assets and liabilities denominated in currencies other than the functional currency are remeasured using the current exchange rate for monetary accounts and historical exchange rates for nonmonetary accounts, with exchange differences on remeasurement included in comprehensive income in our condensed consolidated statements of operations and comprehensive income. Our foreign subsidiaries that utilize foreign currency as their functional currency translate such currency into U.S. dollars using (i) the exchange rate on the balance sheet dates for assets and liabilities, (ii) the average exchange rates prevailing during the period for revenues and expenses, and (iii) historical exchange rates for equity. Any translation adjustments resulting from this process are shown separately as a component of accumulated other comprehensive loss within shareholders’ deficit in the condensed consolidated balance sheets.
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
Revenue Recognition
Effective January 1, 2021, the Company adopted Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which is effective for public business entities with annual reporting periods beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The Company’s initial application of ASC 606 did not have a material impact on its financial statements and disclosures and there was no cumulative effect of the adoption of ASC 606.
Revenue is recognized when all of the following criteria are met:
•Identification of the contract, or contracts, with a customer
A contract with a customer exists when (i) we enter into an enforceable contract with a customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance and the parties are committed to perform, and (iii) we determine that collection of substantially all consideration to which it will be entitled in exchange for goods or services that will be transferred is probable based on the customer’s intent and ability to pay the promised consideration.
•Identification of the performance obligations in the contract
Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, we apply judgment to determine whether promised goods or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised goods or services are accounted for as a combined performance obligation.
•Determination of the transaction price
The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer. Constraints are applied when estimating variable considerations based on historical experience where applicable.
•Allocation of the transaction price to the performance obligations in the contract
All current contracts are of a single performance obligation thus the entire transaction price is allocated to the single performance obligation. We determine standalone selling price taking into account available information such as historical selling prices of the performance obligation, geographic location, overall strategic objective, market conditions and internally approved pricing guidelines related to the performance obligation.
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•Recognition of revenue when, or as, we satisfy performance obligation
We satisfy performance obligations either over time or at a point in time as discussed in further detail below. Revenue is recognized at or over the time the related performance obligation is satisfied by transferring a promised good or service to a customer.
The Company generated revenue for the three months ended March 31, 2025, and 2024 of $
Concentrations of Credit Risk and Significant Customers
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, accounts receivable and restricted cash. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit-quality financial institutions in bank deposits, money market funds, U.S. government securities and other investment grade debt securities that have strong credit ratings. The Company has established guidelines relative to diversification of its cash and marketable securities and their maturities that are intended to secure safety and liquidity. These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates and changes in the Company’s operations and financial position. Although the Company may deposit its cash and cash equivalents with multiple financial institutions, its deposits, at times, may exceed federally insured limits.
Financial Instruments
The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
The fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2024. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
Property, Plant and Equipment
Furniture and equipment are stated at cost. Depreciation is computed by the straight-line method over estimated useful lives. Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment at least Annual or whenever facts and circumstances indicate that the carrying value may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent
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appraisals, if required. If the carrying amount of the long-lived asset is not recoverable, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. The Company recognized depreciation expenses of $
Intangible Assets
The Company’s intellectual property intangible assets primarily include proprietary technologies that facilitate product authentication and data tracking within our blockchain platform. Based on our evaluation under ASC 350, these assets have been determined to have indefinite useful lives, as they are not subject to foreseeable limits on the period over which they contribute to our cash flows. Accordingly, in line with ASC 350-30-35, these assets are not amortized but are subject to annual impairment testing. The Company evaluates these assets for impairment annually or more frequently if events or changes in circumstances indicate a potential impairment. The balance at March 31, 2025, and December 31, 2024, was $
The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments necessary (which include only normal recurring adjustments) to present fairly the financial position, results of operations, and cash flows at March 31, 2025 and for the related periods presented.
| March 31, 2024 |
| December 31, 2024 | ||
Intellectual property | $ | - |
| $ | 190,000 |
Less: Accumulated amortization and impairment |
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Totals | $ | - |
| $ | 190,000 |
Derivative Liabilities
Derivative liabilities include the fair value of instruments such as common stock warrants, preferred stock warrants and convertible features of notes, that are initially recorded at fair value and are required to be re-measured to fair value at each reporting period under provisions of ASC 480, Distinguishing Liabilities from Equity, or ASC 815, Derivatives and Hedging. The change in fair value of the instruments is recognized as a component of other income (expense) in the Company’s statements of operations until the instruments settle, expire or are no longer classified as derivative liabilities. The Company estimates the fair value of these instruments using the Black-Scholes pricing model. The significant assumptions used in estimating the fair value include the exercise price, volatility of the stock underlying the instrument, risk-free interest rate, estimated fair value of the stock underlying the instrument and the estimated life of the instrument. At March 31, 2025, and December 31, 2024, the Company had $
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, as clarified by ASC 740-10, Accounting for Uncertainty in Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities and net operating loss and tax credit carryforwards given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. Valuation allowances are recorded related to deferred tax assets based on the “more likely than not” criteria of ASC 740.
