Item 1. Unaudited Financial Statements.
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, 2019 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, 2020.
MIRAGE ENERGY CORPORATION
INDEX TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
April 30, 2020
|
|
|
April 30,
|
|
|
July 31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
75,306
|
|
|
$
|
70,456
|
|
|
Prepaid expenses
|
|
|
8,338
|
|
|
|
1,760
|
|
|
Total Current Assets
|
|
|
83,644
|
|
|
|
72,216
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
1,844
|
|
|
|
3,030
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
6,921
|
|
|
|
6,921
|
|
|
Total Other Assets
|
|
|
6,921
|
|
|
|
6,921
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
92,409
|
|
|
$
|
82,167
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
859,490
|
|
|
$
|
660,352
|
|
|
Loan payable
|
|
|
127,844
|
|
|
|
127,844
|
|
|
Convertible debentures, net of unamortized discount
|
|
|
1,553,637
|
|
|
|
580,754
|
|
|
Accrued salaries and payroll taxes, related parties
|
|
|
1,782,792
|
|
|
|
1,861,936
|
|
|
Total Current Liabilities
|
|
|
4,323,763
|
|
|
|
3,230,886
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Liabilities
|
|
|
|
|
|
|
|
|
|
Loan payable
|
|
|
822
|
|
|
|
1,063
|
|
|
TOTAL LIABILITIES
|
|
|
4,324,585
|
|
|
|
3,231,949
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.001, 10,000,000 shares authorized, 10,000,000 shares issued and outstanding as of April 30, 2020 and July 31, 2019
|
|
|
10,000
|
|
|
|
10,000
|
|
|
Common stock, par value $0.001, 900,000,000 shares authorized, 428,806,640 shares issued and outstanding as of April 30, 2020; 342,628,540 shares issued and outstanding as of July 31, 2019
|
|
|
428,806
|
|
|
|
406,886
|
|
|
Additional paid-in capital
|
|
|
3,735,446
|
|
|
|
2,986,180
|
|
|
Accumulated deficit
|
|
|
(8,406,328
|
)
|
|
|
(6,552,748
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
TOTAL STOCKHOLDERS’ (DEFICIT)
|
|
|
(4,232,176
|
)
|
|
|
(3,149,782
|
)
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
|
|
$
|
92,409
|
|
|
$
|
82,167
|
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
MIRAGE ENERGY CORPORATION
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
$
|
235,056
|
|
|
$
|
220,655
|
|
|
$
|
721,014
|
|
|
$
|
655,336
|
|
|
Professional fees
|
|
|
13,717
|
|
|
|
24,907
|
|
|
|
69,563
|
|
|
|
79,597
|
|
|
Total Operating Expenses
|
|
|
248,773
|
|
|
|
245,562
|
|
|
|
790,577
|
|
|
|
734,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE OPERATIONS
|
|
|
(248,773
|
)
|
|
|
(245,562
|
)
|
|
|
(790,577
|
)
|
|
|
(734,933
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSE (INCOME)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
26,586
|
|
|
|
39,557
|
|
|
|
69,630
|
|
|
|
37,036
|
|
|
Change in fair value of convertible debt
|
|
|
69,392
|
|
|
|
(953,852
|
)
|
|
|
678,739
|
|
|
|
1,058,798
|
|
|
Penalty on convertible debt
|
|
|
314,633
|
|
|
|
-
|
|
|
|
314,634
|
|
|
|
267,250
|
|
|
Total Other Expense (Income)
|
|
|
410,611
|
|
|
|
(914,295
|
)
|
|
|
1,063,003
|
|
|
|
1,363,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
(659,384
|
)
|
|
|
668,733
|
|
|
|
(1,853,580
|
)
|
|
|
(2,098,017
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
(659,384
|
)
|
|
|
668,733
|
|
|
|
(1,853,580
|
)
|
|
|
(2,098,017
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE INCOME (LOSS)
|
|
$
|
(659,384
|
)
|
|
$
|
668,733
|
|
|
$
|
(1,853,580
|
)
|
|
$
|
(2,098,017
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Income (Loss) per Common Share
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
Weighted Average Common Shares Outstanding, Basic
|
|
|
423,375,776
|
|
|
|
367,662,091
|
|
|
|
