The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s 10-K for the year ending July 31, 2018 filed with the Securities and Exchange Commission. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year ending July 31, 2019.
Notes to the Consolidated Interim Financial Statements
January 31, 2019
(Unaudited)
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.
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.
In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s 10-K filed with the Securities and Exchange Commission on December 24, 2018.
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 January 31, 2019 and July 31, 2018, the Company has convertible notes with a total base principal of $276,500 and $206,000, respectively, which become convertible in 180 days. There is a potential for 17,489,366 shares if the principal of $276,500 were converted at January 31, 2019. These notes will have a dilutive effect on common stock. The Company has 10,000,000 shares of Mirage’s Series A Preferred Stock which possess 20 votes per share and are convertible into 200,000,000 common shares. As of January 31, 2019 there were 164,062 warrants issued and outstanding which are equal to 164,062 shares which have not been exercised.
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.
Financial Instruments
The Company’s notes that have become convertible are subject to ASC Topic 480, “Distinguishing Liabilities from Equity,” as the debt is a mostly fixed amount to be settled with a variable number of shares.
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 $2,766,750 and had net cash used in operations of $78,656 for the six months ended January 31, 2019 and had an accumulated deficit and working capital deficit of $6,105,795 and $4,785,751 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 January 31, 2019, the number of shares of common stock that can be issued for convertible debt as per Note 9 - Subsequent Events was in default due to missing the 10-K filing deadline.
A summary of debt at January 31, 2019 and July 31, 2018 is as follows:
|
|
Jan. 31,
|
|
|
July 31,
|
|
|
|
2019
|
|
|
2018
|
|
Notes payables related party, unsecured, interest bearing at 5% rate per annum, on demand
|
|
$
|
48,877
|
|
|
$
|
152,876
|
|
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 7 - Commitments and Contingencies. This note is now in default as of April 16, 2018 and has a default interest of 17.5%.
|
|
|
77,844
|
|
|
|
77,844
|
|
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 September 2018, $25,000 of this debt was converted and the Company issued 3,223,726 shares of common stock with a fair value of $49,968 in payment leaving a principal balance of $30,000. This note defaulted in November 2018 and a default penalty of $144,000 was added to the note for a total of $219,000. The convertible note had a net change in fair value of $830,699.
|
|
|
1,029,437
|
|
|
|
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%. During August and September 2018, $64,500 of this debt plus $2,580 in interest was converted and the Company issued 8,467,776 shares of common stock with a fair value of $167,534 in payment leaving no balance due. The convertible note had a net change in fair value principal of $103,034 and a net change in fair value accrued interest of $2,077.
|
|
|
-
|
|
|
|
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 January 31, 2019, there was a principal balance of $48,000. This note became convertible on December 9, 2018. This note defaulted on November 14, 2018 and a default penalty of $16,000 was added to the note for a total of $48,000 and incurred default interest rate of 22%. The convertible note had a net change in fair value of $190,545.
|
|
|
238,545
|
|
|
|
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, 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. This note became convertible on December 9, 2018. This note defaulted on November 14, 2018 and a default penalty of $9,000 was added to the note for a total of $27,000 and incurred default interest rate of 22%. The convertible note had a net change in fair value of $107,182.
|
|
|
134,182
|
|
|
|
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. This note becomes convertible on January 6, 2019. This note defaulted on November 14, 2018 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%. The convertible note had a net change in fair value of $226,273.
|
|
|
283,273
|
|
|
|
38,000
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued August 6, 2018 in the amount of $35,000 with fees of $3,000, cash proceeds of $32,000, convertible at February 2, 2019 with conversion price at a discount rate of 49% 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, 2019. This note becomes convertible on February 2, 2019. This note defaulted on November 14, 2018 and a default penalty of $17,500 was added to the note for a total of $52,500 and incurred default interest rate of 22%.
|
|
|
52,500
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum,, issued August 27, 2018 in the amount of $33,000 with fees of $3,000 and cash proceeds of $30,000, convertible at February 23, 2019 with conversion price at a discount rate of 49% 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 June 15, 2019. This note becomes convertible on February 23, 2019. This note defaulted on November 14, 2018 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%.
|
|
|
49,500
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued September 20, 2018 in the amount of $33,000 with fees of $3,000 and cash proceeds of $30,000, convertible at March 19, 2019 with conversion price at a discount rate of 49% 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 July 15, 2019. This note becomes convertible on March 19, 2019. This note defaulted on November 14, 2018 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%.