ASC 740-10 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
The Company recognizes expenses for tax penalties and interest assessed by the Internal Revenue Service and other taxing authorities upon receiving valid notice of assessments. The Company has received no such notices as of March 31, 2025.
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In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences will become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company has recorded a full valuation allowance against its net deferred tax assets because it is not currently able to conclude that it is more likely than not that these assets will be realized. The amount of deferred tax assets considered to be realizable could be increased in the near term if estimates of future taxable income during the carryforward period are increased.
As of March 31, 2025, the Company had unused net operating loss carry forwards of $
No deferred tax assets or liabilities were recognized as of March 31, 2025, or 2024.
Net Income (Loss) Per Common Share
Net income (loss) per share is calculated in accordance with FASB ASC 260, “Earnings Per Share.” The weighted-average number of common shares outstanding during each year is used to compute basic earnings or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.
Basic net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at March 31, 2025, and 2024, respectively. At March 31, 2025, and 2024, the Company had no dilutive potential common shares.
Share-Based Expense
ASC 718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity - Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier performance commitment date or performance completion date.
Share-based expenses were $0 and $0 for the three months ending March 31, 2025, and 2024, respectively.
Commitments and Contingencies
The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred, and the amount of the assessment can be reasonably estimated. There were no known commitments or contingencies as of March 31, 2025, and 2024.
Recent Accounting Pronouncements
The Company has reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting
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principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
The Company has capitalized costs for equipment as follows:
March 31, 2025 |
| December 31, 2024 | ||
Property, plant and equipment | $ | $ | ||
Accumulated depreciation |
|
| ||
Property, plant and equipment, net accumulated depreciation | $ | $ | ||
Depreciation expenses for the three months ended March 31, 2025, and 2024 were $
NOTE 4 - INTANGIBLE PROPERTY
In March of 2025, the Company sold the rights in the amount of $
·SKULLYS®
·DNATags®
The Company recorded the property and intangibles as an intangible asset. The valuation of the properties was booked at Fair Market Value.
NOTE 5 - CONVERTIBLE NOTES PAYABLE
At March 31, 2025 the balance of convertible notes payable were $
NOTE 6 - ACCRUED INTEREST
The Company’s accrued interest consisted of the following:
| March 31, 2025 |
| December 31, 2024 | |
Carpathia, LLC(1) | $ | $ | ||
JP Carey, LLC(2) |
|
| ||
Total Accrued Interest | $ | $ |
1, 2 Accrued interests at December 31, 2024, was included in the Pineapple Express (PNXP) share purchase agreement.
NOTE 7 - DERIVATIVE LIABILITY
The Company’s derivative liabilities consist of convertible notes with variable conversion price provisions. These instruments are classified as derivative liabilities under ASC 815 due to their potential for a variable number of shares upon settlement. The fair value of these derivative liabilities is estimated at initial recognition and remeasured at each reporting date using the Black-Scholes pricing model. Changes in fair value are recorded as derivative income or expense in the statement of operations. The significant assumptions used in estimating the fair value include the exercise price, volatility of the stock underlying the instrument, risk-free interest rate, estimated fair value of the stock underlying the instrument and the estimated life of the instrument.
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A summary of the activity of the derivative liability for the notes above is as follows:
|
| March 31, 2025 |
| December 31, 2024 |
Balance at Beginning of period | $ | - | $ | |
Increase in derivative due to new issuances |
| - |
| |
Derivative income due to mark to market adjustment |
| - |
| ( |
Balance at end of period | $ | - | $ |
NOTE 8 - RELATED PARTY TRANSACTIONS
EMPLOYMENT AND BOARD OF DIRECTOR AGREEMENTS
On October 1, 2023, the Company executed employment and board of director agreements with its key employees, the controlling shareholders, who are its officers and directors of the Company.
·Mr. Franjose Yglesias, Employment Agreement: Ten (10) year contract, annual salary of $
Amounts included in accruals represent amounts due to the officers and directors for corporate obligations under the above-mentioned agreements. Payments on behalf of the Company and accruals made under contractual obligation are accrued. As of March 31, 2025, and December 31, 2024, accrued expenses were $
NOTE PAYABLE
In support of the Company’s efforts and cash requirements, it has relied on advances from the Chief Executive Officer’s until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support. All advances made in support of the Company are formalized by demand notes, at a 0.00% annual interest rate.