418,864,811
|
|
|
|
363,104,279
|
|
|
Diluted Income (Loss) per Common Share
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
Weighted Average Common Shares Outstanding, Diluted
|
|
|
423,375,776
|
|
|
|
369,364,648
|
|
|
|
418,864,811
|
|
|
|
363,104,279
|
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
MIRAGE ENERGY CORPORATION
Statement of Stockholders’ (Deficit)
(Unaudited)
For the Nine Months Ended April 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Preferred Stock
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
Total
|
|
|
|
|
Number
of Shares
|
|
|
Amount
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Paid-in
Capital
|
|
|
Accumulated
(Deficit)
|
|
|
Comprehensive
Loss
|
|
|
Stockholders’
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - July 31, 2018
|
|
|
342,628,540
|
|
|
$
|
342,628
|
|
|
|
10,000,000
|
|
|
$
|
10,000
|
|
|
$
|
580,540
|
|
|
$
|
(3,339,045
|
)
|
|
$
|
(100
|
)
|
|
$
|
(2,405,977
|
)
|
|
Common shares issued for conversion of debt and interest
|
|
|
11,691,502
|
|
|
|
11,692
|
|
|
|
-
|
|
|
|
-
|
|
|
|
211,026
|
|
|
|
-
|
|
|
|
-
|
|
|
|
222,718
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(406,896
|
)
|
|
|
-
|
|
|
|
(406,896
|
)
|
|
Balance - October 31, 2018
|
|
|
354,320,042
|
|
|
$
|
354,320
|
|
|
|
10,000,000
|
|
|
$
|
10,000
|
|
|
$
|
791,566
|
|
|
$
|
(3,745,941
|
)
|
|
$
|
(100
|
)
|
|
$
|
(2,590,155
|
)
|
|
Sale of common stock
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
120,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
125,000
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,359,854
|
)
|
|
|
-
|
|
|
|
(2,359,855
|
)
|
|
Balance – January 31, 2019
|
|
|
359,320,042
|
|
|
$
|
359,320
|
|
|
|
10,000,000
|
|
|
$
|
10,000
|
|
|
$
|
911,566
|
|
|
$
|
(6,105,795
|
)
|
|
$
|
(100
|
)
|
|
$
|
(4,825,009
|
)
|
|
Sale of common stock
|
|
|
7,665,667
|
|
|
|
7,666
|
|
|
|
-
|
|
|
|
-
|
|
|
|
162,314
|
|
|
|
-
|
|
|
|
-
|
|
|
|
169,980
|
|
|
Common shares issued for conversion of debt and interest
|
|
|
27,423,618
|
|
|
|
27,423
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,091,477
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,118,900
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
668,732
|
|
|
|
-
|
|
|
|
668,732
|
|
|
Balance – April 30, 2019
|
|
|
394,409,327
|
|
|
$
|
394,409
|
|
|
|
10,000,000
|
|
|
$
|
10,000
|
|
|
$
|
2,165,357
|
|
|
$
|
(5,437,063
|
)
|
|
$
|
(100
|
)
|
|
$
|
(2,867,397
|
)
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
For the Nine Months Ended April 30, 2020
|
|
|
Common Stock
|
|
|
Preferred Stock
|
|
|
Additional
|
|
|
Accumulated
|
|
|
Accumulated
Other
|
|
|
Total
|
|
|
|
|
Number
of Shares
|
|
|
Amount
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Paid-in
Capital
|
|
|
Earnings
(Deficit)
|
|
|
Comprehensive
Loss
|
|
|
Stockholders’
(Deficit)
|
|
|
Balance - July 31, 2019
|
|
|
406,886,489
|
|
|
$
|
406,886
|
|
|
|
10,000,000
|
|
|
$
|
10,000
|
|
|
$
|
2,986,180
|
|
|
$
|
(6,552,748
|
)
|
|
$
|
(100
|
)
|
|
$
|
(3,149,782
|
)
|
|
Common shares issued for conversion of debt and interest
|
|
|
4,830,016
|
|
|
|
4,830
|
|
|
|
-
|
|
|
|
-
|
|
|
|
347,761
|
|
|
|
-
|
|
|
|
-
|
|
|
|
352,591
|
|
|
Sale of common stock
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
78,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80,000
|
|
|
Common stock warrants issued and valued
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,595
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,595
|
|
|
Common shares issued for exercise of warrants
|
|
|
3,696,973
|
|
|
|
3,697
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,697
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(427,157