|
|
|
49,500
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued October 25, 2018 in the amount of $10,500 with fees of $500 and cash proceeds of $10,000 which was paid directly to the vendor, convertible at April 23, 2019 with conversion price at a discount rate of 49% 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 August 15, 2019. This note becomes convertible on April 23, 2019. This note defaulted on November 14, 2018 and a default penalty of $5,250 was added to the note for a total of $15,750 and incurred default interest rate of 22%.
|
|
|
15,750
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 10% per annum, issued November 13, 2018 in the aggregate principal amount of $105,000 and total cash proceeds of $90,000 to be funded in three (3) tranches. The principal sum due shall be prorated based on the consideration actually paid. For each tranche paid, the Company will have to provide 164,062 warrant shares for holder to purchase for a total of 492,186 warrants which are equal to 492,186 shares. During the 2
nd
Quarter Ended January 31, 2019, the first tranche of $35,000 was received with fees of $5,000 and cash proceeds of $30,000. The Holder shall have the right at any time to convert all or any part of outstanding and unpaid principal amount. The conversion price is the lessor of lowest traded price and lowest closing bid price with a 45% discount during the previous twenty-five (25) trading day period ending on the last complete trading day prior to the conversion dates, maturity date for first tranche of November 13, 2019. This note defaulted on November 14, 2018 and a default penalty of $17,500 was added to the note for a total of $52,500 and incurred default interest rate of 15%. Also, an additional 25% discount for a total of 70% discount must be factored in the conversion price until this note is no longer outstanding. The Company has not received any notice of default and associated default penalties remain unassessed by Lender. The convertible note has a net change in fair value of $516,944.
|
|
|
569,444
|
|
|
|
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued December 28, 2018 in the amount of $12,000 with fees of $2,000 and cash proceeds of $10,000 which was paid directly to the vendor, convertible at June 26, 2019 with conversion price at a discount rate of 49% of market price which is the average of the lowest closed trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date, maturity date of October 30, 2019. This note becomes convertible on June 26, 2019. This note defaulted on November 14, 2018 and a default penalty of $6,000 was added to the note for a total of $18,000 and incurred default interest rate of 22%.
|
|
|
18,000
|
|
|
|
-
|
|
Loan payable related party, unsecured, non-interest bearing, on demand
|
|
|
20
|
|
|
|
2,229
|
|
Total Debt
|
|
|
2,616,872
|
|
|
|
540,155
|
|
Less: Current Maturities
|
|
|
2,566,872
|
|
|
|
490,155
|
|
|
|
|
|
|
|
|
|
|
Total Long-Term Debt
|
|
$
|
50,000
|
|
|
$
|
50,000
|
|
NOTE 5 - RELATED PARTY TRANSACTIONS
As of January 31, 2019, the CEO and two other members of management and one other employee had earned accrued unpaid salary in the amount of $1,614,000. Accrued salaries of $1,614,000 combined with accrued payroll taxes of $55,230 for a total accrued related party salaries and payroll tax of $1,669,230 for the period from June 2015 until January 31, 2019.
Also, Mr. Michael Ward, President was owed $2,229 at July 31, 2018 which has decreased to $20 as of January 31, 2019 resulting from additional expenses paid of $8,815 and repayments of $11,024 during the six months ended January 31, 2019
Additionally, White Boy Partnership, LLC, a company owned by the spouse of the CEO, had provided a total loan of $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. Due to additional payments of $103,999 for the period ended January 31, 2019 the balance has decreased to a total loan amount of $48,877.
NOTE 6 – 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 thirty-one (31) 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 $21,010 and $82,178 for the three month ended January 31, 2019 and the year ended July 31, 2108 respectively. Below is the schedule of base rent for the remaining Lease term as of January 31, 2019.
Year
|
|
Amount
|
|
2019
|
|
$
|
35,015
|
|
|
|
|
|
|
Total Remaining Base Rent
|
|
$
|
35,015
|
|
NOTE 7 - 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 January 31, 2019. Interest will continue accruing after January 31, 2019 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 8 – EQUITY
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 converted the remaining principal in the amount of $14,500 of the $43,000 note issued February 26, 2018 that was defaulted to $64,500 for 1,542,553 shares of common stock along with $2,580 of accrued interest for 274,468 shares of common stock.
