Company Quick10K Filing
Barrel Energy
Price-0.00 EPS-0
Shares41 P/E0
MCap-0 P/FCF0
Net Debt-0 EBIT-1
TEV-0 TEV/EBIT0
TTM 2019-06-30, in MM, except price, ratios
10-Q 2019-12-31 Filed 2020-02-27
10-K 2019-09-30 Filed 2020-01-30
S-1 2019-07-16 Public Filing
10-Q 2019-06-30 Filed 2019-08-21
10-Q 2019-03-31 Filed 2019-05-20
10-Q 2018-12-31 Filed 2019-03-19
10-K 2018-09-30 Filed 2019-02-27
8-K 2020-08-24
8-K 2020-05-14
8-K 2019-11-26
8-K 2019-06-17
8-K 2019-06-07
8-K 2019-05-14
8-K 2019-01-25
8-K 2019-01-16

BRLL 10Q Quarterly Report

Part I - Financial Information
Item 1: Financial Statements
Note 1 - Nature of Business
Note 2 - Going Concern
Note 3 - Convertible Note
Note 4 - Related Party
Note 5 - Equity
Note 6 - Warrants
Note 7 - Notes Payable
Note 8 - Derivative Liabilities
Note 9 - Commitments and Contingencies
Note 10 - Subsequent Events
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Item 4: Controls and Procedures
Part II - Other Information
Item 1: Legal Proceedings.
Item 1A: Risk Factors
Item 2: Sales of Equity Securities and Use of Proceeds.
Item 3: Defaults Upon Senior Securities.
Item 4: Mine Safety Information
Item 5: Other Information.
Item 6. Exhibits
EX-31.1 brll_ex311.htm
EX-31.2 brll_ex312.htm
EX-32.1 brll_ex321.htm
EX-32.2 brll_ex322.htm

Barrel Energy Earnings 2019-06-30

Balance SheetIncome StatementCash Flow

10-Q 1 brll_10q.htm FORM 10-Q brll_10q.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2019

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

From transition period from ________ to _______

 

Commission File No.: 333-201740


BARREL ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

47-1963189

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

8275 S. Eastern Ave Suite 200 Las Vegas, NV

 

89123

(Address of principal executive offices)

 

(Zip Code)

 

(702) 595-2247

 (Registrant’s telephone number, including area code) 

 

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 x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ¨ No x

 

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

 ¨

Non-accelerated filer

 x

Smaller reporting company

 x

 

 

Emerging Growth Company

 x

 

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. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes  x No

 

As of August 20, 2019 the registrant had 41,093,618 shares of common stock outstanding.

 

 
 
 
 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

 

 

 

Item 1:

Financial Statements

 

4

 

 

Balance Sheets as of June 30, 2019, (Unaudited) and September 30, 2018

 

5

 

 

Statements of Operations and Comprehensive loss for the Three and Nine Months Ended June 30, 2019 and 2018 – (Unaudited)

 

6

 

 

Statement of Shareholders Deficit for the Nine Months Ended June 30, 2019 and 2018(Unaudited)

 

7

 

 

Statements of Cash Flows for the Nine Months Ended June 30, 2019 and 2018 (Unaudited)

 

8

 

 

Notes to Financial Statements (Unaudited)

 

9

 

Item 2:

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

 

15

 

Item 3:

Quantitative and Qualitative Disclosures about Market Risk

 

17

 

Item 4T:

Controls and Procedures

 

17

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

Item 1:

Legal Proceedings

 

18

 

Item 1A:

Risk Factors

 

18

 

Item 2:

Unregistered Sales of Securities and Use of Proceeds

 

18

 

Item 3:

Default upon Senior Securities

 

18

 

Item 4:

Mine Safety Information

 

18

 

Item 5:

Other information

 

18

 

Item 6:

Exhibits

 

19

 

   

 

 

 

Signatures

 

20

 

 

Reference in this report to “BARREL ENERGY” “we,” “us,” and “our” refer to BARREL ENERGY, Inc.

 

2
 
Table of Contents

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

 

3
 
Table of Contents

 

PART I – FINANCIAL INFORMATION

 

ITEM 1: FINANCIAL STATEMENTS

 

The financial information set forth below with respect to our financial statements for the three and nine months period ended June 30, 2019 and 2018 is unaudited. This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data. The results of operations for the nine months ended June 30, 2019 are not necessarily indicative of results to be expected for any subsequent period. Our year end is September 30.