|
)
|
|
|
-
|
|
|
|
(427,157
|
)
|
|
Balance - October 31, 2019
|
|
|
417,413,478
|
|
|
$
|
417,413
|
|
|
|
10,000,000
|
|
|
$
|
10,000
|
|
|
$
|
3,414,839
|
|
|
$
|
(6,979,905
|
)
|
|
$
|
(100
|
)
|
|
$
|
(3,137,753
|
)
|
|
Sale of common stock
|
|
|
4,200,000
|
|
|
|
4,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
142,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
147,000
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(767,039
|
)
|
|
|
-
|
|
|
|
(767,039
|
)
|
|
Balance - January 31, 2020
|
|
|
421,613,478
|
|
|
$
|
421,613
|
|
|
|
10,000,000
|
|
|
$
|
10,000
|
|
|
$
|
3,557,639
|
|
|
$
|
(7,746,944
|
)
|
|
$
|
(100
|
)
|
|
$
|
(3,757,792
|
)
|
|
Sale of common stock
|
|
|
3,083,334
|
|
|
|
3,084
|
|
|
|
-
|
|
|
|
-
|
|
|
|
181,916
|
|
|
|
-
|
|
|
|
-
|
|
|
|
185,000
|
|
|
Common shares issued for exercise of warrants
|
|
|
4,109,828
|
|
|
|
4,109
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,109
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(659,384
|
)
|
|
|
-
|
|
|
|
(659,384
|
)
|
|
Balance – April 30, 2020
|
|
|
428,806,640
|
|
|
$
|
428,806
|
|
|
|
10,000,000
|
|
|
$
|
10,000
|
|
|
$
|
3,735,447
|
|
|
$
|
(8,406,328
|
)
|
|
$
|
(100
|
)
|
|
$
|
(4,232,176
|
)
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
MIRAGE ENERGY CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
|
|
|
Nine Months Ended
|
|
|
|
|
April 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(1,853,580
|
)
|
|
$
|
(2,098,017
|
)
|
|
Adjustments to reconcile net (loss) to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
1,186
|
|
|
|
1,186
|
|
|
Financing Fees
|
|
|
35,947
|
|
|
|
21,500
|
|
|
Loss on change in fair value of convertible debt
|
|
|
678,739
|
|
|
|
1,058,798
|
|
|
Penalty on convertible debt
|
|
|
314,634
|
|
|
|
267,250
|
|
|
Expenses paid by shareholder
|
|
|
16,611
|
|
|
|
15,296
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(6,578
|
)
|
|
|
(474
|
)
|
|
Accounts payable and accrued expenses
|
|
|
204,146
|
|
|
|
174,725
|
|
|
Accrued salaries and payroll taxes, related parties
|
|
|
(79,144
|
)
|
|
|
383,662
|
|
|
Net cash (used) in operating activities
|
|
|
(688,039
|
)
|
|
|
(176,074
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Proceeds from loan, related party
|
|
|
1,000
|
|
|
|
-
|
|
|
Repayment of loan, related party
|
|
|
(17,611
|
)
|
|
|
(185,697
|
)
|
|
Repayment of loan, convertible note
|
|
|
-
|
|
|
|
(65,250
|
)
|
|
Proceeds from sale of common stock
|
|
|
412,000
|
|
|
|
294,980
|
|
|
Proceeds from convertible debt
|
|
|
297,500
|
|
|
|
152,000
|
|
|
Net cash provided by financing activities
|
|
|
692,889
|
|
|
|
196,033
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
4,850
|
|
|
|
19,959
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of period
|
|
|
70,456
|
|
|
|
13,480
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents - end of period
|
|
$
|
75,306
|
|
|
$
|
33,439
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Disclosures
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
1,199
|
|
|
$
|
25,344
|
|
|
Cash payments for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Non-Cash Activity Disclosures
|
|
|
|
|
|
|
|
|
|
Stock issued for convertible debt and interest
|
|
$
|
352,591
|
|
|
$
|
1,341,619
|
|
|
Proceeds from sale of convertible debt paid directly to vendor
|
|
$
|
-
|
|
|
$
|
20,000
|
|
|
Stock exercised for common stock warrants
|
|
$
|
7,806
|
|
|
|
-
|
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
MIRAGE ENERGY CORPORATION
Notes to the Consolidated Interim Financial Statements
April 30, 2020
(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 February 24, 2020.
