Notes to the Audited Consolidated Financial Statements
July 31, 2018 and 2017
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Mirage Energy Corporation (formerly Bridgewater Platforms Inc.) (the “Company”) is a Nevada corporation incorporated on May 6, 2014. On May 20, 2014, the Company incorporated a Canadian subsidiary known as Bridgewater Construction Ltd. in Ontario in association with its construction business. Mirage Energy Corporation is based at 900 Isom Rd Suite 306, San Antonio, TX 78216. The Company’s fiscal year end is July 31.
On August 11, 2016, a change in Company control occurred whereby Company affiliate shareholder, Eric Davies, sold 2,500,000 (90,000,000 post split shares) of his Company shares to Michael R. Ward. The sale represented 30% of the Company’s total issued and outstanding common shares. Additionally, Emanuel Oliveira, an affiliate shareholder, sold 774,000 common shares (27,864,033 post split shares) to Mr. Ward and 1,726,000 shares (62,136,075 post split shares) to Choice Consulting, LLC, a Wyoming limited liability company.
On November 7, 2016, the Company increased the authorized shares from 75,000,000 to 900,000,000 shares of $0.001 par value. It also designated 10,000,000 shares of Series A Preferred Stock. On November 7, 2016, the Company implemented a forward stock split of its common shares on a 36:1 basis. The issued and outstanding common shares increased from 8,333,336 to 300,000,456 shares. All share and per share amounts have been restated from the first day of the first period presented to reflect the split.
On January 24, 2017, Mirage Energy Corporation, a Nevada corporation (“Mirage” or the “Company”) entered into an agreement with Mirage’s President and CEO, Mr. Michael Ward, whereby Mirage acquired all of the issued and outstanding shares of 4Ward Resources Inc., a Texas corporation (“4Ward Resources”) from Mr. Ward in exchange for 10,000,000 shares of Mirage’s Common Stock and 10,000,000 shares of Mirage’s Series A Preferred Stock. The acquisition of 4Ward Resources was completed on January 24, 2017. The Series A shares possess 20 votes per share and are convertible into 200,000,000 common shares. Through this acquisition, the Company’s scope of business was expanded to include 4Ward Resource’s development of an integrated Texas/Mexico natural gas pipeline transportation and storage facility in Northeastern Mexico. This transaction was combined with the August 11, 2016 transaction and treated as a reverse merger and recapitalization whereby 4Ward Resources was determined to be the accounting acquirer under ASC 805 and assumed $40,288 of net assets of Mirage.
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.
Basis of Consolidation
These financial statements include the accounts of the Company and its wholly owned subsidiaries, 4Ward Resources, Inc., Cenote Energy, S. de R.L. de C.V., WPF Transmission, Inc., and WPF Mexico Pipelines, S. de R.L. de C.V. All material intercompany balances and transactions have been eliminated.
Long Lived Assets
In accordance with ASC 360 "Property Plant and Equipment," the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Intangible assets are amortized over their estimated useful lives. Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value. During the year ended July 31, 2017, impairment expense of $122,494 was recorded for the U.S. & Mexican projects.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had $13,480 and $11,776 cash at July 31, 2018 and 2017, respectively.
Convertible Debt
The Company follows ASC 480-10,
Distinguishing Liabilities from Equity
(“ASC 480-10”) in its evaluation of the accounting for a hybrid instrument. A financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares shall be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives, and are carried as a liability at fair value at each balance sheet date with remeasurements reported in interest expense in the accompanying Consolidated Statements of Operations.
Financial Instruments
The Company follows ASC 820, “Fair Value Measurements and Disclosures”, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are described below:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents, accounts receivable. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company evaluates the collectability of its accounts receivable on an on-going basis and request deposits whenever it is necessary. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Share-based Expenses
ASC 718 “Compensation – Stock Compensation” prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “Equity – Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Director and consultant share-based compensation was paid in the amount of in $262,500 in 2017 and $48,110 in 2018.