 

4
 
Table of Contents

 

BARREL ENERGY INC

BALANCE SHEETS

 

 

 

June 30,

2019

 

 

September 30,

2018

 

 

 

Unaudited

 

 

 

 

ASSETS

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$12,525

 

 

$3,458

 

Prepaid

 

 

--

 

 

 

33,333

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

12,525

 

 

 

36,791

 

 

 

 

 

 

 

 

 

 

Total assets

 

$12,525

 

 

$36,791

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$47,427

 

 

$27,719

 

Consulting payable- related parties

 

 

64,361

 

 

 

--

 

Advances from shareholder

 

 

23,201

 

 

 

32,791

 

Convertible notes payable- net of discount of $218,736 and zero respectively

 

 

90,146

 

 

 

52,709

 

Notes payable

 

 

100,000

 

 

 

--

 

Derivative liability

 

 

334,338

 

 

 

--

 

Total current liabilities

 

 

659,473

 

 

 

113,219

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

659,473

 

 

 

113,219

 

Commitment and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 5,000,000 authorized, zero issued and outstanding

 

 

-

 

 

 

-

 

Common stock, $0.001 par value, 450,000,000 authorized, 41,093,618 issued and outstanding as of June 30, 2019 and 23,801,332 as of September 30, 2018

 

 

41,093

 

 

 

23,801

 

Additional paid in capital

 

 

870,515

 

 

 

272,638

 

Stock subscription receivable

 

 

--

 

 

 

(11,500)

Accumulated other comprehensive loss

 

 

(5,126)

 

 

(6,857)

Accumulated deficit

 

 

(1,553,430)

 

 

(354,510)

Total stockholders’ equity (deficit)

 

 

(646,948)

 

 

(76,428)

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity (deficit)

 

$12,525

 

 

$36,791

 

 

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

 

5
 
Table of Contents

 

BARREL ENERGY INC

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND NINE MONTHS JUNE 30,

(Unaudited)

 

 

 

Three Months

 

 

Nine Months

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting – related parties

 

$87,155

 

 

$--

 

 

$264,681

 

 

$--

 

Consulting

 

 

77,627

 

 

 

--

 

 

 

174,824

 

 

 

--

 

General and administrative expense

 

 

154,647

 

 

 

7,319

 

 

 

306,788

 

 

 

192,025

 

Loss from operations

 

 

(319,429)

 

 

(7,319)

 

 

(746,293)

 

 

(192,025)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on currency

 

 

--

 

 

 

--

 

 

 

(24)

 

 

--

 

Change in fair value

 

 

(45,570)

 

 

--

 

 

 

(16,796)

 

 

--

 

Financing cost

 

 

(117,394)

 

 

--

 

 

 

(271,098)

 

 

--

 

Interest expense

 

 

(117,233)

 

 

(1,256)

 

 

(133,771)

 

 

(3,860)

Total other expense

 

 

(280,197)

 

 

(1,256)

 

 

(421,689)

 

 

(3,860)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(599,262)

 

 

(8,575)

 

 

(1,167,982)

 

 

(195,885)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(349)

 

 

6,188

 

 

 

1,731

 

 

 

(3,570)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

$(599,611)

 

$(2,387)

 

$(1,166,251)

 

$(199,455)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share, Basic and Diluted

 

$(0.02)

 

$(0.00)

 

$(0.03)

 

$(0.02)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding, basic and diluted

 

 

38,371,853

 

 

 

12,301,332

 

 

 

35,320,524

 

 

 

12,301,332

 

 

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

 

6
 
Table of Contents

 

BARREL ENGERGY INC

STATEMENTS OF SHAREHOLDERS DEFICIT

(Unaudited)

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

Stock

Comprehensive

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

Receivable

Gain (Loss)

Deficit

 

Balance at September 30, 2017

 

 

12,301,332

 

 

$12,301

 

 

$272,638

 

 

$(178,477)

 

 

--

 

 

$(4,298)

 

$102,165

 

Comprehensive gain (loss)

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

2,355

 

 

 

2,355

 

Net loss

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(24,712)

 

 

--

 

 

 

--

 

 

 

(24,712)

Balance at December 31, 2017

 

 

12,301,332

 

 

 

12,301

 

 

 

272,638

 

 

 

(203,189)

 

 

--

 

 

 

(1,943)

 

 

79,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive gain (loss)

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(12,112)

 

 

(12,112)

