Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

Barrel Energy, Inc. (the "Company," "Barrel Energy," "we," "us," or "our") is a Nevada corporation whose common stock is publicly traded under the symbol BRLL on the OTCIQ Market maintained by OTC Markets Group. The Company operates in the environmental services, renewable energy, and waste-to-value sectors.

In March 2025, the Company completed a reverse merger transaction pursuant to which Happy Traps, LLC became a wholly owned operating subsidiary of Barrel Energy Inc. As a result of this transaction, Happy Traps represents the Company's primary operating business.

Operating Subsidiary - Happy Traps, LLC

Happy Traps, LLC ("Happy Traps") is an environmentally focused grease trap service and waste management company headquartered at 51 Ingersoll Drive, Portland, Maine 04103. The Company provides grease trap pumping, cleaning, maintenance, and related services to restaurants and food service establishments, primarily in the greater Portland, Maine metropolitan area.

In addition to grease trap services, Happy Traps offers a proprietary line of eco-friendly cleaning products marketed under the Happy Traps Cleaners brand and provides used cooking oil collection and recycling services through a strategic partnership with Maine Standard Biofuels, Inc.

History of Happy Traps

Happy Traps was founded in 2016 by JarmiKaltsas, who has over 20 years of experience in the biodiesel, waste-to-energy and environmental services industries. The Company initially focused on grease trap pumping and maintenance services for restaurants and food service establishments in southern Maine.

Over time, Happy Traps expanded its operations to include proprietary eco-friendly cleaning products and used cooking oil recycling services. This evolution was driven by customer demand for bundled services and the Company's commitment to sustainability and environmental responsibility.

In 2020, Kayla Tilton was appointed President, bringing regulatory and operational expertise gained from her prior work with the Maine Department of Environmental Protection and her leadership role at Maine Standard Biofuels. Under current leadership, Happy Traps has refined its operational efficiency, strengthened compliance capabilities and established the foundation for regional expansion.

In March 2025, Happy Traps completed a reverse merger with Barrel Energy, pursuant to which Barrel Energy acquired the Company. The transaction was structured to provide Happy Traps with access to additional capital, infrastructure and strategic resources to support regional expansion and integration into a broader renewable energy and waste-to-value platform. Following the transaction, Happy Traps continues to operate its business with existing management while aligning its growth strategy with Barrel Energy's long-term objectives.

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.

Liquidity and Capital Resources

At June 30, 2026, we had an accumulated deficit of $310,073. We recorded net income of $7,230 and $1,046for the three and six months periods ended June 30, 2026 and net income of $33,868 and $50,727 for the same period in 2025, 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 $28,690 as of June 30, 2026, compared to working capital of 50,818 as of December 31, 2025.

Cash used in operations totaled $7,544 during the six months ended June 30, 2026, compared to cash used in operations of $39,443 during the same period in 2025.

Cash used in investing activities was $25,500 for the six months period ended June 30, 2026 compared to zero for the same period in 2025. The Company purchased a service truck which is being depreciated over 60 months.

Cash received from financing activities was $3,085 from a note payable related party.

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.

Results of Operations

The Company recorded revenue of $54,843 and $97,238 during the three and six months periods ended June 30, 2026 and $62,654 and $107,798 for the same periods in 2025. Cost of service recorded during the three and six months ended June 30, 2026 was $25,175 and $47,993 compared to $18,534 and $33,705 for the same periods in 2025, respectively.

Total expenses for the three and six months periods ended June 30, 2026 $22,438 and $48,199 compared to $10,252 and $23,366 for the same periods in 2025. The increased expenses incurred during the three and six months ended June 30, 2026 due mostly to the increase in general and administrative expenses along with increased bad debt expense.

The Company incurred net income of $7,230 and $1,046 in the three and six months periods ended June 30, 2026, compared to net income of $33,868 and $50,727 for the same periods in 2025. The higher net income in 2025 was due to lower cost of services plus higher sales versus the same period in 2026.

Revenue decreased for the three and six months ended June 30, 2026 compared to the same periods in 2025 primarily due to timing of jobs and the Company's decision to stop servicing larger traps as a result of capacity constraints.

Off-Balance Sheet Arrangements

None