Check whether the Company is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Check whether the Company is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. ☐
Check whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒
Indicate by check mark whether the Company 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 Company was required to submit such files). Yes ☐ No ☒
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) contained herein, and no disclosure will be contained, to the best of Company’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Check whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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. ☐
Check whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of February 4, 2022, there were 312,694,984 shares of common stock, par value $.001, outstanding. The aggregate number of shares of the voting stock held by non-affiliates on March 31, 2020 was 49,986,616 with a market value of $204,945. For the purposes of the foregoing calculation only, all directors and executive officers of the registrant has been deemed affiliates.
Certain statements made in this Annual Report on Form 10-K are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Barrel Energy, Inc. (the “Company”) to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
Barrel Energy Inc (“Barrel” or the “Company”) was incorporated on January 27, 2014, under the laws of the State of Nevada. The Company was formed to invest in the energy sector. On September 26, 2014, the Company leased the Bison Property, an unproven oil and gas project in the province of Alberta, Canada. The Bison property is comprised of four sections of interest (land totaling 2,560 acres located in northwestern Alberta in an area called the Peace River Arch an area known for its prolific oil and natural gas wells and is one of the most desirable light oil and natural gas liquids drilling areas in North America.
On October 11, 2018, the Company entered into an Earn-In Agreement with True Grit Resources, a British Columbia corporation (“TGR”), an unrelated third party. In exchange for the stepped payments by the Company, Barrel could earn of to 100% participation interest in certain mineral rights leases that TGR held in Arizona. The Company was to earn a 70% interest by expending a cumulative $1,400,000 on the property and to secure the 100% participation interest. The Company was required to expend a cumulative amount of payments and property expenditures of $2,400,000.
On November 5, 2018, the Company received an extension for the initial payments of $400,000 to maintain the earn in agreement. On January 19, 2019, after a thorough review of supporting information on the project, 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, Barrel entered into a 10 year land Lease with Crocker Acana, LLC on 602 acres of land in Tehama County, California. The Company’s intent was to farm the land to grow hemp, which required a permit from the Tehama County government. A permit was not acquired and after thorough examination of the State and Federal regulations, the Company has not yet reapplied.
On November 26, 2019, the Company entered into a non-binding Letter of Intent with ZB Holdings, Inc. (“ZB”) to acquire the assets of ZB pursuant to a definitive agreement to be formalized. ZB, with headquarters, manufacturing and distribution facilities located in Katy, Texas, is a consumer products company in the business of producing and marketing sporting goods apparel and safety apparel through a proprietary and trademarked design and production technique. Under the proposed transaction, the Company was to acquire 100% of the assets of ZB, and ZB was to acquire 40% of the fully diluted shares of common stock of the Company. The transaction could be terminated if not completed by March 31, 2020. The transaction was terminated.
In early April, 2020 the Company reviewed the changing business landscape brought about by the Covid-19 pandemic. Oil prices had dropped considerably and the sporting activities nearly came to a full stop with cancellation of events across the country. On April 7, 2020, the Company decided to cease its plans to acquire ZB Holdings and terminate the conditions of the Letter of Intent. On April 7, 2020, the Company also relinquished any further claim or work commitments on the Bison Oil and Gas Project in Northern Alberta.
At present, the Company does not have any production of a commercial product and the Company has not earned any revenues to date. The Company has divested itself of various ventures and future plans are to engage in the exploration and production of supporting products for Electric Vehicles, which would include both battery materials, such as Lithium Carbonate or Lithium Hydroxide, and battery production.
The Company is returning its focus, targeting areas with potential economic concentrations of Lithium, Cobalt and Graphite, that will be in critical demand to service the energy needs of high growth battery materials.
The growth in demand for lithium batteries is predicted to outpace the lithium production in the coming decade. Lithium-ion batteries for the automotive industry are expected to advance demand to nearly unserviceable levels. These industry trends enhance the Company’s new business model.
Interest in Lithium ore is very high with Lithium being extracted from primarily two sources: pegmatite crystals and lithium salts from brine pools. Currently, the world’s five top producers of Lithium are Australia, Chile, China, Argentina and Zimbabwe.
In 2019 worldwide production totaled approximately 77,000 metric tons, with the top 3 countries contributing the majority of the global production. Much of the current production of Lithium (i.e. Australia) is from conventional mining techniques of ancient Precambrian rocks containing Lithium ore, which is crushed and fed into capital intensive processing plants to upgrade the lithium mineral using gravity, flotation, magnetic and roasting processes.