In February 2016, the FASB issued guidance regarding the accounting for leases on “Leases” (ASC 842). The Company will adopt ASC 842 effective August 1, 2020 after electing to defer one year as an Emerging Growth Company which requires lessees to recognize right-of-use (“ROU”) assets and liabilities for leases with lease terms of more than twelve months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The term of the existing lease on the office premises ends June 30, 2022. Refer to Note 6 below for further information on this lease.
Net Income (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 income (loss) per share is computed by dividing net income (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. In the period of net loss, diluted EPS calculation is not deemed necessary as the effect would be anti-dilutive.
As of April 30, 2020 and July 31, 2019, the Company has convertible notes with a total base principal of $532,500 and $53,000, respectively, which become convertible in 180 days. There is a potential for 14,608,566 shares if the principal of $532,500 were converted at April 30, 2020. These notes will have a dilutive effect on common stock for the three months ended April 30, 2020. 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 April 30, 2020, the Company has one common stock purchase warrant open and it has not been exercised. For each warrant, there are 164,062 warrant shares issued and outstanding which upon exercise could potentially be 4,353,221 common stock shares.
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 $1,853,580 and had net cash used in operations of $688,039 for the nine months ended April 30, 2020 and had an accumulated deficit and working capital deficit of $8,406,328 and $4,240,119 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 April 30, 2020, the number of shares of common stock that can be issued for convertible debt as per Note 9 - Subsequent Events are 25,749,044. The other notes that were convertible at April 30, 2020 have not been converted. For the nine months ended April 30, 2020, there was a $678,739 loss on change in fair value of convertible debt.
A summary of debt at April 30, 2020 and July 31, 2019 is as follows:
|
|
|
Apr. 30,
|
|
|
July 31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
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 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 in the year ended July 31, 2018, 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 $25,111.
|
|
|
52,111
|
|
|
|
54,702
|
|
|
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 3rd Quarter ended April 30, 2019, the second 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 first and second tranche for a total of $52,500 and incurred default interest rate of 15% for each. 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 received a notice of default dated May 23, 2019. During the 4th Quarter ended July 31, 2019, $71,000 of the first tranche plus $5,250 in interest was converted and the Company issued 5,543,830 shares of common stock with a fair value of $401,538. During the conversion on Crown’s first tranche, $1,000 penalty was added on the first conversion date of 05/24/19 and a duplicate $17,500 penalty was converted by the final conversion date 07/31/19. During the 1st Quarter ended October 31, 2019, the third and final tranche of $35,000 was received with fees of $5,000 and cash proceeds of $30,000. Also, $53,000 of the second tranche plus $5,250 in interest was converted on August 16, 2019 and the Company issued 4,830,016 shares of common stock with a fair value of $320,813. The first two tranches of the convertible note had a net change in fair value of $595,852. The third tranche was convertible on January 27, 2020. A default penalty of $17,500 was added to the note for a total of $56,500. The convertible note had a net change in fair value of $61,738.