For the period ended March 31, 2025, and the year ended December 31, 2024, the balance of notes payable-related party was $
NOTE 9 - STOCKHOLDERS’ DEFICIENCY
At March 31, 2024, and December 31, 2024, there are
At March 31, 2025, and December 31, 2024, there are
NOTE 10 - COMMITMENTS AND CONTINGENCIES
From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.
NOTE 11 - SUBSEQUENT EVENTS
The Company implemented a
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward- looking statements. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Company Overview
Groovy Company, Inc. (“the Company”) was incorporated in the State of Nevada on July 8, 2009, under the name Santa Pita Corp. The Company’s original mission was to operate an internet portal for dentists and patients to access dental information, as well as a teeth-whitening business.
On July 30, 2012, the Company redirected its focus toward precious metal exploration and mining. Mineral exploration commenced with the execution of a mineral claim acquisition agreement between GEXPLO, SRL (the “Vendor”) and the Company, whereby the Company agreed to acquire from the Vendor a one hundred percent interest in a claim located in the Dominican Republic. Concurrent with this strategic shift, the Company was renamed Santo Mining Corp.
On April 2, 2015, Santo Mining Corp. entered into a “Plan of Exchange” Agreement with Cathay Cigars of Asia Corporation (“Cathay”), a Florida corporation. Pursuant to the terms of this agreement, the Company agreed to acquire 100% of the capital stock of Cathay in exchange for the issuance of 300,000 shares of Series A Preferred Stock of the Company, effectively transferring majority voting power to Cathay.
Santo Mining Corp. redomiciled to the State of Florida in July 2015. From July 2015 to August 2017, the Company evolved from an exporter and distributor of cigars and tobacco to Asia into a software development company specializing in blockchain and cryptocurrency NFTs, operating from Ho Chi Minh City (Saigon), Vietnam.
In July 2021, the Company redomiciled to the State of Wyoming, where it maintains an active business registration in good standing. Concurrently, the Company relocated its operational headquarters from Ho Chi Minh City (Saigon), Vietnam, to Medellín-Bogotá, Colombia. Through its subsidiary, Santo Blockchain Labs of Colombia, S.A.S., the Company continued its principal focus on blockchain, cryptography, artificial intelligence, web3, and fourth industrial revolution (4IR) software development.
On February 7, 2024, the Company filed with the State of Wyoming to change its name from Santo Mining Corp. to Groovy Company, Inc.
On February 19, 2025, the Company entered into an Exchange Agreement with Pineapple Express Cannabis Company. Under this agreement, the Company exchanged all its assets for an 87% controlling interest in Pineapple Express Cannabis Company. The Company will maintain and continue to develop the Groovy Platform as a Service (PaaS) for Pineapple Express Cannabis Company.
Currently, the Company has focused its endeavors on the development and operation of OTCM Protocol, a blockchain-based platform that creates digital meme tokens referred to as Security Meme Tokens that are backed by Series “M” Preferred Shares of over-the-counter traded companies. Our goal is to combine traditional securities custody with blockchain tokenization.
The Company has one other subsidiary, BlackFlamingo Ventures, LLC (Florida). This subsidiary focuses on providing essential administrative and logistical support for the Company’s operations. Its specialization in Latin America, Asia, and USA has a focus on facilitating cross-border transactions, navigating international regulations, and managing supply chain logistics.
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Results of Operations for the three months ended March 31, 2025 and 2024:
Revenue and cost of goods sold
For the three months ended March 31, 2025 and 2024, the company generated revenues of $8,494 and $0, respectively.
Operating expenses
Total expenses for the three months ended March 31, 2025 and 2024 were $139,090 and $176,634, respectively. The expenses for the three months ended March 31, 2025 and 2024 consisted of contractor cost of $25,187 and $0, respectively; management compensation of $37,500 and $112,500 respectively; professional fees of $50,241 and $716, respectively; general and administrative costs of $16,799 and $40,944, respectively and rent expense of $0 and $13,111, respectively and depreciation expense of $9,363 and 9,363, respectively.
Other income (loss) for the three months ended March 31, 2025 and 2024 was $7,641,808 and ($314,620), respectively.
Net Loss
The net income (loss) for the three months ended March 31, 2025 and 2024 was $7,641,808 and ($314,620) respectively.
Liquidity and Capital Resources
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business.