Alternatively, Lithium production in Chile and Argentina uses a much less capital intense method. Lithium is located beneath flat, arid salt flats. The Lithium leaches from nearby source rocks and concentrated in salty brines, just under the surface. Here, Lithium enriched brines are pumped to settle on hundreds of shallow surface evaporation pools, which produces a thicker Lithium rich liquid. That liquid is treated with sodium carbonate, precipitating lithium carbonate.
Lithium brine development has proven to be faster to start production than the hard rock mine counterparts. Brine is a liquid, which means, drilling to find it is more akin to drilling for water. Once a Lithium Brine is identified, the continuity is more straightforward to understand and quantify than the typically irregular pegmatite body. New direct Lithium extraction techniques being developed will help minimize the environmental impact of Brine production.
Lithium clay deposits represent a significant and as yet untapped natural resource. Along with lithium brines and pegmatites, the clay can supply the exponentially growing lithium battery market for electric vehicles, as well as for laptops and cell phones. Current indications are that lithium clay deposits have favorable economics that are comparable to large lithium brine projects in Argentina and Chile.
Lithium (Li) is a soft silver-white metal. With an atomic number of 3, it is the lightest of the metals, only the gases Hydrogen (atomic number 1) and Helium (atomic number 2) being lighter. Light weight Lithium has many applications, but the metal is a perfect replacement of the much heavier Nickel used in most large batteries. Lithium batteries also have a high charge density, a longer life and are rechargeable.
The Lithium market has typically been dominated by the ceramic and medical sector. However, 2015 presented a marked change in the market as the demand for Lithium for the battery market outstripped any other sector.
At the moment, the main lithium-ion battery-makers are Samsung and LG of South Korea, Panasonic and Sony of Japan, and ATL of Hong Kong. China has many battery factories being built furthering the demand for Lithium.
Lithium is not traded publicly and is usually distributed in a chemical form such as Lithium carbonate (Li2CO3. It is sold directly to end users for a negotiated price per ton. The price increased greatly in 2018 and has since contracted, however prices are projected to rise with coming demand.
For Lithium, Lithium-ion batteries have become the rechargeable battery of choice in cell phones, computers, electric cars and larger scale electric storage. The growth in demand for lithium batteries is predicted to far outpace lithium production in the coming decade. In particular, Lithium-ion batteries for the automotive industry is expected to advance demand to nearly unserviceable levels.
Goldman Sachs predicted that the market consumption could very well triple from the current production by 2025. Just a 1% increase of Electric Vehicles could increase lithium demand by roughly half of the todays lithium production. The largest Lithium producers, SQM, FMC and Albemarle are increasing production, but such efforts are predicted to fall short of the on-coming demand.
Tesla’s mile long Gigafactory started producing powerful Lithium-ion batteries in 2017 with their partner Panasonic. The Gigafactory is expected to supply batteries for the 500,000 cars Tesla hopes to produce by the end of the decade, as well as to power homes. Additionally, Chrysler, Dodge, Ford, GM, Mercedes-Benz, Mitsubishi, Nissan, Saturn, Tesla and Toyota have all announced plans to build lithium-ion battery powered cars. Preorders of the new Tesla model 3 have sold out to 400,000 and are currently in production. Elon Musk has stated that Tesla will have to acquire the entire lithium market to meet the current demands.
Environmental policy data trends point to future energy development that is characterized by being efficient, sustainable and clean. These policy changes and Battery technology innovations such as higher charge density and reductions in weight, charge time and cost have precipitated a pivot in the Auto Industry to Electric Vehicle (EVs).
Key Countries that have announced major policy changes that will affect the sector are:
France & Britain – to end sales of gas and diesel cars by 2040, Germany to follow Scottish Government – phase out gas and diesel cars by 2032
Austria, Denmark, Ireland, Japan, Portugal, Korea and Spain have all set official targets for electric car sales.
China announced it will set a deadline for the end of fossil fuel powered vehicles.
Global demand for these key materials is expected to rise dramatically over the next decade. The outlook for Lithium will outstrip production with global demand for Lithium expected to increase 650% by 2027. Market demand for Lithium has been predicted to be 470,000 metric tons by 2025.
Barrel Energy is aware that most analysts see an upcoming bull market for Lithium, Cobalt and Graphite and sourcing of the raw materials for the Lithium-ion battery supply chain is a strategic focus for the company. Lithium is set to be one of the world’s hottest commodities and is attracting the eye of investors who are searching for Battery Metal explorers and production companies that would allow them to get in on the ground floor of the renaissance in Energy Technology.