|
|
|
114,238
|
|
|
|
339,552
|
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued May 1, 2019 in the amount of $103,500 with fees of $3,500, cash proceeds of $100,000, convertible at October 28, 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 February 28, 2020. This note was convertible on October 28, 2019. The note defaulted on November 16, 2019 and a default penalty of $51,750 was added to the note and incurred default interest rate of 22%. The convertible note had a net change in fair value of $167,888.
|
|
|
323,138
|
|
|
|
103,500
|
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued June 27, 2019 in the amount of $83,000 with fees of $3,000, cash proceeds of $80,000, convertible at December 24, 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 April 15, 2020. This note was convertible on December 24, 2019. The note defaulted on November 16, 2019 and a default penalty of $41,500 was added to the note and incurred default interest rate of 22%. The convertible note had a net change in fair value of $134,635.
|
|
|
259,134
|
|
|
|
83,000
|
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued August 12, 2019 in the amount of $73,000 with fees of $3,000, cash proceeds of $70,000, convertible at February 8, 2020 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, 2020. This note was convertible on February 8, 2020. The note defaulted on November 16, 2019 and a default penalty of $36,500 was added to the note and incurred default interest rate of 22%. The convertible note had a net change in fair value of $118,414.
|
|
|
227,914
|
|
|
|
-
|
|
|
Convertible debenture, unsecured, interest bearing at 12% per annum, issued September 24, 2019 in the amount of $55,000 with fees of $3,000, cash proceeds of $52,000, convertible at March 22, 2020 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, 2020. This note became convertible on March 22, 2020. The convertible note had a net change in fair value of $59,477.
|
|
|
114,477
|
|
|
|
-
|
|
|
Convertible debenture, unsecured, interest bearing at 8% per annum, issued September 12, 2019 in the amount of $82,500 with fees of $9,500 and cash proceeds of $73,000, convertible at March 10, 2020 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 conversion date; maturity date of July 12, 2020. This note was convertible on March 10, 2020. The note defaulted on November 16, 2019 and a default penalty of $83,692 was added to the note and incurred default interest rate of 24%. The convertible note had a net change in fair value of $65,945.
|
|
|
232,137
|
|
|
|
-
|
|
|
Convertible debenture, unsecured, interest bearing at 8% per annum, issued September 12, 2019 in the amount of $82,500 with fees of $9,500 and cash proceeds of $73,000, convertible at March 10, 2020 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 conversion date; maturity date of July 12, 2020. This note was convertible on March 10, 2020. The note defaulted on November 16, 2019 and a default penalty of $83,692 was added to the note and incurred default interest rate of 24%. The convertible note had a net change in fair value of $65,945.
|
|
|
232,137
|
|
|
|
-
|
|
|
Remaining unpaid portion due AT&T regarding cell phone installments
|
|
|
822
|
|
|
|
1,063
|
|
|
Total Debt
|
|
|
1,683,952
|
|
|
|
709,661
|
|
|
Less: Current Maturities
|
|
|
1,683,130
|
|
|
|
708,598
|
|
|
Total Long-Term Debt
|
|
$
|
822
|
|
|
$
|
1,063
|
|
NOTE 5 - RELATED PARTY TRANSACTIONS
As of April 30, 2020, the CEO and two other members of management and one other employee had earned accrued unpaid salary in the amount of $1,717,275. Accrued salaries of $1,717,275 combined with accrued payroll taxes of $65,517 for a total accrued related party salaries and payroll tax of $1,782,792 for the period from June 2015 until April 30, 2020.
Also, Mr. Michael Ward, President, provided $1,000 directly to the Company with an additional $16,611 owed for monies outlaid on behalf of the Company for a total loan amount of $17,611 which was netted for $17,611 in payments received leaving a net due Mr. Ward of $0 at April 30, 2020. During the year ended July 31, 2019, Mr. Ward had a previous balance due of $2,229 with an additional $24,898 of expenses paid which increased the total amount due to $27,127 less repayments of $27,127.