Deferred Income Taxes and Valuation Allowance
The Company accounts for income taxes under ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of July 31, 2018 and 2017.
Net Loss Per Share of Common Stock
The Company has adopted ASC Topic 260, “Earnings per Share,” (“EPS”) which requires presentation of basic EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation. In the accompanying financial statements, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to convertible debt, stock options and warrants for each year.
As of July 31, 2018 and July 31, 2017, the Company has convertible notes totaling $207,500 and $33,000, respectively, which become convertible in 180 days. These notes will have a dilutive effect on common stock. The Company has no other potentially dilutive securities, such as options or warrants, currently issued and outstanding.
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
Commitments and Contingencies
The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no contingencies as of July 31, 2018.
Future obligations for the base rent of the office lease as of July 31, 2018 and 2017 were $83,045 and $157,314, respectively.
Reclassifications
Certain prior year amounts have been reclassified to conform with the current year presentation.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.
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 which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company had a net loss of $1,495,687 and had net cash used in operations of $221,998 for the year ended July 31, 2018 and had an accumulated deficit and working capital deficit of $3,339,045 and $2,367,509 at that date. The Company has not established an ongoing source of revenues sufficient to cover its operating cost, and requires additional capital to commence its operating plan. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about its ability to continue as a going concern.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company may include, but not be limited to: sales of equity instruments; traditional financing, such as loans; sale of participation interests and obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 - DEBT
As of July 31, 2018, the number of shares of common stock that can be issued for convertible debt as per Note 10 - Subsequent Events are 7,918,264. The other notes were not convertible at July 31, 2018.
A summary of debt at July 31, 2018 and July 31, 2017 is as follows:
|
|
July 31,
|
|
|
July 31,
|
|
|
|
2018
|
|
|
2017
|
|
Notes payables related party, unsecured, interest bearing at 5% rate per annum, on demand
|
|
$
|
152,876
|
|
|
$
|
187,600
|
|
Note, unsecured interest bearing at 2% per annum, due July 9, 2020
|
|
|
50,000
|
|
|
|
50,000
|
|
Note, unsecured interest bearing at 7.5% per annum, due April 15, 2018. This was an accounts payable bill that was converted to a loan as per Note 9 Commitments and Contingencies. This note is now in default as of April 16, 2018 and has a default interest of 17.5%
|
|
|
77,844
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued June 28, 2017 in the amount of $33,000 with fees of $3,000 and cash proceeds of $30,000, convertible at December 25, 2017 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of March 30, 2018. This note defaulted on November 15, 2017 and a default penalty of $16,500 was added to the note for a total of $49,500 and incurred default interest rate of 22%. During January and February 2018, $49,500 of this debt plus $1,980 in interest was converted and the Company issued 5,024,243 shares of common stock with a fair value of $110,708 in payment leaving no balance due. The convertible note had a net change in fair value of $59,227.
|
|
|
-
|
|
|
|
33,000
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued August 22, 2017 in the amount of $38,000 with fees of $3,000 and cash proceeds of $35,000, convertible at February 18, 2018 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of May 30, 2018. This note defaulted on November 15, 2017 and a default penalty of $19,000 was added to the note for a total of $57,000 and incurred default interest rate of 22%. During March and May 2018, $57,000 of this debt plus $2,280 in interest was converted and the Company issued 9,971,847 shares of common stock with a fair value of $134,113 in payment leaving no balance due. The convertible note had a net change in fair value of $74,833.
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|
|
-
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum,, issued December 4, 2017 in the amount of $53,000 with fees of $3,000 and cash proceeds of $50,000, convertible at June 2, 2018 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of September 15, 2018. This note defaulted on March 25, 2018 and a default penalty of $26,500 was added to the note for a total of $79,500 and incurred default interest rate of 22%. During June and July 2018 $79,500 of this debt plus $5,033 in interest was converted and the Company issued 11,813,920 shares of common stock with a fair value of $190,872 in payment leaving no balance due. The convertible note had a net change in fair value of $106,339.