We will be subject to applicable laws and regulations that relate directly or indirectly to our operations including United States securities laws. We will also be subject to regulation by the Alberta Energy Regulator (AER). We will be required to apply to the AER to obtain drilling permits for wells on our Bison leases. We are subject to the guidelines of the area in which we have leased the land to grow hemp and have not been able to commence operations waiting for the jurisdiction to publish the guidelines required to commence operations.
Other than time spent researching our proposed business we have not spent any funds on research and development activities to date. We do not currently plan to spend any funds on research and development activities in the future.
We currently have two employees. Harpreet Sangha acts as our Chairman and Chief Financial Officer and Craig Alford as our Chief Executive Officer. We had employment agreement which all expired on September 30, 2020. The Company has not renewed or created new consulting agreements as of today as the officers will bill for their time until new agreements are in place.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 – NATURE OF BUSINESS
BARREL ENERGY INC. is a Nevada corporation, incorporated January 17, 2014, which was engaged historically in the oil and gas sector of the energy industry. In January 2019, the Company terminated the oil and gas agreement. 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.
The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans, and quarantine. This may limit access to our, suppliers, management, support staff and professional advisors. Although the Company’s operations are virtual, we depend on numerous third-party consultants and contract suppliers so we cannot measure the impact on our operations or financial condition at this point in time.
NOTE 2 – ACCOUNTING POLICIES
Accounting Method
The Company’s financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America.
The Company has elected a fiscal year ending on September 30.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Foreign currency translation
The Company’s functional currency and reporting currency is in U.S. dollars. The financial statements of the Company are translated to U.S. dollars in accordance with ASC-830-Foreign Currency Matters”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
In June, 2014, the Company issued a note to one individual in Canadian dollars. During the year ended September 30, 2019 the note was converted to US dollars plus conversion of debt to stock resulted in a foreign currency translation adjustment of $1,496.
Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The Company’s significant estimates include the fair value of common stock issued for services, fair value of derivative liability, deemed dividend down round, the valuation of right to use asset and lease liability and valuation allowance for deferred tax assets.. Actual results could differ from those estimates.
Income Taxes
Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized.
The Company accounts for income taxes under the provisions of Financial Accounting Standards Board) Accounting Standards Codification 740, Accounting for Income Taxes. It prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result, the Company has applied a more-likely-than-not recognition threshold for all tax uncertainties. The guidance only allows the recognition of those tax benefits that have a greater than 50% likelihood of being sustained upon examination by the various taxing authorities.
The Company classifies penalties and interest related to unrecognized tax benefits as income tax expense in the Statements of Operations.
Basic and diluted net loss 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 September 30, 2020 the potential shares at conversion outstanding was 69,518,520 consisting of conversion of debt to common stock from derivative calculation of approximately 67,916,234 and conversion warrants to common stock of 1,602,286 compared to a total of 25,155,126 for the year ended September 30, 2019.
Stock-Based Compensation
The Company accounts for stock-based compensation to employees and consultants in accordance with FASB ASC 718. Stock-based compensation to employees is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period. The Company accounts for stock-based compensation to other than employees in accordance with FASB ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period. The Company estimates the fair value of stock-based payments using the Black Scholes option-pricing model for common stock options and warrants and the closing price of the Company’s common stock for common share issuances.
Gain (Loss) on Modification/Extinguishment of Debt
In accordance with ASC 470, a modification or an exchange of debt instruments that adds or eliminates a conversion option that was substantive at the date of the modification or exchange is considered a substantive change and is measured and accounted for as extinguishment of the original instrument along with the recognition of a gain or loss. Additionally, under ASC 470, a substantive modification of a debt instrument is deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. A substantive modification is accounted for as an extinguishment of the original instrument along with the recognition of a gain or loss.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02 Leases which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases with terms greater than 12 months. In July 2018, the FASB issued ASU 2018-10 Leases, Codification Improvements and ASU 2018-11 Leases, Targeted Improvements, to provide additional guidance for the adoption of ASU 2016-02. ASU 2018-10 clarifies certain provisions and corrects unintended applications of the guidance such as the application of implicit rate, lessee reassessment of lease classification, and certain transition adjustments that should be recognized to earnings rather than to stockholders’ (deficit) equity. ASU 2018-11 provides an alternative transition method and practical expedient for separating contract components for the adoption of ASU 2016-02. ASU 2016-02, ASU 2018-10, ASU 2018-11, (collectively, “Topic 842”) are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. In December 2019, the Company adopted Topic 842 and made the following elections:
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·
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The Company did not elect the hindsight practical expedient, for all leases.
