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Groovy Company (GROO) Risk Analysis

Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning. Groovy Company disclosed 24 risk factors in its most recent earnings report. Groovy Company reported the most risks in the “Finance & Corporate” category.

Risk Overview Q4, 2025

Source: the company's latest filing for the period ended Dec 31, 2025, filed Mar 17, 2026

Risk Distribution
24Risks
Sector Avg.Finance & CorporateTech & InnovationLegal & RegulatoryProductionAbility to SellMacro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Risk Change Over Time

Groovy Company disclosed risks per quarterNo. of Risks24Q4Showing: Q4, 2025
Risks removedRisks addedRisks changedGroovy Company Risk Factors
No changes from previous report

Risk Highlights Q4, 2025

Main Risk Category
Finance & Corporate
With 9 Risks
Number of Disclosed Risks
24
S&P 500 Average: 32
Recent Changes
0Risks added
0Risks removed
0Risks changed
Since Dec 2025
Number of Risk Changed
0
S&P 500 Average: 1

Risk Word Cloud

18.the market for illiquid otc securities is subject to regulatory change that could reduce the size of our addressable market.subject to regulatory change3.our financial statements are unaudited and subject to material adjustment upon completion of an independent audit.subject to material adjustment18.the market for illiquid otc securities is subject to regulatory change that could reduce the size of our addressable market.size of our addressable market8.our compliance with the sec’s category 1 issuer-authorized tokenization framework is subject to evolving regulatory interpretation, and any adverse regulatory determination could materially impair our operations.subject to evolving regulatory interpretation17.patrick mokros, our coo, is also the founder and ceo of empire stock transfer, which serves as our transfer agent and custody provider.ceo of empire stock transfer8.our compliance with the sec’s category 1 issuer-authorized tokenization framework is subject to evolving regulatory interpretation, and any adverse regulatory determination could materially impair our operations.category 1 issuer-authorized tokenization framewor9.we are subject to anti-money laundering, kyc, and sanctions compliance requirements that may be costly to implement.subject to anti-money laundering23.the company does not currently have a chief financial officer; the absence of a qualified cfo with expertise in both securities accounting and digital assets creates financial reporting and compliance risk.digital assets creates financial reporting14.cybersecurity breaches, data loss, or unauthorized access to our systems could harm our business.unauthorized access to our systems5.the intangible asset was received in a related-party transaction from our cto and is subject to additional scrutiny.subject to additional scrutiny

Risk Factors Full Breakdown - Total Risks 24

Share Price & Shareholder Rights4 | 16.7%
  • Share Price & Shareholder Rights - Risk 1
    5.The intangible asset was received in a related-party transaction from our CTO and is subject to additional scrutiny.

    The OTCM Protocol software platform was assigned to the Company pursuant to an IP Assignment Agreement dated June 12, 2025, between the Company and Franjose Yglesias, our Chief Technology Officer and co-founder. Mr. Yglesias received 100,000,000 shares of Series A Preferred Stock as consideration, of which 85,000,000 were returned to treasury and 15,000,000 were retained by Mr. Yglesias. Related-party transactions are inherently subject to conflicts of interest. Although the transaction was supported by a third-party software valuation report, the SEC or investors may challenge the valuation methodology, the arm’s length nature of the transaction, or the accounting treatment. Any such challenge could result in a restatement, impairment charge, or regulatory inquiry.

  • Share Price & Shareholder Rights - Risk 2
    15.Our capital structure includes a large number of authorized but unissued preferred shares, which could result in significant dilution.

    Our authorized capital includes 100,000,000 shares of Series A Preferred Stock (of which 55,000,000 remain in treasury), 200,000,000 shares each of Series B, C, and S Preferred Stock, and 1,000,000,000 shares of Series M Preferred Stock, all of which are currently unissued. The issuance of any of these securities could result in substantial dilution to holders of our common stock. The terms and preferences of these preferred series have not yet been designated. The Series M Preferred Stock is intended for the ST22 Security Token backing mechanism; issuance of up to 1,000,000,000 shares could significantly affect our capital structure and existing stockholder rights.

  • Share Price & Shareholder Rights - Risk 3
    16.Our common stock has lost its Rule 15c2-11 eligibility and is currently quoted on the Expert Market; we are working to restore eligibility.

    Our common stock is currently quoted on the Expert Market under the ticker symbol "GROO." The Expert Market is a tier of OTC Markets Group that restricts trading to broker-dealers and sophisticated investors only; retail investors generally cannot purchase Expert Market securities through most brokerage platforms. The Company lost its Rule 15c2-11 eligibility, resulting in relegation to the Expert Market, which significantly restricts trading activity and limits investor access. The Company is in the process of filing a Form 211 with FINRA to restore Rule 15c2-11 eligibility and reinstate quotation on the OTC Pink or OTCQB marketplace. There is no assurance that the Company will regain 15c2-11 eligibility within any particular timeframe, or at all. Until eligibility is restored, trading in GROO common stock will remain restricted to the Expert Market, which may adversely affect the market price and liquidity of our common stock. 10

  • Share Price & Shareholder Rights - Risk 4
    17.Patrick Mokros, our COO, is also the founder and CEO of Empire Stock Transfer, which serves as our transfer agent and custody provider.

    Empire Stock Transfer, Inc., an SEC-registered transfer agent, serves as the Series M Preferred Share custodian for the OTCM Protocol’s ST22 Security Token framework. Empire Stock Transfer was founded by and is led by Patrick Mokros, our Chief Operating Officer and co-founder. This relationship represents a significant related-party arrangement. While we believe the custody services are provided on commercially reasonable terms, conflicts of interest may arise. If Empire Stock Transfer is unable to perform its obligations, or if the relationship is terminated, our ability to operate the ST22 Security Token issuance and custody framework could be materially impaired.

Accounting & Financial Operations4 | 16.7%
Debt & Financing1 | 4.2%

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky. The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment. They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result. It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process. Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”. Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report. According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing. You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector. Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements. A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below. 1. Financial & Corporate Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results. Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing. Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments. Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances. 2. Legal & Regulatory Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company. Regulation – risks related to compliance, GDPR, and new legislation. Environmental / Social – risks related to environmental regulation and to data privacy. Taxation & Government Incentives – risks related to taxation and changes in government incentives. 3. Production Costs – risks related to costs of production including commodity prices, future contracts, inventory. Supply Chain – risks related to the company’s suppliers. Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls. Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation. 4. Technology & Innovation Innovation / R&D – risks related to innovation and new product development. Technology – risks related to the company’s reliance on technology. Cyber Security – risks related to securing the company’s digital assets and from cyber attacks. Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying. 5. Ability to Sell Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers. Competition – risks related to the company’s competition including substitutes. Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration. Brand & Reputation – risks related to the company’s brand and reputation. 6. Macro & Political Economy & Political Environment – risks related to changes in economic and political conditions. Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19. International Operations – risks related to the global nature of the company. Capital Markets – risks related to exchange rates and trade, cryptocurrency.