As of March 31, 2025, the Company had $1,141 in cash and cash equivalents. The Company generated $8,494 in revenues and has relied primarily upon capital generated from public and private offerings of its securities.
The Company sustained a (loss) from operations of ($130,596) for the three months ending March 31, 2025. The Company has accumulated losses totaling $3,704,815 at March 31, 2025. Because of the absence of positive cash flows from operations, the Company will require additional funding for continuing the development and marketing of products. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We are presently able to meet our obligations as they come due through our borrowing and the support of our shareholders. At March 31, 2025, we had a working capital deficit of $306,896. Our working capital deficit is due to the results of operations.
Cash Flows from Operating, Investing and Financing Activities
The following table summarizes our cash flows for the period indicated:
|
| For the three months ended March 31, 2025 |
| For the three months ended March 31, 2024 | ||
Cash flows from operating activities |
| $ | (1,402,386) |
| $ | (54,651) |
Cash flows from investing activities |
| $ | 1,401,343 |
| $ | - |
Cash flows from financing activities |
| $ | - |
| $ | 55,000 |
Going Concern
Management believes that current trends toward lower capital investment in start-up companies pose the most significant challenge to the Company’s success over the next year and in future years. Additionally, the Company will have to meet all the financial disclosure and reporting requirements associated with being a public reporting company. The Company’s management will have to spend additional time on policies and procedures to make sure it is compliant
19
with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act of 2002. This additional corporate governance time required of management could limit the amount of time management has to implement is business plan and impede the speed of its operations. Accordingly, the Company’s management has concluded that these conditions raise substantial doubt about our ability to continue as a going concern. There can be no assurance that we will be able to achieve our business plan objectives or be able to achieve or maintain cash- flow-positive operating results. If we are unable to generate adequate funds from operations or raise sufficient additional funds, we may not be able to repay our existing debt, continue to operate our business network, respond to competitive pressures or fund our operations. As a result, we may be required to significantly reduce, reorganize, discontinue or shut down our operations.
Limited operating history; need for additional capital
There is no historical financial information about us upon which to base an evaluation of our performance. We are in a start-up stage of operations and have generated minimal revenues since inception. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders
Subsequent Events
The Company implemented a 1-for-2,500 Reverse Split of the Company’s common stock (the “Reverse Split”) effective as of the close of business on May 6, 2025. As a result, every 2,500 pre-Reverse Split shares of common stock outstanding will automatically combine into one new share of post-Reverse Split common stock without any action on the part of the holders.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
A smaller reporting company is not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Company’s management, as appropriate, to allow timely decisions regarding required disclosure.
The Company’s management, with the participation of our principal executive and principal financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our principal executive and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective.
Management’s Report on Internal Controls over Financial Disclosure Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the
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Company’s internal control over financial reporting as of March 31, 2025 using the criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of March 31, 2025, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
1.We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.
2.We did not maintain appropriate cash controls – As of March 31, 2025, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on the Company’s bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in their bank accounts. \
3.We did not implement appropriate information technology controls – As of March 31, 2025, the Company retains copies of all financial data and material agreements; however, there is no formal procedure or evidence of normal backup of the Company’s data or off-site storage of data in the event of theft, misplacement, or loss due to unmitigated factors.
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of March 31, 2025 based on criteria established in Internal Control- Integrated Framework issued by COSO.
System of Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2025. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As described above, the Company has concluded that the internal control over financial reporting is ineffective in 2023 because of the material weakness identified by our independent auditor.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we are involved in ordinary routine litigation typical for companies engaged in our line of business. As of the date of this Quarterly Report on Form 10-Q, there are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company that we believe would be likely, individually or in the aggregate, to have a material adverse effect on our financial condition or results of operations.
ITEM 1A. RISK FACTORS
Smaller reporting companies are not required to provide disclosure pursuant to this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
(a) Exhibits required by Item 601 of Regulation SK.:
Number |
| Description |
|
|
|
| Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101. INS |
| XBRL Instance Document |
101. SCH |
| XBRL Taxonomy Extension Schema Document |
101. CAL |
| XBRL Taxonomy Calculation Linkbase Document |
101. DEF |
| XBRL Taxonomy Extension Definition Linkbase Document |
101. LAB |
| XBRL Taxonomy Label Linkbase Document |
101. PRE |
| XBRL Taxonomy Presentation Linkbase Document |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Groovy Company, Inc. |
|
|
Dated: November 13, 2025 | /s/ Berge Abajian |
| Berge Abajian |
| Chief Executive Officer (principal executive officer, principal accounting officer and principal financial officer) |
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