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·
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The Company elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs for all leases.
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·
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In March 2018, the FASB approved an optional transition method that allows companies to use the effective date as the date of initial application on transition. The Company elected this transition method, and as a result, will not adjust its comparative period financial information or make the newly required lease disclosures for periods before the effective date.
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·
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The Company elected to not separate lease and non-lease components, for all leases.
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On October 1, 2019, the Company recorded a Right of Use Asset of $4,104,985, a corresponding Lease Liability of $4,330,735 in accordance with Topic 842.
The FASB recently issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity. The guidance in ASU 2020-06 simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock. The guidance in ASC 470-20 applies to convertible instruments for which the embedded conversion features are not required to be bifurcated from the host contract and accounted for as derivatives. These amendments are expected to result in more freestanding financial instruments qualifying for equity classification (and, therefore, not accounted for as derivatives), as well as fewer embedded features requiring separate accounting from the host contract. The amendments in ASU 2020-06 further revise the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The amendments in ASU 2020-06 are effective for public entities for fiscal years beginning after December 15, 2021 with early adoption permitted (for “emerging growth company” beginning after December 15, 2023). The Company will be evaluating the impact this standard will have on the Company’s financial statements.
Derivative Instruments
Derivative financial instruments are recorded in the accompanying balance sheets at fair value in accordance with ASC 815. When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative instrument. The estimated fair value of the derivative feature is recorded in the accompanying balance sheets separately from the carrying value of the host contract. Subsequent changes in the estimated fair value of derivatives are recorded as a gain or loss in the Company’s statements of operations.
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.
Deemed Dividend
The Company issues instruments which contain a provision for the change in conversion price should a new instrument issued hold a conversion price lower than the conversion price of the instrument issued earlier. The provision lowers the conversion price to the new instrument triggering the down round feature and creates a deemed dividend. The deemed dividend is added to the net income or loss for the period and used in calculating the earnings per share for the period.
NOTE 3 – 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 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 an accumulated deficit of $21,206,197 and negative working capital (excess of current liabilities over current assets) of $1,762,299. 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 for at least one year from the issuance of these financial statements. 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. There can be no assurance however that the Company will be able to raise additional capital when needed, or at terms deemed acceptable, if at all. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 4 – INCOME TAXES
The Company follows Accounting Standards Codification 740, Accounting for Income Taxes. During 2009, there was a change in control of the Company.
Under section 382 of the Internal Revenue Code such a change in control negates much of the tax loss carry forward and deferred income tax. Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry forwards. For federal income tax purposes, the Company uses the accrual basis of accounting, the same that is used for financial reporting purposes.
The Company did not have taxable income for the years ended September 30, 2020 or 2019 The Company’s deferred tax assets consisted of the following as of September 30, 2020, and 2019
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2020
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2019
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Net tax loss carry forward
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$
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693,864
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$
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435,096
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Less: Valuation allowance
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(693,864
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)
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(435,096
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)
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Net deferred tax asset
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$
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--
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$
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--
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|
The Company had a net loss of $2,745,564 for the year ended September 30, 2020 and $1,717,376 for the year ended September 30, 2019. As of September 30, 2020 the Company’s net tax loss carry forward was $3,304,112 will begin to expire in the year 2040. All tax years from inception of the Company are open to review by appropriate taxing authorities.
A reconciliation of income taxes at the federal statutory rate to amounts provided for the years ended September 30, 2020 and 2019 is as follows:
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2020
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2019
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U.S. federal statutory rate
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|
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21
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%
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|
|
21
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%
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|
Net operating loss
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(21
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)%
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(21
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)%
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Effective tax rate
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--
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%
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--
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%
|
The Company due to its losses has not filed US Corporate tax returns and is subject to examination back to inception.
NOTE 5 – COMMON STOCK
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.
During the year ended September 30, 2019 the Company issued 175,000 shares of common stock for debt inducement with a value of $131,250.
During the year ended September 30, 2019 the Company issued 140,000 shares of common stock for the conversion of debt with a value of $4,900.
During the year ended September 30, 2020 the Company issued 800,000 shares of common stock with a value of $100,000 for note conversion.
