Groove Botanicals (GRVE) 8-K Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 2, 2010

	Avalon Oil & Gas, Inc.
	(Exact name of registrant as specified in its charter)
Nevada	1-12850	84-1168832
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS EmployerIdentification No.)
	7808 Creekridge Circle, Suite 105
	Minneapolis, MN  55439
	(Address of principal executive offices) (Zip Code)
	(612) 359-9020
	Registrant's telephone number, including area code
	(Former name or former address, if changed since last report.)

                                                                                                                                  0;                                                                 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 4 —Matters Related to Accountants and Financial Statements

Item 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW.

On July 2, 2010, the officer of Avalon Oil & Gas, Inc. (the “Company”) authorized to take such action, after consultation with and upon recommendation from the Audit Committee of the Board of Directors of the Company, concluded the Company’s previously issued audited financial statements for the twelve months ended March 31, 2009 included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 14, 2009, and all of the Company’s subsequent interim financial statements filed with the Securities and Exchange Commission prior to the fiscal year ended March 31, 2010, should no longer be relied upon and that disclosure should be made and action should be taken to prevent future reliance.  The Company’s audited financial statements for the twelve months ended March 31, 2010 and March 31, 2009, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 22, 2010, should be relied upon rather than the financial statements filed with the Securities and Exchange Commission prior to this date.

Such conclusion is based upon the following: The $481,072 referred to in the schedule on page F-31 of the audited financial statements for the twelve months ended March 31, 2010  included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 22, 2010  containing a comparison of the standardized measure of discounted future net cash flows to the net carrying value of proved natural gas and oil properties at March 31, 2010 is a result of a ceiling test write-down in accordance with Rule 4-10(c)(4) of Regulation S-X.  $93,999 of this amount was written-down during the year ended March 31, 2007, and the balance of $387,073, was written down during the year ended March 31, 2009.  There was no write-down in our financial statements for the year ended March 31, 2009 as originally filed with the SEC on July 14, 2009.  We have included below our re-stated financial statements for the year ended March 31, 2009:

Avalon Oil and Gas, Inc.

Condensed Consolidated Balance Sheets

UNAUDITED

	March 31, 2009
Assets	RE-STATED
Current assets
Cash and cash equivalents	$	26,406
Accounts receivable		40,827
Deposits and prepaid expenses		43,340
Receivable from joint interests		159,208
Notes receivable		-
Total current assets		269,781
Property and equipment, net		28,190
Unproven oil and gas properties		2,274,722
Producing oil and gas properties, net		421,440
Goodwill		-
Intellectual property rights, net		962,583
Total assets	$	3,956,716
Liabilities and stockholders' deficit
Current liabilities
Accounts payable and accrued liabilities	$	744,892
Accrued liabilities-related parties		34,468
Dividends payable to related party		-
Accrued liabilities to joint interests		42,265
Notes payable, net of discount		600,982
Total current liabilities		1,422,607
Accrued ARO liability		67,865
		1,490,472
Commitments and contingencies		-
Stockholders' deficit
Preferred stock, Series A, $0.10 par value,   1,000,000 shares authorized; 100 shares
issued and outstanding		500,000
Common stock, $0.001 par value; 50,000,000   shares authorized; 98,278,193
shares issued and outstanding at March 31,
2009		98,278
Additional paid-in capital		26,761,738
Common stock subscribed		3,175
Accumulated deficit		(24,896,947	)
Total stockholder's equity		2,466,244
Total liabilities and stockholders' equity	$	3,956,716

Avalon Oil and Gas, Inc.

Condensed Consolidated Statements of Operations

UNAUDITED

	For the
	Year Ended
	March 31, 2009
Oil and gas sales	$	320,712
Operating expenses:
Lease operating expense, severance taxes
and ARO accretion		71,970
Selling, general and administrative expenses		1,245,812
Stock based compensation		430,420
Acquisition costs		122,500
Impairment of producing wells		387,073
Depreciation, depletion, and amortization		346,994
Total operating expenses		2,604,769
Operating loss		(2,284,057	)
Other expense:
Interest (income) expense, net		43,472
Loss on sale of minority interest		37,500
Loss on sale of property		16,000
Total other (income) expense		96,972
Loss before  taxes		(2,381,029	)
Provision for taxes		-
Net loss before minority interest		(2,381,029	)
Net loss		(2,381,029	)
Preferred stock dividend		(40,000	)
Net loss attributable to common stock after preferred stock dividends	$	(2,421,029	)
Net loss per share - basic and diluted	$	(0.04	)
Weighted average shares outstanding - basic and diluted		57,636,261

Avalon Oil and Gas, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(A Development Stage Company)

	For the
	Year Ended
	March 31,
	2009
Cash flows from operating activities:
Net loss	$	(2,381,029	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss on sale of minority interest in Bedford Energy assets		37,500
Loss on sale of oil and gas property		16,000
Write-off note receivable		25,000
Non-cash compensation		430,420
Impairment of goodwill		33,943
Impairment of producing wells		387,073
Depreciation		13,915
Depletion		102,526
Depreciation of ARO liability		2,898
Amortization of discount on notes payable		7,792
Amortization of intangible assets		220,822
Net change in operating assets and liabilities:
Accounts receivable		(17,354	)
Joint Interest receivable		(159,208	)
Prepaid expenses		69,647
Accounts payable and other accrued expenses		121,026
Due to related party		42,265
Asset retirement obligation		5,795
Net cash used in operating activities		(1,040,969	)
Cash flows from investing activities:
Purchase of Bedford Energy assets		(900,000	)
Purchase of interests in Grace wells		(45,194	)
Sale of a minority interest in Bedford Energy assets		262,500
Principal payment received on note receivable		65,000
Purchase of fixed assets		(1,000	)
Disposal to oil and gas properties		10,000
Additions to oil and gas properties		(131,527	)
Net cash used in investing activities		(740,221	)
Cash flows from financing activities:
Proceeds from sale of common stock, net of costs		1,044,191
Proceeds from notes payable		660,000
Issuance of common stock for finders fee		122,217
Issuance of common stock for equity financing, net of fees		(32,500	)
Payments on note payable		(95,000	)
		1,698,908
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents		(82,282	)
Cash and cash equivalents at beginning of period		108,688
Cash and cash equivalents at end of period	$	26,406

The related, revised disclosures on page F-9 of the audited financial statements for the twelve months ended March 31, 2009 included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 14, 2009 are as follows:

“During the years ended March 31, 2009 and 2008, the Company recognized impairment expense of $387,073 and $0, respectively.”

The Company’s audited financial statements for the twelve months ended March 31, 2010, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 22, 2010, corrects this error.

The Company, has discussed the foregoing matters with the Company’s independent registered public accounting firm, Bernstein & Pinchuk LLP, Inc., which concurs with the conclusion of the Company to take such action.

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 hereunto duly authorized.

	Avalon Oil & Gas, Inc.
Date:  July 23, 2010	By:	/s/ Kent Rodriguez
		Kent Rodriguez
		President