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 was for three (3) years beginning July 1, 2016. On July 1, 2019, the Company entered into a First Amendment to Lease Agreement at same location. The landlord continues to hold $6,921 as security which is to be returned at the end of the new lease. The new Lease Period is three (3) years beginning July 1, 2019. 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 seven (7) 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 $63,679 and $83,974 for the nine months ended April 30, 2020 and for the year ended July 31, 2019, respectively. Below is the schedule of rent for the remaining Lease term as of April 30, 2020.
|
Year Ending
|
|
Amount
|
|
|
July 31, 2020
|
|
$
|
14,151
|
|
|
July 31, 2021
|
|
|
84,906
|
|
|
July 31, 2022
|
|
|
84,906
|
|
|
|
|
|
|
|
|
Total Remaining Base Rent
|
|
$
|
183,963
|
|
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 April 30, 2020. Interest will continue accruing after April 30, 2020 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
During the nine months ended April 30, 2020, the Company issued 4,830,016 shares of common stock for conversion of convertible notes on August 16, 2019 totaling $58,250 with a fair value of $320,813 for the debt and a fair value of $31,778 for the interest totaling $352,591.
Also, the Company issued a total of 7,806,801 shares of common stock as a cashless exercise of common stock warrants. On October 16, 2019 and February 10, 2020, Crown Bridge Partners, LLC exercised the right to purchase 3,696,973 and 4,109,828 shares of common stock, respectively, per the Common Stock Warrants that were issued with the November 13, 2018 note.
On August 5, 2019, Crown Bridge Partners, LLC funded a third tranche of $35,000 and in which the Company will have to provide 164,062 warrant shares for holder to purchase.
For the nine months ended April 30, 2020, the Company sold 9,283,334 shares of common stock to investors for cash proceeds of $412,000.
NOTE 9 - SUBSEQUENT EVENTS
The Company evaluated events occurring subsequent to April 30, 2020, identifying those that are required to be disclosed as follows:
In December 2019, a novel coronavirus disease (“COVID-19”) was reported and in January 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic. While the Company did not incur significant disruptions to its operations during the first quarter of 2020 from COVID-19, it is unable at this time to predict the impact that COVID-19 will have on its business, financial position and operating results in future periods due to numerous uncertainties and is closely monitoring the impact of the pandemic on all aspects of its business. Beginning April 1, 2020, it became more difficult to schedule business trips to Mexico for the purpose of continuing our efforts to complete final documentation for our Mexican projects as certain portions of the government were not available at all times due to the COVID-19.
In May 2020, Power Up Lending Group Ltd. converted the principal amount of the $103,500 note issued May 1, 2019 that was defaulted to $155,250 along with $6,210 of accrued interest for 5,919,247 shares of common stock.
In June 2020, the Company offered and sold 7,675,000 shares of common stock at $0.04 per share for $307,000.
In June 2020, Power Up Lending Group Ltd. converted the principal amount of the $83,000 note issued June 27, 2019 that was defaulted to $124,500 along with $14,767 of accrued interest for 5,936,367 shares of common stock.
In July 2020, Jefferson Street Capital LLC converted the principal amount of the $82,500 note issued September 18, 2019 that was defaulted to $166,192 along with $27,861 of accrued interest for 8,018,722 shares of common stock.
In July 2020, Crown Bridge Partners, LLC converted the principal amount of the $35,000 note issued November 13, 2018 that was defaulted to $52,500 along with $3,500 accrued interest and $500 in fees for 3,165,266 shares of common stock.
In July 2020, Power Up Lending Group Ltd. converted the principal amount of the $73,000 note issued August 12, 2019 that was defaulted to $109,500 along with $12,935 of accrued interest for 1,774,519 shares of common stock.
In July 2020, Power Up Lending Group Ltd. converted the principal amount of the $55,000 note issued September 24, 2019 for 934,923 shares of common stock.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Except for historical information, this report contains certain forward-looking statements. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the “Current Business” and “Risk Factors” sections in our 10-K for the year ended July 31, 2019, as filed on February 24, 2020. You should carefully review the risks described in our documents we file from time to time with the Securities and Exchange Commission (“SEC”). You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-Q to the “Company,” “Mirage Energy,” “we,” “us,” or “our” are to Mirage Energy Corporation (formerly Bridgewater Platforms Inc.)