Net loss

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(162,598)

 

 

--

 

 

 

--

 

 

 

(162,598)

Balance at March 31, 2018

 

 

12,301,332

 

 

 

12,301

 

 

 

272,638

 

 

 

(365,787)

 

 

--

 

 

 

(14,055)

 

 

(94,902)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive gain (loss)

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

 

 

 

 

6,188

 

 

 

6,188

Net income (loss)

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(8,575)

 

 

--

 

 

 

--

 

 

 

(8,575)

Balance at June 30, 2018

 

 

12,301,332

 

 

 

12,301

 

 

 

272,638

 

 

 

(374,362)

 

 

 

 

 

 

(7,867)

 

 

(97,289)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2018

 

 

12,301,332

 

 

 

23,801

 

 

 

272,638

 

 

 

(354,510)

 

 

(11,500)

 

 

(6,857)

 

 

(76,428)

Common stock issued for cash

 

 

13,502,000

 

 

 

25,002

 

 

 

998

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

26,000

 

Common stock issued for service

 

 

175,000

 

 

 

175

 

 

 

131,075

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

131,250

 

Shares issued for stock receivable

 

 

11,500,000

 

 

 

(11,500)

 

 

--

 

 

 

--

 

 

 

11,500

 

 

 

--

 

 

 

--

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive gain (loss)

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

3,420

 

 

 

3,420

 

Net loss

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(507,637)

 

 

--

 

 

 

--

 

 

 

(507,637)

Balance at December 31, 2018

 

 

37,478,332

 

 

 

37,478

 

 

 

404,711

 

 

 

(862,147)

 

 

--

 

 

 

(3,437)

 

 

(423,395)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

 

440,286

 

 

 

440

 

 

 

219,703

 

 

 

--

 

 

 

--

 

 

 

 

 

 

 

220,143

 

Comprehensive gain (loss)

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(1,340)

 

 

(1,340)

Net loss

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(61,719)

 

 

--

 

 

 

--

 

 

 

(61,719)

Balance at March 31, 2019

 

 

37,918,618

 

 

 

37,918

 

 

 

624,414

 

 

 

(923,866)

 

 

--

 

 

 

(4,777)

 

 

(266,311)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

 

3,035,000

 

 

 

3,035

 

 

 

75,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

78,500

 

Common stock issued for convertible debt

 

 

140,000

 

 

 

140

 

 

 

4,760

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

4,900

 

Finance charges of note

 

 

--

 

 

 

--

 

 

 

134,938

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

134,938

 

Deemed dividend of warrants

 

 

 

 

 

 

 

 

 

 

30,938

 

 

 

(30,938)

 

 

 

 

 

 

 

 

 

 

--

 

Comprehensive gain (loss)

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(349)

 

 

(349)

Net loss

 

 

--

 

 

 

--

 

 

 

--

 

 

 

(598,626)

 

 

--

 

 

 

--

 

 

 

(598,626)

Balance at June 30, 2019

 

 

41,093,618

 

 

$41,093

 

 

$870,515

 

 

$(1,553,430)

 

$

--

 

 

$(5,126)

 

$(646,948)

 

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

 

7
 
Table of Contents

 

BARREL ENGERGY INC

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JUNE 30,

(Unaudited)

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$(1,167,982)

 

$(195,855)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Derivative change in fair value

 

 

16,769

 

 

 

--

 

Amortization of debt discount

 

 

134,938

 

 

 

--

 

Financing cost

 

 

253,583

 

 

 

--

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expense

 

 

11,644

 

 

 

53,111

 

Prepaid

 

 

33,333

 

 

 

--

 

Due to related party

 

 

64,361

 

 

 

--

 

Net cash used in operating activities

 

 

(653,354)

 

 

(142,744)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Cash received for the sale of common stock

 

 

323,643

 

 

 

--

 

Proceeds from notes payable

 

 

100,000

 

 

 

--

 

Proceeds from convertible notes payable

 

 

255,000

 

 

 

--

 

Repayment of related party advances and convertible note payable

 

 

(9,590)

 

 

(92,739)

Net cash provided by (used in) financing activities

 

 

669,053

 

 

 

(92,739)

 

 

 

 

 

 

 

 

 

Effects of currency translation

 

 

(6,632)

 

 

(6,587)

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

9,067

 

 

 

(240,070)

Cash – beginning of period

 

 

3,458

 

 

 

250,160

 

Cash – end of period

 

