Groovy Co. Swings to Profit on PNXP Deal, Cash Dwindles

TL;DR

**GROO's 'profit' is a one-time asset sale, not sustainable operations; this stock is a speculative gamble with high risk.**

AI Summary

Groovy Company, Inc. (GROO) reported a significant turnaround for the six months ended June 30, 2025, achieving a net income of $7,504,220, a stark contrast to the net loss of $1,472,248 in the prior-year period. This dramatic improvement was primarily driven by a substantial gain of $7,772,404 on a Sale and Purchase Agreement (SPA) with PNXP. Revenue from sales also saw a notable increase, reaching $11,676 for the six months ended June 30, 2025, up from $1,250 in the same period of 2024. Despite this, the company's cash and cash equivalents decreased to $1,679 as of June 30, 2025, from $2,184 at December 31, 2024, and total assets plummeted from $247,038 to $37,806 over the same period, largely due to the exchange of assets for an 87% controlling interest in Pineapple Express Cannabis Company. Operating expenses remained high at $278,360 for the six months ended June 30, 2025, contributing to a net loss from operations of $268,184. The company continues to face a 'going concern' risk, relying on additional capital from management and significant stockholders to fund operating losses.

Why It Matters

This filing reveals a company in significant transition, pivoting from blockchain and AI to cannabis through a major asset exchange with Pineapple Express Cannabis Company. For investors, the $7.5 million net income is a positive, but it's largely an accounting gain from the PNXP deal, not sustained operational profitability. The drastic reduction in total assets and persistent 'going concern' warning signal high risk. Employees and customers of Groovy's 'OTCM Protocol' and 'Groovy Platform as a Service' may face uncertainty given the company's volatile financial state and frequent strategic shifts, impacting competitive positioning in both the blockchain and cannabis sectors.

Risk Assessment

Risk Level: high — The company explicitly states a 'going concern' risk, indicating it has not established an ongoing revenue source sufficient to cover operating costs. Cash and cash equivalents are critically low at $1,679 as of June 30, 2025, and total assets have dramatically decreased from $247,038 to $37,806, suggesting a precarious financial position.

Analyst Insight

Investors should exercise extreme caution and avoid GROO given the explicit 'going concern' warning and reliance on one-time gains for profitability. The company's frequent business model shifts and minimal cash reserves indicate high speculative risk, making it unsuitable for most portfolios.

Financial Highlights

debt To Equity

N/A

revenue

$11,676

operating Margin

-2300%

total Assets

$37,806

total Debt

$436,799

net Income

$7,504,220

eps

N/A

gross Margin

87.16%

cash Position

$1,679

revenue Growth

834.1%

Revenue Breakdown

Key Numbers

• $7,504,220 — Net income (for the six months ended June 30, 2025, primarily due to a gain on SPA with PNXP)
• $1,472,248 — Net loss (for the six months ended June 30, 2024)
• $7,772,404 — Gain on SPA with PNXP (contributed significantly to net income for the six months ended June 30, 2025)
• $11,676 — Sales revenue (for the six months ended June 30, 2025, up from $1,250 in the prior year)
• $1,679 — Cash and cash equivalents (as of June 30, 2025, a decrease from $2,184 at December 31, 2024)
• $37,806 — Total Assets (as of June 30, 2025, a significant drop from $247,038 at December 31, 2024)
• $268,184 — Net loss from operations (for the six months ended June 30, 2025, indicating ongoing operational challenges)
• 87% — Controlling interest (acquired in Pineapple Express Cannabis Company through asset exchange)
• 7,384,006 — Shares of common stock outstanding (as of November 20, 2025)

Key Players & Entities

• Groovy Company, Inc. (company) — registrant
• Pineapple Express Cannabis Company (company) — partner in asset exchange
• PNXP (company) — counterparty in Sale and Purchase Agreement
• Santo Mining Corp. (company) — former name of Groovy Company, Inc.
• BlackFlamingo Ventures, LLC (company) — subsidiary of Groovy Company, Inc.
• SEC (regulator) — Securities and Exchange Commission
• Wyoming (regulator) — state of incorporation
• OTCM Protocol (company) — blockchain-based platform developed by Groovy Company, Inc.
• Groovy Platform as a Service (PaaS) (company) — platform maintained and developed for Pineapple Express Cannabis Company