During the year ended September 30, 2020 the Company issued 2,000,000 shares of common stock with a value of $40,000 for cash.
During the year ended September 30, 2020 the Company issued 257,736,366 shares of common stock with a value of $405,849 for the conversion of convertible debt. The conversion created an increase to paid in capital of $1,677,300 offset by reduction in derivative liability. The Company further determined the difference between the value of the issuance at date of issuance and the conversion price of the shares which increased the paid in capital by $2,406 with offset to debt extinguishment and interest.
During the year ended September 30, 2020 the Company issued 10,000,000 shares of common stock with a value of $40,000 for the inducement to extend a note payable. The shares have not been issued as of September 30, 2020 and are carried as a stock not issued.
During the year ended September 30, 2020 10,000,000 shares were returned by a related party to Treasury at par value.
The Company accounts for shares being issued when the stock subscription agreement is received and payment for the shares is received, not at the date the shares are issued to the shareholder by the Transfer Agent. Accordingly, there may be a difference between the shares accounted for in the Company’s financials verses the number reported by the Transfer Agent.
NOTE 6 – WARRANTS
During the year ended September 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 exercisable into one share of common stock for each warrant with an exercise price of $0.50 per share. 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 $0.51 per share, conversion price of $0.50, volatility of 272.63% and discount rate of 2.40%. The fair value was determined to be $221,000. Based on the fair value of the common stock of $221,000 and value of the warrants of $336,000 the fair value of the warrants was calculated to be 40% of the total value or $134,000.
During the year ended September 30, 2019 the Company issued 1,125,000 warrants to 2 convertible debt entities as part of the note issued. The warrants were issued as an inducement of the issuance of the two notes for an aggregate of $225,000. 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 also contain an antidilution clause allowing the holder to adjust the number of warrants and or price should the Company issue any convertible instrument at a lower value or conversion price than the warrants issue.
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 $0.11 per share, conversion price of $0.20, volatility of 272.63% and discount rate of 2.40%. The fair value of the warrants was determined to be $314,365.
The 1,125,000 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 also contain an antidilution clause allowing the holder to adjust the number of warrants and or price should the Company issue any convertible instrument at a lower value or conversion price than the warrants issue. The triggering of the anti-dilution clause creates a change in valuation. The valuation resulted in a deemed dividend from the down round calculation of the 1,125,000 warrants of $30,938.
The 1,125,000 warrants provided a provision that adjusted the conversion price if any other convertible instrument provides for a lower conversion price. As the Company agreed to the conversion price on a convertible note at $0.00275 during the quarter ended December 31, 2019, the warrants became eligible for that conversion price and triggered a down round and deemed dividend of $16,363,600.
The outstanding warrants are set out as follow:
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Warrants
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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 September 30, 2019
|
|
|
1,602,286
|
|
|
|
0.29
|
|
|
|
3.32
|
|
|
|
--
|
|
|
Granted
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
Expired
|
|
|
(477,286
|
)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
Exercised
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
Outstanding at September 30, 2020
|
|
|
1,125,000
|
|
|
$
|
0.20
|
|
|
|
4.62
|
|
|
$
|
--
|
|
NOTE 7 – NOTE 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 $5,000 as of September 30, 2019. During the quarter ended December 31, 2019 the Company issued 800,000 shares of common stock with a value of $100,000 for the payment of the note and implied interest. The transaction resulted in a loss on settlement of debt of $25,600.
During the year ended September 30, 2020 the Company issued three notes totaling $33,125. The notes all mature in two years from date of issuance with one note for $10,000 bearing 20% interest and the balance of the note bearing 10% interest per annum.
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 annum. 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 at 55% of the market price which is defined as the lowest trading price 25 days prior to conversion. The Company used the Black Scholes model to estimate the fair value of the derivative liability as of the date of issuance and as of September 30, 2019, using the following key inputs: market price of the Company’s common stock $0.0727 per share, volatility of 269.66% and discount rate of 2.00%. The fair value of the derivative liability was determined to $6,509 as of September 30, 2020 and $57,452 as of September 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 annum. 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 Black Scholes model to estimate the fair value of the derivative liability as of the date of issuance and as of September 30, 2019, using the following key inputs: market price of the Company’s common stock $0.0727 per share, volatility of 269.66% and discount rate of 2.00%. The fair value of the derivative liability was determined to $9,463 as of September 30, 2020 and $200,926 as of September 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 annum. 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 Black Scholes model to estimate the fair value of the derivative liability as of the date of issuance and as of September 30, 2019, using the following key inputs: market price of the Company’s common stock $0.0727 per share, volatility of 269.66% and discount rate of 2.00%. The fair value of the derivative liability was determined to $78,302 as of September 30, 2020 and $176,631 as of September 30, 2019.