$12,525

 

 

$8,090

 

 

 

 

 

 

 

 

 

 

SUPPLEMENT DISCLOSURES:

 

 

 

 

 

 

 

 

Interest paid

 

$--

 

 

$334

 

Income taxes paid

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NON CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Discount recorded on inception of derivatives

 

$36,000

 

 

$--

 

Expenses paid on behalf of the Company

 

$--

 

 

$51,898

 

 

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

 

8
 
Table of Contents

 

BARREL ENERGY INC

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – NATURE OF BUSINESS

 

BARREL ENERGY INC. is a Nevada corporation, incorporated January 17, 2014, which has engaged historically in the oil and gas sector of the energy industry. In January 2019 the Company terminated the agreement. It still maintains its interest in capped oil and gas properties in Alberta Canada. The Company entered into an agreement in the lithium exploration business but terminated the contract. The Company has leased land in central California to grow hemp for extracting CBD and the use of fiber in clothing and other materials.

 

On April 11, 2019 the Company amended its articles of incorporation to increase its number of authorized shares of common stock from 75,000,000 to 450,000,000.

 

BASIS OF PRESENTATION

 

The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required to be included in a complete set of financial statements in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2019. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted. The accompanying unaudited financial statements should be read in conjunction with the audited September 30, 2018 financial statements and related notes included in the Company’s form 10-K filed with the SEC.

 

Basic and diluted net income per share

 

Basic loss per share is calculated as net loss to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted loss per share for the period equals basic loss per share as the effect of any stock based compensation awards or stock warrants would be antidilutive. As of June 30, 2019 the potential shares at conversion standing was 4,795,199.

 

NOTE 2 - GOING CONCERN

 

The Company’s unaudited interim financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company, as shown in the accompanying balance sheets, has negative working capital and an accumulated deficit of $1,553,430 as of June 30, 2019. The Company has not established any source of revenue to cover its operating costs. These factors raise substantial doubt about the company’s ability to continue as a going concern. The unaudited interim financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company will engage in very limited activities that must be satisfied in cash until a source of funding is secured. The Company will offer noncash consideration and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.

 

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NOTE 3 – CONVERTIBLE NOTE

 

On July 1, 2014, the Company issued a USD $67,215 (CAD $75,000) convertible note for cash. The note bears an interest rate of 9.5% and matured on December 31, 2015. The note, plus accrued interest, is convertible by the holder, in part or whole, until the date of maturity into common stock of the Company at CAD one cent ($0.01) per share. The note is in default. The Company by resolution has elected to allow conversion of any and all the notes outstanding principal and interest until the note is fully paid. On September 30, 2017 the Company issued 700,000 shares of common stock with a value of $5,612 (CDN $7,000) for partial conversion of the convertible note. As of June 30, 2019, the convertible debt outstanding was USD $52,032 plus accrued interest of USD $26,113 for a total liability of USD $78,145.

 

On November 12, 2018 the Company issued a $36,000 convertible note to Crown Partners, LLC. The note bears an original discount of $10,000, matures in 12 months from the origination date and bears interest at 5% per annuum. The note is convertible at any time, in part or whole, at $0.50 per share until the 180th date of the note at which time it is convertible an 55% of the market price which is defined as the lowest trading price 25 days prior to conversion. An interest amount of $1,142 has been accrued along with a principal balance of $31,850 as of June 30, 2019

 

On May 15, 2019 the Company issued a $100,000 convertible note plus 500,000 warrants to Auctus Funding, LLC. The note bears an original discount of $3,500, matures February 17, 2020 and bears interest at 5% per annuum. The note is convertible at any time, at 55% of the market price which is defined as the lowest trading price 25 days prior to conversion. Interest of $1,478 has been accrued as of June 30, 2019. The warrants are convertible at $0.20 per share or if the price of the company’s common stock is greater than the exercise price of the warrant, the warrant may be converted by the holder as a cashless warrant in lieu of a cash warrant. (See Note 6: Warrants)

 

On May 16, 2019 the Company issued a $125,000 convertible note and 625,000 warrants to FirstFire Global Opportunity Fund, LLC. The note bears an original discount of $12,500, matures in 12 months from the origination date and bears interest at 7% per annuum. The note is convertible at any time, in part or whole, at %0.25 per share or 60% of the market price which is defined as the lowest trading price 20 days prior to conversion. Interest of $1,055 has been accrued as of June 30, 2019. The warrants are convertible at $0.20 per share or if the price of the company’s common stock is greater than the exercise price of the warrant, the warrant may be converted by the holder as a cashless warrant in lieu of a cash warrant. (See Note 6: Warrants)