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|
|
-
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued January 5, 2018 in the amount of $75,000 with an original issue discount of $2,000 and cash proceeds of $73,000, convertible at July 4, 2018 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of January 5, 2019. During July 2018, $20,000 of this debt was converted and the Company issued 4,278,074 shares of common stock with a negative fair value of $38,075 in payment leaving a principal balance of $55,000. The convertible note had a net change in fair value of $67,781.
|
|
|
104,706
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued February 26, 2018 in the amount of $43,000 with fees of $3,000 and cash proceeds of $40,000, convertible at August 25, 2018 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of November 30, 2018. This note defaulted on March 25, 2018 and a default penalty of $21,500 was added to the note for a total of $64,500 and incurred default interest rate of 22%. As of July 31, 2018, there was a principal balance of $64,500. This note becomes convertible on August 25, 2018.
|
|
|
64,500
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued June 12, 2018 in the amount of $32,000 with fees of $2,000, cash proceeds of $28,200 and disbursement of $1,800, convertible at December 9, 2018 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of March 30, 2019. As of July 31, 2018, there was a principal balance of $32,000. This note becomes convertible on December 9, 2018.
|
|
|
32,000
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum,, issued June 12, 2018 in the amount of $18,000 with fees of $0 and cash proceeds of $18,000 which was paid directly to the vendor, convertible at December 9, 2019 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of March 30, 2019. As of July 31, 2018, there was a principal balance of $18,000. This note becomes convertible on December 9, 2018.
|
|
|
18,000
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum,, issued July 10, 2018 in the amount of $38,000 with fees of $3,000 and cash proceeds of $35,000, convertible at January 6, 2019 with conversion price at a discount rate of 45% of market price which is the average of the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of April 30, 2019. As of July 31, 2018, there was a principal balance of $38,000. This note becomes convertible on January 6, 2019.
|
|
|
38,000
|
|
|
|
-
|
|
Loan payable related party, unsecured, non-interest bearing, on demand
|
|
|
2,229
|
|
|
|
21,078
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|
Total Debt
|
|
|
540,155
|
|
|
|
291,678
|
|
Less: Current Maturities
|
|
|
490,155
|
|
|
|
241,678
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|
|
|
|
|
|
|
|
|
|
Total Long-Term Debt
|
|
$
|
50,000
|
|
|
$
|
50,000
|
|
NOTE 5 – EQUITY
Authorized Stock
The Company has authorized 900,000,000 common shares with a par value of $0.001 per share. The Company also designated 10,000,000 shares of Series A Preferred Stock with a par value of $0.001 per share which were issued to Mr. Michael Ward on January 23, 2017. There are 10,000,000 shares of preferred stock that are convertible into 200,000,000 shares of common stock.
Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought. Each share of Series A Preferred Stock has the right to be converted into twenty (20) shares of our Common Stock. Holders of Series A Preferred Stock have the right to vote such shares on an “as converted” basis, unless and until such shares are converted into shares of Common Stock.
Common Shares
On February 2, 2017, the Company offered and sold 40,000 shares of common stock at $0.50 per share to accredited investor for $20,000.
On March 8, 2017, the Company authorized a stock grant of 50,000 common shares to each of three members of the board of directors totaling 150,000 shares at $1.75 per share of common stock valued at $262,500 as director compensation.
On January 3, 2018, the Company entered into consulting agreements with two consultants with total consideration of 1,000,000 shares of common stock valued at $42,500. These shares were subsequently issued in March 2018.
On January 8, 2018, Power Up Lending Group Ltd converted principal in the amount of $15,000 of the $33,000 note issued June 28, 2017 that was defaulted to $49,500 for 940,439 shares of common stock.