The Company used the Black Scholes model to estimate the fair value of the notes for the year ended September 30, 2020, using the following key inputs: market price of the Company’s common stock $0.0028 per share, volatility of 351.00% and discount rate of 1.80%.
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, 2020 and September 30, 2019:
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
As of September 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
434,999
|
|
|
$
|
434,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liability
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
94,275
|
|
|
$
|
94,275
|
|
The following table summarizes the change in the fair value of the derivative liability during the year ended September 30, 2020 and 2019.:
|
Fair value as of September 30, 2018
|
|
$
|
--
|
|
|
Additions
|
|
|
462,119
|
|
|
Debt discount charged to derivatives
|
|
|
106,300
|
|
|
Financing costs charged to derivatives
|
|
|
15,965
|
|
|
Change in fair value
|
|
|
(117,457
|
)
|
|
Fair value as of September 30, 2019
|
|
|
434,999
|
|
|
Loss on debt at conversion
|
|
|
(43,969
|
)
|
|
Transfer out upon conversion of debt
|
|
|
(1,677,300
|
)
|
|
Change in fair value
|
|
|
1,380,545
|
|
|
Fair value as of September 30, 2020
|
|
$
|
94,275
|
|
Fluctuations in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period. As the stock price increases for each of the related derivative instruments, the value to the holder of the instrument generally increases, therefore increasing the liability on the Company’s balance sheet. Additionally, stock price volatility is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative instruments. The simulated fair value of these liabilities is sensitive to changes in the Company’s expected volatility. Increases in expected volatility would generally result in higher fair value measurement. A 10% change in pricing inputs and changes in volatilities and correlation factors would not result in a material change in our Level 3 fair value.
NOTE 9 – 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, as, in part or whole, until the date of maturity into common stock of the Company at CAD $0.00275 per share. 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. The note was amended stating the note in US dollars with an agreed principal balance of $82,496 maturing on December 31, 2018. As of April 1, 2020 the note was further amended extending the closing date to December 31, 2021, interest increased as of April 1, 2020 to 18% per annum, the note’s principal increased by $30,000 and the note holder receiving 10,000,000 shares of the Company’s common stock with a value of $40,000. As of September 30, 2020, the convertible debt outstanding was USD $19,065 plus accrued interest of USD $29,538 for a total liability of USD $48,603.
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 annum. 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 at 55% of the market price which is defined as the lowest trading price 25 days prior to conversion. An interest amount of $2,430 has been accrued along with a principal balance of $4,922, for a total of $7,422 outstanding as of September 30, 2020. The outstanding balance as of September 30, 2019 was $31,850. As of September 30, 2020 the note is in default and no litigation pending.
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 annum. 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 $9,972 has been accrued as of September 30, 2020. The warrants are exercisable 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 exercised by the holder as a cashless warrant in lieu of a cash warrant. As of September 30, 2020 and 2019 the outstanding balance was $9,972 and $100,000 respectively. As of September 30, 2020 the note is in default and no litigation pending. (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 annum. 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 warrants are exercisable 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. As of September 30, 2020 and 2019 , the outstanding balances were $90,307 and $125,000, respectively. (See Note 6: Warrants)
On June 26, 2020, the Company issued a convertible note to Harp Sangha for $21,500 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share. The note has accrued interest of $448 as of September 30, 2020.
On July 17, 2020 the Company issued a convertible note to Harp Sangha, Chairman and CFO of the Company for $25,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share. As of September 30, 2020 the outstanding balances included principal of $25,000 plus interest of $411.
On August 11, 2020 the Company issued a convertible note to Harp Sangha, Chairman and CFO of the Company for $45,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share. As of September 30, 2020 the outstanding balances included principal of $45,000 plus interest of $493.
As of September 30, 2020 the Company calculated the derivative liability of $94,275 using a closing price of $0.0028 volatility of 351%, conversion prices of $0.0015 to $0.0017 dividend of 0.00 and discount rate of 1.8% and expensed $132,793 in debt discount. (See Note 8 Derivative)
During the year ended September 30, 2020 the Company issued 257,736,366 shares of common stock with a value of $405,849 for the reduction of convertible notes. The Company further determined the difference between the value of the issuance at date of issuance and the conversion price of the shares.