 

NOTE 4 – RELATED PARTY

 

During the period from October 1, 2018 through June 30, 2019 the Company paid related parties consulting fees of $264,681 of which Harp Sangha was paid $174,000 and Craig Alford was paid $66,000. Under the terms of their consulting agreements Mr. Alford is entitled to $67,500 for the period and Mr. Sangha $135,000. As of June 30, 2019 the Company owed the related parties $64,361 in accrued consulting. The monthly payments, dates of their contracts termination and relation to the Company or family of the officers are set forth below:

 

Name

 

Monthly

 

 

Terminates

 

Related Party

 

Louis Silver

 

$2,000

 

 

1/31/2019

 

no

 

Harkrishnan Giroh

 

$2,500

 

 

1/31/2019

 

no

 

Jagraj Sangha

 

$4,000

 

 

6/30/2019

 

Son of Harp Sangha

 

Remit Bains

 

$3,000

 

 

9/30/2019

 

Wife of Brother of Harp Sangha

 

Flora Mushi

 

$3,000

 

 

9/30/2019

 

no

 

William Monroe

 

$5,833

 

 

3/31/2019

 

No

 

Baljinder Cheema

 

$5,000

 

 

2/28/2019

 

no

 

Kulraj Sangha

 

$3,000

 

 

9/30/2019

 

Yes to Harp Sangha

 

Craig Alford

 

$7,000

 

 

9/30/2019

 

Officer

 

Harp Sangha

 

$15,000

 

 

9/30/2019

 

Officer

 

 

During the period ended June 30, 2019 Harpreet Sangha, the Company’s Chairman and Chief Financial Officer, entered into an agreement and purchased 10,000,000 shares of the Company’s common stock for $10,000 and Craig Alford, the Company’s President, who entered into an agreement and purchased 4,000,000 shares of the Company’s common stock for $4,000.

 

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NOTE 5 – EQUITY

 

During the period from September 30, 2018 to June 30, 2019, the Company entered into separate Subscription Agreements with 17 persons under which 25,000,000 shares of the Company’s common stock were sold for $0.001 per share. In addition, twenty individuals were sold 3,477,286 units, consisting of one share of common stock at $0.50 per share one warrant to purchase one share of common stock shares at $0.50 per share within three years. This included Harpreet Sangha, the Company’s Chairman, who entered into an agreement to purchase 10,000,000 shares of the Company’s common stock and Craig Alford, the Company’s President, who entered into an agreement to purchase 4,000,000 shares of the Company’s common stock. Three individuals purchasing a total of 3,250,000 shares of common stock with a value $3,250 are relatives of the company Chairman and CFO. . Subscription Agreements were approved by the Company’s Board of Directors. The sales were made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933 and, with respect to a majority of the purchasers, Regulation S.

 

On November 13, 2018 the Company entered into a $3,000,000 equity purchase agreement with Crown Bridge Partners. Under the terms of the agreement, the Company may put to the investor shares of the Company common stock in minimums of $10,000 to maximums of either $100,000 or 200% of the average trading volume, whichever is less. The agreement may be terminated at any time by the Company or when the total commitment of shares are sold by the Company to the investor. As part of the agreement, the Company issued 175,000 shares of its common stock at $0.75 per share as a commitment fee. The value of the transaction of $131,250 was expensed as a financing cost.

 

NOTE 6 – WARRANTS

 

During the nine months period ended June 30, 2019 the Company issued 477,286 warrants to twenty individuals as part of their purchase of 477,286 shares of common stock. The warrants mature in three years and are convertible into one share of common stock for each warrant at $0.50 per share.

 

During the nine months period ended June 30, 2019 the Company issued 1,125,000 warrants to 2 convertible debt entities as part of the note issued. The warrants are convertible at $0.20 per share or if the price of the company’s common stock is greater than the exercise price of the warrant, the warrant may be converted by the holder as a cashless warrant in lieu of a cash warrant. The warrants were issued as an inducement of the issuance of the two notes for an aggregate of $225,000.