On January 18, 2018, Power Up Lending Group Ltd converted principal in the amount of $15,000 of the $33,000 note issued June 28, 2017 that was defaulted to $49,500 for 1,181,102 shares of common stock.
On January 31, 2018, Power Up Lending Group Ltd converted principal in the amount of $10,000 of the $33,000 note issued June 28, 2017 that was defaulted to $49,500 for 1,351,351 shares of common stock.
On February 14, 2018, Power Up Lending Group Ltd. converted the remaining principal of $9,500 of the $33,000 note issued June 28, 2017 that was defaulted to $49,500 along with $1,980 of accrued interest for 1,551,351shares of common stock.
On March 1, 2018, Power Up Lending Group Ltd. converted principal in the amount of $15,000 of the $38,000 note issued August 22, 2017 that was defaulted to $57,000 for 2,459,016 shares of common stock.
On March 12, 2018, Power Up Lending Group Ltd. converted principal in the amount of $15,000 of the $38,000 note issued August 22, 2017 that was defaulted to $57,000 for 2,459,016 shares of common stock.
On March 21, 2018, the Company offered and sold Fifty Thousand (50,000) shares of common stock to Michael Liska valued at $0.50 per share for $25,000 which the proceeds were paid to Michael Ward directly to be disclosed as per Note 2 Related Party Disclosures.
On March 21, 2018, Power Up Lending Group Ltd. converted principal in the amount of $15,000 of the $38,000 note issued August 22, 2017 that was defaulted to $57,000 for 3,333,333 shares of common stock.
On May 9, 2018, Power Up Lending Group Ltd. converted principal in the amount of $8,000 of the $38,000 note issued August 22, 2017 that was defaulted to $57,000 for 963,855 shares of common stock.
On May 14, 2018, Power Up Lending Group Ltd. converted the remaining principal of $4,000 of the $38,000 note issued August 22, 2017 that was defaulted to $57,000 along with $2,280 of accrued interest for 756,627 shares of common stock.
On June 7, 2018, Power Up Lending Group Ltd. converted principal in the amount of $15,000 of the $53,000 note issued December 4, 2017 that was defaulted to $79,500 for 1,562,500 shares of common stock.
On June 11, 2018, Power Up Lending Group Ltd. converted principal in the amount of $20,000 of the $53,000 note issued December 4, 2017 that was defaulted to $79,500 for 2,083,333 shares of common stock.
On June 20, 2018, Power Up Lending Group Ltd. converted principal in the amount of $15,000 of the $53,000 note issued December 4, 2017 that was defaulted to $79,500 for 2,205,882 shares of common stock.
On June 27, 2018, Power Up Lending Group Ltd. converted principal in the amount of $15,000 of the $53,000 note issued December 4, 2017 that was defaulted to $79,500 for 2,205,882 shares of common stock.
On July 5, 2018, Power Up Lending Group Ltd. converted the remaining principal of $14,500 of the $53,000 note issued December 4, 2017 that was defaulted to $79,500 along with $5,033 of accrued interest for 3,756,323 shares of common stock.
On July 12, 2018, JSJ Investments Inc. converted principal of $20,000 of the $75,000 note issued January 5, 2018 for 4,278,074 shares of common stock.
On July 31, 2018, the Company authorized a stock grant of 100,000 common shares to each of three members of the board of directors totaling 300,000 shares of common stock valued at $0.0187 per share valued at $5,610 as director compensation.
NOTE 6 - PROVISION FOR INCOME TAXES
The Company provides for income taxes under ASC 740, “Income Taxes”. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Certain tax attributes are subject to an annual limitation as a result of the acquisition of our subsidiaries, which constitute a change of ownership as defined under Internal Revenue Code Section 382.