FAQ

Risk Factors

• Going Concern Uncertainty [high — financial]: The company has a history of operating losses and a significant accumulated deficit. It relies on additional capital from management and significant stockholders to fund operating losses, indicating a substantial doubt about its ability to continue as a going concern.
• Deteriorating Cash Position [high — financial]: Cash and cash equivalents decreased from $2,184 at December 31, 2024, to $1,679 as of June 30, 2025. This, coupled with a drastic reduction in total assets, highlights a precarious liquidity situation.
• Asset Impairment and Restructuring [high — financial]: Total assets plummeted from $247,038 to $37,806 due to the exchange of assets for an 87% controlling interest in Pineapple Express Cannabis Company. This significant asset reduction and the write-off of intangible assets ($190,000 in prior period) suggest substantial restructuring and potential value erosion.
• Persistent Operating Losses [medium — operational]: Despite a reported net income for the period, the company incurred a net loss from operations of $268,184 for the six months ended June 30, 2025. High operating expenses, totaling $278,360, continue to outpace operational revenue.
• High Operating Expenses [medium — financial]: Operating expenses remained substantial at $278,360 for the six months ended June 30, 2025, including significant contractor costs ($63,261) and professional fees ($87,946). These costs contribute directly to the operational losses.
• Significant Debt Reduction and Restructuring [medium — financial]: Total liabilities decreased dramatically from $8,418,961 to $436,799, largely due to the extinguishment of convertible notes payable and derivative/warrant liabilities. While this reduces leverage, it was achieved through asset exchange and potentially cash outlays not fully detailed.

Industry Context

The cannabis industry is characterized by rapid growth, evolving regulatory landscapes across different jurisdictions, and intense competition. Companies often face challenges related to financing, compliance, and market access. Recent trends include consolidation, increased institutional investment, and a growing focus on product innovation and branding.

Regulatory Implications

Operating in the cannabis sector subjects Groovy Company to complex and varying regulations at federal, state, and local levels. Changes in these regulations, such as those related to licensing, taxation, or product safety, could materially impact the company's operations and financial performance. Compliance costs are also a significant factor.

What Investors Should Do

1. Scrutinize the sustainability of the reported net income, given it is heavily reliant on a one-time gain from the SPA with PNXP, rather than core operational profitability.
2. Monitor the company's ability to secure additional capital to address ongoing operating losses and the 'going concern' risk.
3. Analyze the performance and integration of the acquired 87% controlling interest in Pineapple Express Cannabis Company, as it now represents a significant portion of the company's structure.
4. Assess the trajectory of operating expenses relative to revenue generation to determine if operational efficiency is improving.
5. Evaluate the long-term strategy for asset utilization and cash management given the drastic reduction in total assets and cash position.

Key Dates

• 2025-06-30: Six Months Ended — Reporting period showing a significant net income of $7,504,220, driven by a large gain on SPA, but also a net loss from operations of $268,184.
• 2024-06-30: Six Months Ended — Prior year period reported a net loss of $1,472,248, with minimal revenue of $1,250 and no significant gains.
• 2025-06-30: Balance Sheet Date — Total assets significantly reduced to $37,806, with cash at $1,679, reflecting asset exchange and ongoing operational challenges.
• 2024-12-31: Balance Sheet Date — Prior year-end showed substantially higher total assets of $247,038 and cash of $2,184, before the major asset exchange.

Glossary

Sale and Purchase Agreement (SPA)

A legally binding contract that outlines the terms and conditions of a sale of goods or services between a buyer and a seller. (A significant gain of $7,772,404 on an SPA with PNXP was the primary driver of the company's reported net income for the period.)

Going Concern

An accounting assumption that a business will continue to operate for the foreseeable future, typically at least 12 months from the reporting date. (The company faces a 'going concern' risk, meaning there is substantial doubt about its ability to continue operations without additional funding.)

Accumulated Deficit

The cumulative net losses of a company that have not been offset by net income since its inception. (Groovy Company has a large accumulated deficit of ($3,842,403) as of June 30, 2025, indicating a history of unprofitability.)

Controlling Interest

The ownership of more than 50% of a company's voting stock, granting the holder the power to direct the management and policies of the company. (Groovy Company acquired an 87% controlling interest in Pineapple Express Cannabis Company through an asset exchange.)