    

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The outstanding warrants are set out as follow:

 

 

 

Warrants

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contract Life

 

 

Intrinsic

Value

 

Outstanding at September 30, 2018

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Granted

 

 

1,602,286

 

 

 

0.29

 

 

 

4.32

 

 

 

--

 

Expired

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Exercised

 

 

--

 

 

 

--

 

 

 

--

 

 

 

--

 

Outstanding at June 30, 2019

 

 

1,602,286

 

 

$0.29

 

 

 

4,32

 

 

$288,411

 

 

The Company used the Black Scholes Pricing model to estimate the fair value of the warrants as of grant date, using the following key inputs: market prices of the Company’s common stock at dates of grant between $0.28 - $3.00 per share, conversion price of $0.20-0.50, volatility of 272.63% and discount rate of 2.40%. Based on the fair value of the common stock of $221,000 and value of the warrants of $535,293 the fair value of the warrants was calculated to be 38 % of the total value or $288,411. The valuation resulted in a deemed dividend from the down round calculation of the 1,125,000 warrants of $30,938

 

NOTE 7 – NOTES PAYABLE

 

On November 15, 2018 the Company received an advance from one non-related party for $65,000. On December 3, 2018 the Company received an additional advance of $35,000 from the same individual for a total of $100,000. Both advances are unsecured, on demand and bear no interest. The Company has calculated an imputed interest of $2,500 for the last period.

 

NOTE 8- DERIVATIVE LIABILITIES

 

On November 12, 2018 the Company issued a $36,000 convertible note to Crown Partners, LLC. The note bears an original discount of $3,500, matures in 12 months from the origination date and bears interest at 5% per annuum. The note is convertible at any time, in part or whole, at $0.50 per share until the 180th date of the note at which time it is convertible an 55% of the market price which is defined as the lowest trading price 25 days prior to conversion. The Company used the American Option Binomial Tree Pricing model to estimate the fair value of the derivative liability as of the date of issuance and as of June 30, 2019, using the following key inputs: market price of the Company’s common stock $0.11 per share, volatility of 269,66% and discount rate of 2.37%. The fair value of the derivative liability was determined to $61,178 as of June 30, 2019.

 

On May 15, 2019 the Company issued a $100,000 convertible note to Auctus Funding, LLC. The note bears an original discount of $3,500, matures February 17, 2020 and bears interest at 5% per annuum. The note is convertible at any time, at 5% of the market price which is defined as the lowest trading price 25 days prior to conversion. The Company used the American Option Binomial Tree Pricing model to estimate the fair value of the derivative liability as of the date of issuance and as of June 30, 2019, using the following key inputs: market price of the Company’s common stock $0.11 per share, volatility of 269,66% and discount rate of 2.37%. The fair value of the derivative liability was determined to $243,418 as of June 30, 2019.

 

On May 16, 2019 the Company issued a $125,000 convertible note to FirstFire Global Opportunity Fund, LLC. The note bears an original discount of $12,500, matures in 12 months from the origination date and bears interest at 7% per annuum. The note is convertible at any time, in part or whole, at $0.25 per share or 60% of the market price which is defined as the lowest trading price 20 days prior to conversion. The Company used the American Option Binomial Tree Pricing model to estimate the fair value of the derivative liability as of the date of issuance and as of June 30, 2019, using the following key inputs: market price of the Company’s common stock $0.11 per share, volatility of 269.66% and discount rate of 2.37%. The fair value of the derivative liability was determined to $38,742 as of June 30, 2019.

 

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Fair Value of Financial Instruments

 

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses and shareholder loans. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

 

Financial assets and liabilities recorded at fair value in our condensed consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:

 

Level 1— Quoted market prices in active markets for identical assets or liabilities at the measurement date.

 

Level 2— quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.

 

Level 3— Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

 

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below as of September 30, 2018 and June 30, 2019:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

As of September 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

None

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability

 

$-

 

 

$-

 

 

$--

 

 

$--

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

None

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liability

 

$-

 

 

$-

 

 

$334,338

 

 

$334,338

 

 

The following table summarizes the change in the fair value of the derivative liability during the nine months ended June 30, 2019:

 

Fair value as of September 30,2018

 

$--

 

Additions

 

 

462,119

 

Debt discount charged to derivative

 

 

106,300

 

Financing cost charged to derivative

 

 

70,000

 

Change in fair value

 

 

(16,769)

Fair value as of June 30, 2019

 

$334,338

 

 

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NOTE 9 – COMMITMENTS AND CONTINGENCIES

 

On May 14, 2019 the Company signed a land lease in central California for 602 acres at $1,000 per acre to grow hemp for fiber usage. The lease is for 10 years with annual costs of $602,000 with the initial payment of $200,000 due September 30, 2019.