As of September 30, 2020 the Company has $226,314, net of unamortized debt discount, convertible notes outstanding compared to $175,494 net of $132,793 of unamortized debt discount. The Company amortized $132,793 of debt discount and $147,745 for the years ended September 30, 2020 and 2019, respectively.
NOTE 10 – RELATED PARTY TRANSACTIONS
During the years ended September 30, 2019 and 2018 the Company’s operations conducted out of the premises at 14890 66a Ave., Surrey, B.C. V3S 9Y6 Canada. Mr. Gurm Sangha, the former President, Director made these premises available to the Company rent-free.
During the year ended September 30, 2019 the Company paid or accrued related parties consulting fees of $538,176 of which Harp Sangha was paid and accrued $193,000, Craig Alford was paid and accrued $82,000 and Lowell Holden through Mayday Management accrued $18,000. Under the terms of their consulting agreements Mr. Alford is entitled to $82,000 for the period and Mr. Sangha $180,000 and Lowell Holden (Mayday Management) is entitled to $18,000. As of September 30, 2019 the Company owed the related parties $121,425 in accrued consulting.
During the period ended September 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. On June 24, 2020 Harpreet Sangha returned the 10,000,000 shares to the Company.
During the year ended September 30, 2019, the Company signed a land lease agreement for the production of hemp. The lease is a 10 year lease with annual payments of $602,000 and was modified for the initial payments of $301,000 each in May and June 2020. A director of the Company is related to the owner of the land leased. (See Note 12: Operating Lease)
On June 26, 2020, the Company issued a convertible note to Harp Sangha for $21,500 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share. The note has accrued interest of $448 as of September 30, 2020.
On July 17, 2020 the Company issued a convertible note to Harp Sangha, Chairman and CFO of the Company for $25,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share. As of September 30, 2020 the outstanding balances included principal of $25,000 plus interest of $411.
On August 11, 2020 the Company issued a convertible note to Harp Sangha, Chairman and CFO of the Company for $45,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share. As of September 30, 2020 the outstanding balances included principal of $45,000 plus interest of $493.
During the year ended September 30, 2020 the Company accrued $332,400 and paid $51,600 in consulting fees for three officers. As of September 30, 2020, the total accrual of $451,837 is due the related parties.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
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 is due within ten (10) days of the execution of the Agreement and another payment of $300,000 or expenditure to the property is 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 is 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.
On November 5, 2018 the Company received an extension for the initial payments of $400,000 of which the initial $100,000 was required to be paid by February 28, 2019. The Company required the extension but it had not been received from True Grit. On January 17, 2019 the Company terminated the Earn-In agreement with True Grit Resources.
NOTE 12 – OPERATING LEASE
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 $301,000 on March 30, 2020 and second payment of $301,000 on June 30, 2020 with the balance of the annual payments being made on April 1 of each subsequent year. The lease holder is a related party to one of the directors of the Company. As of September 30, 2020 the Company has accrued $602,000 of unpaid lease payments as accounts payable. The lease terminates in May 2029. As of September 30, 2020 the Company recorded a right of use asset of $3,796,290 and operating lease liability of $4,022,210 with a lease expense for the year of $601,920, respectively.
The yearly rental obligations including the lease agreements are as follows:
|
Fiscal Year ended September 30,
|
|
|
|
|
|
|
|
|
|
2021
|
|
$
|
602,000
|
|
|
2022
|
|
$
|
602,000
|
|
|
2023
|
|
$
|
602,000
|
|
|
2024
|
|
$
|
602,000
|
|
|
2025 and years thereafter
|
|
$
|
3,010,000
|
|
|
Total lease payments
|
|
$
|
5,418,000
|
|
|
Less present value discount
|
|
$
|
(1,395,790
|
)
|
|
|
|
$
|
4,022,210
|
|
|
Less operating lease short term
|
|
$
|
(301,720
|
)
|
|
Operating lease liability, long term
|
|
$
|
3,720,490
|
|
As noted in the recent accounting pronouncements the Company adapted ASC 842 on October 1, 2019 using the modified retrospective approach and has elected the practical expedient package by allowing for historical lease classification for this lease as the date of transition. The present value calculation discount rate used is the rate of 7% at which the Company can borrow funds.
NOTE 13 – SUBSEQUENT EVENTS
On December 23, 2020, the Company issued a convertible note to EROP Capital for $25,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share or 70% of the lowest trade five days prior to conversion.
