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
October 31, 2018
(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 October 31, 2018 and July 31, 2018, the Company has convertible notes with a total base principal of $229,500 and $207,500, 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.
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 $406,896 and had net cash used in operations of $40,371 for the three months ended October 31, 2018 and had an accumulated deficit and working capital deficit of $3,745,941 and $2,551,292 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 October 31, 2018, the number of shares of common stock that can be issued for convertible debt as per Note 9 - Subsequent Events are 4,694,538. The other notes were not convertible at October 31, 2018 All convertible debt is in default due to missing the 10-K filing deadline.
A summary of debt at October 31, 2018 and July 31, 2018 is as follows:
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|
October 31,
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|
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July 31,
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|
|
|
2018
|
|
|
2018
|
|
Notes payables related party, unsecured, interest bearing at 5% rate per annum, on demand
|
|
$
|
105,377
|
|
|
$
|
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
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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 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. The convertible note had a net change in fair value of $37,308.
|
|
|
92,045
|
|
|
|
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 of $105,111.
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|
|
-
|
|
|
|
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 October 31, 2018, there was a principal balance of $32,000. This note becomes convertible on December 9, 2018. This note defaulted on November 14, 2018 and a default penalty of $16,000 will be added to the note for a total of $48,000 and incurred default interest rate of 22%.
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|
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32,000
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|
|
|
32,000
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|
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. As of October 31, 2018, there was a principal balance of $18,000. This note becomes convertible on December 9, 2018. This note defaulted on November 14, 2018 and a default penalty of $9,000 will be added to the note for a total of $27,000 and incurred default interest rate of 22%.
|
|
|
18,000
|
|
|
|
18,000
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|
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 October 31, 2018, there was a principal balance of $38,000. This note becomes convertible on January 6, 2019. This note defaulted on November 14, 2018 and a default penalty of $19,000 will be added to the note for a total of $57,000 and incurred default interest rate of 22%.
|
|
|
38,000
|
|
|
|
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. As of October 31, 2018, there was a principal balance of $35,000. This note becomes convertible on February 2, 2019. This note defaulted on November 14, 2018 and a default penalty of $17,500 will be added to the note for a total of $52,500 and incurred default interest rate of 22%.
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|
|
35,000
|
|
|
|
-
|
|
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. As of October 31, 2018, there was a principal balance of $33,000. This note becomes convertible on February 23, 2019. This note defaulted on November 14, 2018 and a default penalty of $16,500 will be added to the note for a total of $49,500 and incurred default interest rate of 22%.
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|
|
33,000
|
|
|
|
-
|
|
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. As of October 31, 2018, there was a principal balance of $33,000. This note becomes convertible on March 19, 2019. This note defaulted on November 14, 2018 and a default penalty of $16,500 will be added to the note for a total of $49,500 and incurred default interest rate of 22%.
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|
|
33,000
|
|
|
|
-
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued October 25, 2018 in the amount of $10,500 with fees of $0 and cash proceeds of $10,500 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. As of October 31, 2018, there was a principal balance of $10,500. This note becomes convertible on April 23, 2019. This note defaulted on November 14, 2018 and a default penalty of $5,250 will be added to the note for a total of $15,750 and incurred default interest rate of 22%.
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|
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10,500
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|
|
|
-
|
|
Loan payable related party, unsecured, non-interest bearing, on demand
|
|
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523
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|
|
|
2,229
|
|
Total Debt
|
|
|
525,289
|
|
|
|
540,155
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|
Less: Current Maturities
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|
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475,289
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|
|
|
490,155
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|
|
|
|
|
|
|
|
|
|
Total Long-Term Debt
|
|
$
|
50,000
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|
|
$
|
50,000
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|
NOTE 5 - RELATED PARTY TRANSACTIONS
As of October 31, 2018, the CEO and two other members of management and one other employee had earned accrued unpaid salary in the amount of $1,488,750. Accrued salaries of $1,488,750 combined with accrued payroll taxes of $52,034 for a total accrued related party salaries and payroll tax of $1,540,784 for the period from June 2015 until October 31, 2018.
Also, Mr. Michael Ward, President was owed $2,229 at July 31, 2018 which has decreased to $523 as of October 31, 2018 resulting from additional expenses paid of $3,977 and repayments of $5,683 during the three months ended October 31, 2018.
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 $47,500 for the period ended October 31, 2018 the balance has decreased to a total loan amount of $105,376.
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 twenty-eight (28) 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 October 31, 2018 and the year ended July 31, 2108 respectively. Below is the schedule of base rent for the remaining Lease term as of October 31, 2018.
Year
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|
Amount
|
|
2019
|
|
$
|
56,028
|
|
|
|
|
|
|
Total Remaining Base Rent
|
|
$
|
56,028
|
|
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 October 31, 2018. Interest will continue accruing after October 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 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.
NOTE 9 - SUBSEQUENT EVENTS
The Company evaluated events occurring subsequent to October 31, 2018, identifying those that are required to be disclosed as follows:
On November 6, 2018, JSJ Investments Inc. 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 and have not yet been issued.
On November 13, 2018, the Company entered into Securities Purchase Agreement with Crown Bridge Partners, LLC to issue a convertible note in the aggregate principal amount of $105,000, with unsecured, interest bearing at 10% per annum and a maturity date of November 13, 2019 for the first tranche for $35,000. The Company does not intend to draw down any more.
In November 2018, as part of one note holder’s conversion request, shares underlying that/those conversions have not yet been issued resulting in a dispute between the Company and the note holder as to potential penalties under the note agreement. The Company is in discussions with the note holder on this matter as of the date of the filing report.
In January 2019, the Company offered and sold 5,000,000 shares of common stock at $0.025 per share for $125,000.