 

The yearly rental obligations including the lease agreements are as follows:

 

Fiscal Year

 

 

 

2019

 

$602,000

 

2020

 

$602,000

 

2021

 

$602,000

 

2022

 

$602,000

 

2023 and years thereafter

 

 

3,612,000

 

Total

 

$6,020,000

 

 

NOTE 10 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events to determine events occurring after June 30, 2019 through August 20, 2019 that would have a material impact on the Company’s financial results or require disclosure and have determined none exist other than those noted above in this footnote.

 

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Executive Overview

 

Barrel Energy Inc (Barrel) was incorporated on January 27, 2014 under the laws of the State of Nevada. The Company was formed to invest in producing oil and gas properties. On September 26, 2014, the Company leased an unproven oil and gas property in the province of Alberta, Canada.

 

On October 11, 2018, Barrel Energy Inc. (the “Company”) entered into an Earn-In Agreement (the “Agreement”) with True Grit Resources, a British Columbia corporation (“TGR”), an unrelated third party. In exchange for the payment by the Company of certain consideration, the Company may earn of to 100% participation interest in certain mineral rights leases that TGR has in Arizona. The first payment for $100,000 was due within ten (10) days of the execution of the Agreement and another payment of $300,000 or expenditure to the property was due within 30 days of the first payment. Upon receipt of $400,000, the Company will have a 49% participation interest in the Arizona property mineral lease rights .The Company may require a 70% earn-in interest by expending a cumulative $1,400,000 on the property. In order to secure the 100% participation interest, the Company is required to expend a cumulative amount of payments and property expenditures of $2,400,000.

 

The mineral rights the Company was acquiring is subject to an option agreement dated October 3, 2017 between True Grit and two individuals with beneficial ownership of the mining Permit issued by the State of Arizona in accordance with ARS 27-234. The Company at the date of this filing is unable to confirm that the either the beneficial owners and or True Grit’s claims are current and active. If the Claims cannot be confirmed the earn in agreement may not be valid and may be void. Prior to any payments per the agreement, the Company is requiring from True Grit a statement from the Bureau of Land Management confirming the claims and permits on the property are current and in effect

 

On November 5, 2018 the Company received an extension for the initial payments of $400,000 of which the initial $100,000 is required to be paid by February 28, 2019.

 

On January 17, 2019 the Company terminated the Earn-In agreement with True Grit Resources.

 

On April 11, 2019 the Company amended its articles of incorporation to increase its number of authorized shares of common stock to 450,000,000.

 

On May 14, 2019 the Company signed a 10 year land lease to grow hemp fiber.

 

As of the date of this filing no revenues have been recorded for the past two years. Our focus for the next twelve months will be to obtain additional funding to develop and expand our operations and new projects. Our success will depend on our ability to obtain funding through equity and/or debt transactions. However, with the downturn of the United States and world economies, we will encounter substantial competition for the limited financing that will be available in the marketplace. If we are unable to obtain financing, then we will likely delay further development of our unimproved property which is an oil lease in Canada.

 

In summary, management continues to position the company in a way to best benefit from worldwide economic conditions, trends, events, and demand for new technologies.

 

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Liquidity and Capital Resources

 

At June 30, 2019, we had an accumulated deficit of $1,553,430. We recorded a net loss of $598,262 and $1,167,982 for the three and nine months periods ended June 30, 2019 and net loss of $8,575 and $195,885 for the same periods in 2018, respectively. Based on these numbers there is substantial doubt that we can continue as a going concern unless we obtain external funding. Management plans to continue limited operations until we obtain additional funding to expand our operations.

 

Working capital was negative $646,948 as of June 30, 2019, compared to negative working capital of $76,428 as of September 30, 2018.

 

Cash used in operations totaled $653,354 during the nine months ended June 30, 2019, compared to cash used in operations of $142,744 during the same period in 2018.

 

Funds provided by financing activities was $669,053 from notes of $100,000, common stock sold for cash of $323,643 and proceeds from Convertible note of $255,000 offset by repayment to a related a party of $9,590 for the period ended June 30, 2019, compared to cash used in financing activities of $92,739 from repayment to related party during the same period in 2018.

 

The effect of foreign currency translation on cash flows was a negative $6,632 for the nine months ended June 30, 2019, compared to a negative $6,587 in the same period in 2018.