On September 11, 2018, JSJ Investments, Inc. converted principal in the amount of $25,000 of the $75,000 note issued January 5, 2018 for 3,223,726 shares of common stock.
On January 7, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to Robert Soer valued at $0.0250 per share for $20,000.
On January 9, 2019, the Company offered and sold One Million (1,000,000) shares of common stock to David Damerjian valued at $0.0250 per share for $25,000.
On January 14, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to David Damerjian valued at $0.0250 per share for $20,000.
On January 14, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to Henry Lackner valued at $0.0250 per share for $20,000.
On January 15, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to Christine Maly valued at $0.0250 per share for $20,000.
On January 18, 2019, the Company offered and sold Eight Hundred Thousand (800,000) shares of common stock to Henry Lackner valued at $0.0250 per share for $20,000.
NOTE 9 - SUBSEQUENT EVENTS
The Company evaluated events occurring subsequent to January 31, 2019, identifying those that are required to be disclosed as follows:
On November 6, 2018, JSJ Investments Inc. (JSJ) attempted to convert the remaining principal in the amount of $30,000 of the $75,000 note issued January 5, 2018 for 3,896,103 shares of common stock along with interest of $6,148 of accrued interest for 798,435 shares of common stock but was rejected. The remaining note balance with interest was subsequently converted on February 12, 2019 for same 4,694,538 shares of common stock. On February 27, 2019, JSJ executed a conversion notice to convert $45,000 of $144,000 penalty that was tacked onto the original note for 2,727,272 shares of common stock.
On November 13, 2018, the Company entered into Securities Purchase Agreement with Crown Bridge Partners, LLC (Crown) to issue a convertible note in the aggregate principal amount of $105,000 to be funded in three (3) tranches, with unsecured, interest bearing at 10% per annum and a maturity date of November 13, 2019 for the first tranche in the amount of $35,000. Crown funded a second tranche of $35,000 which we received in February 2019 and in addition the Company will have to provide 164,062 warrant shares for holder to purchase.
In February 2019, the Company offered and sold 2,000,000 shares of common stock at $0.025 per share for $50,000 and 4,750,000 shares of common stock at $0.020 per share for $95,000.
In February 2019, Power Up Lending Group Ltd. converted the principal amount of the $32,000 note issued June 12, 2018 that was defaulted to $48,000 along with $1,920 of accrued interest for 3,081,482 shares of common stock.
In February 2019, Power Up Lending Group Ltd. converted the principal amount of the $38,000 note issued July 10, 2018 that was defaulted to $57,000 along with $2,280 of accrued interest for 3,207,302 shares of common stock.
In February 2019, Power Up Lending Group Ltd. converted the principal amount of the $35,000 note issued August 6, 2018 that was defaulted to $52,500 along with $2,100 of accrued interest for 3,689,190 shares of common stock.
In March 2019, the Company offered and sold 249,000 shares of common stock at $0.020 per share for $4,980.
In March 2019, Power Up Lending Group Ltd. converted the principal $49,500 of the $33,000 note issued August 27, 2018 that was defaulted to $49,500 along with $1,980 of accrued interest for 3,478,380 shares of common stock.
In March 2019, JSJ converted the remaining $99,000 of the $144,000 penalty on the $75,000 note issued January 5, 2018 that was defaulted for 6,545,454 shares of common stock.
On March 6, 2019, the Company exercised their right to prepay the full principal and accrued interest of the $33,000 note issued September 20, 2018. The total amount paid was $52,692.
On March 14, 2019, the Company entered into a Memorandum of Understanding (MOU) which is subject to the payment of a "good will deposit". The funds are due on, or before April 14, 2019. The MOU sets out the terms of the proposed funding and participation in the Concho/Progresso Pipeline and Natural Gas Storage Project. Under the MOU, Mirage proposes to sell 100% of its participation interest in the Project to Organizatiiton Mondiale De development (OMD), a French company, in exchange for its promise to fund the Project's cost. OMD will offer Mirage a five percent (5.0%) carried equity participation interest which will be characterized as Mirage's put option interest in the Project. The closing of the proposed transaction is subject to the execution of definitive documents. In the event the transaction fails to close due to Mirage's fault, Mirage will be required to refund the good will deposit. In the event the transaction fails to close due to OMD, Mirage will be entitled keep a portion of the deposit.