On December 31, 2020, the Company issued a convertible note to Harp Sangha for $30,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share.
On February 5, 2021, the Company issued a convertible note to EROP Capital for $115,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share or 70% of the lowest trade five days prior to conversion.
On February 9, 2021, the Company entered into a Memorandum of Understanding with Rosh Energy Technology Pvt, Inc. Under the terms of the agreement the Company will provide the capital for the manufacturing of lithium batteries in India.
On February 10, 2021, the Company issued a convertible note to Harp Sangha for $354,500 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share.
On February 17, 2021, the Company issued a convertible note to EROP Capital for $300,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share.
On February 22, 2021, the Company entered into a Stock Purchase and Sale Agreement (“SPA”) with Flote App, Inc. (“Flote”) of Las Vegas, Nevada. Under the SPA, the Company has agreed to purchase a 25% equity interest in Flote based on a Company valuation of $10,000,000 and, subsequently, a 20% equity interest in Flote based on a Flote valuation of $30,000,000 (for a cumulative total of 45% equity interest after transaction). The investment is to be made in two tranches, with an initial closing to take place on or before April 30, 2021 and the second tranche closing to take place on or before December 31, 2021. Closing is subject to a number of customary conditions including the accuracy of representations and warranties contained in the Agreement. Flote is in the business of designing advanced social media, virtual reality and token platforms Flote are the creators of a new Social Network system built on respect for the user’s personal data, privacy and pocketbook. The Flote platform fully delivers on the internet’s promise of a wholly connected community without censorship, murky guidelines, or infringement. The platform provides a valuable marketspace with multi-currency wallets and more ways for content providers and creators to monetize their goods and services, even including their content from third-party social applications. Flote and Barrel are presently mapping out a methodology that is able to tokenize Lithium Resources in various stages of development and production.
On March 3, 2021, the Company issued a convertible note to Harp Sangha for $250,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share.
On March 3, 2021, the Company issued a convertible note to Harp Sangha for $50,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share.
On March 4, 2021, the Company signed a memorandum of Understanding with American Lithium Minerals, Inc. Under the terms of the agreement, AMLM will assist in the development of lithium battery technology in the US and India including the manufacturing, assembly, distribution and recycling of Lithium batteries.
On March 12, 2021, the Company entered into an agreement with Crown Bridge Partners, LLC whereby the remaining balance of the note dated November 12, 2018 and any remaining warrants of 28,800 issued to Crown Bridge are extinguished. In addition Crown Bridge will instruct the Company transfer agent to cancel 8,330,420 shares held by Crown Bridge by March 17, 2021,
On March 12, 2021, the Company entered into an agreement with First Fire Global Opportunities Fund, LLC whereby the remaining balance of the note dated May 28, 2019 with principal of $125,000 and a remaining warrants of 625,000 issued to First Fire are extinguished. The Company issued 2,000,000 shares with a value of $145,000 for final settlement and payment of all principal, interest and penalties, plus the cancellation of any reserve shares held by First Fire with the Company’s Transfer Agent.
During the period from February 2, 2021 to March 31, 2021 the Company issued 24,520,420 shares of common stock to three convertible debt holders for the conversion of debt.
On March 29, 2021, the Company issued a convertible note to EROP Capital for $25,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.01 per share or 70% of the lowest trade five days prior to conversion.
On April 1 2021, the Company issued a convertible note to EROP Capital for $50,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.01 per share or 70% of the lowest trade five days prior to conversion.
On May 14, 2021, the Company issued a convertible note to Harp Sangha for $40,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share.
On June 30, 2021 the Company issued a convertible note to EROP Capital for $50,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.01 per share or 70% of the lowest trade five days prior to conversion.
On July 12, 2021, the Company issued a convertible note to EROP Capital for $50,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.01 per share or 70% of the lowest trade five days prior to conversion.
On July 28, 2021, the Company issued a convertible note to EROP Capital for $50,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.01 per share or 70% of the lowest trade five days prior to conversion.
On August 2, 2021, the Company issued 9,400,000 shares of common stock for the conversion of debt of $9,000 and accrued interest of $16,850 for a total value of $25,850.
On September 2, 2021, the Company issued a convertible note to EROP Capital for $50,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.01 per share or 70% of the lowest trade five days prior to conversion.
On December 21, 2021, the Company issued a convertible note to Harp Sangha for $50,000 which matures one year from date of issuance. The note bears interest of 8% per annum and is convertible into common stock of the Company at $0.10 per share.