Year-Over-Year Comparison

Compared to the prior year's six-month period ended June 30, 2024, Groovy Company, Inc. has shown a dramatic improvement in net income, swinging from a loss of $1,472,248 to a profit of $7,504,220. This turnaround is primarily attributed to a substantial $7,772,404 gain on a Sale and Purchase Agreement, not present in the prior period. Revenue from sales also saw a significant increase, rising from $1,250 to $11,676. However, the company's balance sheet reflects a drastic reduction in total assets from $247,038 to $37,806, largely due to an asset exchange for a controlling interest in another company, and a decrease in cash reserves. Despite the net income, operational performance remains weak, with a net loss from operations of $268,184, and the 'going concern' risk persists.

Key Financial Figures

• $0.00001 — were 7,384,006 shares of common stock, $0.00001 par value per share, outstanding. 2 G

Filing Documents

• groo-20250630_10q.htm (10-Q) — 392KB
• groo_ex311.htm (EX-31.1) — 8KB
• groo_ex321.htm (EX-32.1) — 4KB
• 0001499275-25-000012.txt ( ) — 2235KB
• groo-20250630_cal.xml (EX-101.CAL) — 26KB
• groo-20250630_def.xml (EX-101.DEF) — 36KB
• groo-20250630_lab.xml (EX-101.LAB) — 117KB
• groo-20250630_pre.xml (EX-101.PRE) — 116KB
• groo-20250630.xsd (EX-101.SCH) — 29KB
• groo-20250630_10q_htm.xml (XML) — 235KB

Financial Information

Part I. Financial Information 5

Financial Statements

Item 1. Financial Statements 5

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 18

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk. 20

Controls and Procedures

Item 4. Controls and Procedures. 20

Other Information

Part II. Other Information 22

Legal Proceedings

Item 1. Legal Proceedings. 22

Risk Factors

Item 1A. Risk Factors. 22

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 22

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities. 22

Mine Safety Disclosures

Item 4. Mine Safety Disclosures. 22

Other Information

Item 5. Other Information. 22

Exhibits

Item 6. Exhibits. 23

Signatures

Signatures 24 3 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, di

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS. INDEX TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS PAGE Consolidated Condensed Balance Sheets at June 30, 2025 and December 31, 2024 (Unaudited) 6 Consolidated Condensed Statements of Operations for the three and six month periods ended June 30, 2025 and 2024 (Unaudited) 7 Consolidated Condensed Statement of Stockholders' Deficit for the three and six month periods ended June 30, 2025 and 2024 (Unaudited) 8 Consolidated Condensed Statements of Cash Flows for the six month periods ended June 30, 2025 and 2024 (Unaudited) 9 Notes to Consolidated Condensed Financial Statements (Unaudited) 10 5 Groovy Company, Inc. Consolidated Condensed Balance Sheets (Unaudited) June 30, 2025 December 31, 2024 ASSETS Current Assets Cash and cash equivalents $ 1,679 $ 2,184 Total Current Assets 1,679 2,184 Property, plant and equipment, net 36,127 54,854 Intangible assets, net - 190,000 TOTAL ASSETS $ 37,806 $ 247,038 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable and accrued expenses 35,637 47,419 Accrued compensation 262,500 562,500 Accrued interest - 931,871 Convertible note payable, net of discount of $ 0 and $ 46,627 133,500 3,678,753 Note payable, related party 5,162 70,433 Derivative liability - 3,122,985 Warrant liability - 5,000 Total Current Liabilities 436,799 8,418,961 TOTAL LIABILITIES 436,799 8,418,961 Stockholders' Deficit Preferred stock Series A: 500,000,000 shares authorized; $ 0.001 par value. 500,000,000 and 350,000,000 shares issued and outstanding, respectively 500,000 350,000 Common stock: 20,000,000,000 authorized; $ 0.00001 par value 7,384,006 shares issued and outstanding, respectively 74 74 Additional paid-in capital 2,307,511 2,181,277 Stock to be issued 630,800 630,800 Accumulated deficit ( 3,842,403 ) ( 11,339,099 ) Accumulated other compreh

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View this 10-Q filing on SEC EDGAR