 

Management expects to continue to issue common stock to pay for the future development and needs. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. We also note that if we issue more shares of our common stock our shareholders may experience dilution in the value per share of their common stock.

 

We intend to rely on debt and equity financing, capital contributions from management and sales of our common stock to pay for costs, services, operating leases, litigation expense and future development of our business opportunities. Accordingly, our focus for the next twelve months will be to obtain additional funding through debt or equity financing. Our success in obtaining funding will depend upon our ability to sell our common stock or borrow on terms that are financially advantageous to us. If we are unable to obtain financing, then expansion of our operations will be delayed.

  

Results of Operations

 

The Company recorded no revenue during the three and nine months periods ended June 30, 2019 and 2018.

 

General and administrative expenses for the three and nine months periods ended June 30, 2019 totaled $154,647 and $306,788 compared to $7,319 and $192,025 for the same periods in 2018. The increase loss from operations for the three and nine months in 2019 compared to 2018 was due to the consulting costs paid and accrued of $439,505 along with general expense of $306,788 in 2019.

 

The Company incurred a net loss of $599,262 and $1,167,982 in the three and nine months periods ended June 30, 2019, compared to net loss of $8,575 and $195,885 for the same periods in 2018. The higher net loss was due to higher general and administrative cost including higher consulting costs along with financing costs of $271,098 and interest of $133,771 in the nine months periods ended June 30, 2019 compared to the same periods in 2018.

  

Off-Balance Sheet Arrangements

 

None

 

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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4: CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Based on their evaluation of our disclosure controls and procedures(as defined in Rule 13a-15e under the Securities Exchange Act of 1934 the “Exchange Act”), our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this quarterly report on Form 10-Q such disclosure controls and procedures were not effective due to the lack of segregation of duties and lack of a formal review process that includes multiple levels of review to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms because of the identification of a material weakness in our internal control over financial reporting which we view as an integral part of our disclosure controls and procedures. The material weakness relates to the lack of segregation of duties in financial reporting, as our financial reporting and all accounting functions are performed by an external consultant with no oversight by a professional with accounting expertise. Our CEO /CFO do not possess accounting expertise and our company does not have an audit committee. This weakness is due to the Company’s lack of working capital to hire additional staff. To remedy this material weakness, we intend to engage another accountant to assist with financial reporting as soon as our finances will allow.

 

Changes in Internal Control over Financial Reporting

 

Except as noted above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our first nine months that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

ITEM 1: LEGAL PROCEEDINGS.

 

None

 

ITEM 1A: RISK FACTORS

 

None

 

ITEM 2: SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

During the period from September 30, 2018 to June 30, 2019, the Company entered into separate Subscription Agreements with 17 persons under which 25,000,000 shares of the Company’s common stock were sold for $0.001 per share. In addition, twenty individuals were sold 3,477,286 units, consisting of one share of common stock at $0.50 per share one warrant to purchase one share of common stock shares at $0.50 per share within three years. This included Harpreet Sangha, the Company’s Chairman, who entered into an agreement to purchase 10,000,000 shares of the Company’s common stock and Craig Alford, the Company’s President, who entered into an agreement to purchase 4,000,000 shares of the Company’s common stock. Three individuals purchasing a total of 3,250,000 shares of common stock with a value $3,250 are relatives of the company Chairman and CFO. . Subscription Agreements were approved by the Company’s Board of Directors. The sales were made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933 and, with respect to a majority of the purchasers, Regulation S.

 

On November 13, 2018 the Company entered into a $3,000,000 equity purchase agreement with Crown Bridge Partners. Under the terms of the agreement, the Company may put to the investor shares of the Company common stock in minimums of $10,000 to maximums of either $100,000 or 200% of the average trading volume, whichever is less. The agreement may be terminated at any time by the Company or when the total commitment of shares are sold by the Company to the investor. As part of the agreement, the Company issued 175,000 shares of its common stock at $0.75 per share as a commitment fee. The value of the transaction of $131,250 was expensed as a financing cost.

 

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

 

None

 

ITEM 4: MINE SAFETY INFORMATION

 

None

 

ITEM 5: OTHER INFORMATION.

 

None

 

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ITEM 6. EXHIBITS

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 BARREL ENERGY, INC.
    
Date: August 20, 2019By:/s/ Craig Alford

 

 

Craig Alford

 

 

 

President 
  Chief Executive Officer 
    

 

 

20