The Company is subject to taxation in the United States and certain state jurisdictions.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% to the net loss before provision for income taxes for the following reasons:
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Year Ended
|
|
|
Year Ended
|
|
|
|
July 31, 2018
|
|
|
July 31, 2017
|
|
Income tax expense at statutory rate
|
|
$
|
161,715
|
|
|
$
|
243,020
|
|
Valuation allowance
|
|
|
(161,715
|
)
|
|
|
(243,020
|
)
|
Income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Net deferred tax assets consist of the following components as of:
|
|
July 31,
2018
|
|
|
July 31,
2017
|
|
NOL Carryover
|
|
$
|
328,654
|
|
|
$
|
270,941
|
|
Valuation allowance
|
|
|
(328,654
|
)
|
|
|
(270,941
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Due to the change in ownership provisions of the Income Tax laws of United States of America, net operating loss carry forwards of approximately 1,565,017, which expire commencing in fiscal 2037, for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years. The tax years still left open are 2015, 2016, 2017 and 2018.
NOTE 7 - RELATED PARTY TRANSACTIONS
On January 24, 2017, Mirage Energy Corporation, a Nevada corporation (“Mirage” or the “Company”) entered into an agreement with Mirage’s President and CEO, Mr. Michael Ward, whereby Mirage acquired all of the issued and outstanding shares of 4Ward Resources Inc., a Texas corporation (“4Ward Resources”) from Mr. Ward in exchange for 10,000,000 shares of Mirage’s Common Stock and 10,000,000 shares of Mirage’s Series A Preferred Stock. The acquisition of 4Ward Resources was completed on January 24, 2017.
On January 28, 2017, 4Ward Resources, Inc., Mirage Energy Corporation’s wholly owned subsidiary, acquired Michael Ward’s ninety (90%) percent interest in two Mexican companies. The remaining ten (10%) percent interest was acquired by Mirage Energy Corporation from Patrick Dosser. Patrick Dosser is Michael Ward’s son.
Together, Mirage Energy and 4Ward Resources own 100% of the two Mexican corporations. The two Mexican corporations are WPF MEXICO PIPELINES, S. de R.L. de C.V., and CENOTE ENERGY S. de R.L. de C.V. Additionally, 4Ward Resources acquired all of Michael Ward’s interest in WPF TRANSMISSION, INC., a Texas corporation. These transactions were valued at their carry over basis of $140,286, representing $99,821 expended on behalf of these companies by 4Ward Resources, $1,500 expended by Mr. Michael Ward to be reimbursed by 4Ward Resources and $38,965 whose vendor payments will be assumed or paid by 4Ward Resources. These transactions were accounted for as a merger of entities under common control under ASC 805-50 whereby the financial information has been combined from the first day of the first period presented similar to a pooling of interest.
As of July 31, 2018, the CEO and two other members of management and one other employee had earned accrued unpaid salary in the amount of $1,363,500. Accrued salaries of $1,363,500 combined with accrued payroll taxes of $49,676 for a total accrued related party salaries and payroll tax of $1,413,176 for the period from June 2015 until July 31, 2018.
Also, Mr. Michael Ward provided $64,800 directly to the company with an additional $26,015 owed to Mr. Ward for monies outlaid on behalf of the Company which was netted for $69,737 payments received leaving a net due Mr. Ward $21,078 at July 31, 2017 which has decreased to $2,229 as of July 31, 2018. This resulted from additional $40,100 of loans provided and $26,725 of expenses paid which increased the total amount due to $87,903 less repayments of $85,674 during the year ended July 31, 2018.
Additionally, White Boy Partnership, LLC, a company owned by the spouse of the CEO, provided an additional loan of $137,600 to 4Ward Resources, Inc. during the year ended July 31, 2017. This additional loan increased the total loan amount to $187,600. Repayments of $34,724 were made during the year ended July 31, 2018, which reduced the balance due to $152,876 as of July 31, 2018.
NOTE 8 – LEASES
On June 9, 2016, the Company entered into a Lease Agreement for its San Antonio, Texas office lease location. The Lease Period is for three (3) years beginning July 1, 2016. The landlord is holding $6,921 as security and shall be returned at the end of the lease. The Company shall pay as additional rent all other sums of money as shall become due and payable by them under this Lease. To date after twenty-two (22) months of this thirty-six (36) month lease, no such additional charges have been made. The Company has incurred rent expense in the amount of $82,178 and $79,163 for the year ended July 31, 2108 and July 31, 2017 respectively. Below is the schedule of base rent for the remaining Lease term as of July 31, 2018.
Year
|
|
Amount
|
|
2019
|
|
$
|
83,045
|
|
|
|
|
|
|
Total Remaining Base Rent
|
|
$
|
83,045
|
|
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company committed to eighteen (18) months of Acquisition of Pipeline Rights of Way to Marcos y Asociados with a total amount of $77,844 which was due April 15, 2018 and not paid as of July 31, 2018. Interest will continue accruing after July 31, 2018 until it is paid.
From time to time the Company may become a party to litigation matters involving claims against the Company. Management believes that it is adequately insured for its operations and there are no current matters that would have a material effect on the Company’s financial position or results of operations.
NOTE 10 -
SUBSEQUENT EVENTS
The Company evaluated events occurring subsequent to July 31, 2018, identifying those that are required to be disclosed as follows:
On August 6, 2018, the Company entered into Securities Purchase Agreement with Power Up Lending Group Ltd. to issue an additional amount of convertible note in the amount of $35,000, with unsecured, interest bearing at 12% per annum and a maturity date of May 30, 2019.
On August 27, 2018, the Company entered into Securities Purchase Agreement with Power Up Lending Group Ltd. to issue an additional amount of convertible note in the amount of $33,000, with unsecured, interest bearing at 12% per annum and a maturity date of June 15, 2019.
On August 28, 2018, Power Up Lending Group Ltd. converted principal in the amount of $20,000 of the $43,000 note issued February 26, 2018 that was defaulted to $64,500 for 2,702,703 shares of common stock.
On August 31, 2018, Power Up Lending Group Ltd. converted principal in the amount of $15,000 of the $43,000 note issued February 26, 2018 that was defaulted to $64,500 for 2,000,000 shares of common stock.
On September 5, 2018, Power Up Lending Group Ltd. converted principal in the amount of $15,000 of the $43,000 note issued February 26, 2018 that was defaulted to $64,500 for 1,948,052 shares of common stock.
On September 10, 2018, Power Up Lending Group Ltd. was converted the remaining principal of $14,500 of the $43,000 note issued February 26, 2018 that was defaulted to $64,500 along with $2,580 of accrued interest for 1,817,021 shares of common stock.
On September 11, 2018, JSJ Investment converted principal of $25,000 of the $75,000 note issued January 5, 2018 for 3,223,726 shares of common stock.
On September 20, 2018, the Company entered into Securities Purchase Agreement with Power Up Lending Group Ltd. to issue an additional amount of convertible note in the amount of $33,000, with unsecured, interest bearing at 12% per annum and a maturity date of July 15, 2019.
On October 25, 2018, the Company entered into Securities Purchase Agreement with Power Up Lending Group Ltd. to issue an additional amount of convertible note in the amount of $10,500, with unsecured, interest bearing at 12% per annum and a maturity date of August 15, 2019.
On November 6, 2018, JSJ Investment tried to convert the remaining principal of $30,000 of the $75,000 note issued January 26, 2019 along with $6,148 of accrued interest for 4,694,538 shares of common stock but was rejected and have not yet been issued.
In November 2018, as part of one noteholders conversion request, shares underlying that/those conversions have not yet been issued resulting in a dispute between the Company and the noteholder as to potential penalties under the note agreement. The Company is in discussions with the noteholder on this matter as of the date of the filing of this report.
On November 13, 2018, the Company entered into Securities Purchase Agreement with Crown Bridge Partners LLC to issue an amount of convertible note in the amount of $105,000, with unsecured, interest bearing at 10% per annum and a maturity date of August 15, 2019.