Corporate Overview
Company’s Plans
The Company has proposed to develop an integrated natural gas pipeline system in Texas and Mexico. The purpose of these pipelines will transport and store natural gas in an underground natural gas storage facility, which the Company proposes to permit and develop in northern Mexico. The Company believes that it has made substantial progress toward these goals with its preliminary project engineering designs and high-level meetings with representatives of various Mexican regulatory agencies.
On June 11, 2020, the Company received a financing Term Sheet from Bluebell International, LLC (BBI) for $4 Billion plus an interest reserve and payment of Closing Costs. The equity would split with Mirage owning 25% after closing. Mirage would have no payment obligation regarding any of the $4 Billion loan. Mirage would be responsible for construction and after construction management.
The Projects which will be initially developed include:
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Mirage 1 - Burgos Hub Storage & Gas Pipeline (natural gas)
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“Brasil Field” is the gas storage facility
“Concho Line” “Progreso Line” “Progreso Crossing” “Storage Line” (pipeline running from Corpus Christi, TX to the Brasil Field storage facility)
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Mirage 2 - 48-inch Pipeline Rehabilitation (natural gas)
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Pipeline running from Reynosa, Mexico to Nuevo
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Mirage 3 - 30-inch and 48-inch Pipeline Rehabilitation (crude oil)
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Bi-directional transport of crude oil across the Tehuantepec Isthmus of Mexico
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BBI is completing its Due Diligence activities prior to a Final Closing.
Discussion and Analysis of Financial Condition and Results of Operations
Revenues
Three month period ended April 30, 2020
For the three (3) month period ended April 30, 2020, we generated no revenue and incurred a net loss of $659,384.
Our net loss of $659,384 for the three (3) month period ended April 30, 2020 was the result of operating expenses of $248,773, interest expense of $26,586, fair market value interest expense of $69,392 and penalty on convertible debt of $314,633. Our operating expenses consisted of $235,056 in general and administrative expenses and $13,717 in professional fees.
Three month period ended April 30, 2019
For the three (3) month period ended April 30, 2019, we generated no revenue and incurred a net income of $668,733.
Our net income of $668,733 for the three (3) month period ended April 30, 2019 was the result of operating expenses of $245,562, interest expense of $39,557 and reduction of prior fair market value interest expense of $953,852. Our operating expenses consisted of $220,655 in general and administrative expenses, and $24,907 in professional fees.
Costs and Expenses
Our primary costs going forward are related to travel, professional fees, legal fees, financing fees and salaries and related payroll taxes associated with our proposed pipeline and natural gas storage activities in Mexico.
Three month period ended April 30, 2020 and 2019
For the three (3) months ended April 30, 2020, we had $235,056 in general and administrative expenses compared to $220,655 in general and administrative expenses for the three (3) months ended April 30, 2019. The $14,401 increase in general and administrative expenses was primarily the result of an increase in travel and entertainment, increase in telephone and decrease in payroll during the three (3) months ended April 30, 2020.
The professional fees for the three (3) months ending April 30, 2020 and April 30, 2019 were $13,717 and $24,907, respectively. The $11,190 decrease was primarily related to decrease in audit.
The executive compensation for the three (3) months ending April 30, 2020 and April 30, 2019 was $92,000 and $116,500, respectively. The difference was due to a decrease in salaries because an executive left as of the year ended July 31, 2019.
Nine month period ended April 30, 2020 and 2019
For the nine (9) months ended April 30, 2020, we had $721,014 in general and administrative expenses compared to $655,336 in general and administrative expenses for the nine (9) months ended April 30, 2019. The $65,678 increase in general and administrative expenses was primarily a result of an increase in travel and entertainment, an increase in telephone, an increase in financing fees, an increase in consulting fees and a decrease in executive compensation during the nine (9) months ended April 30, 2020.
The professional fees for the nine (9) months ending April 30, 2020 and April 30, 2019 were $69,563 and $79,597, respectively. The $10,034 decrease was primarily related to an increase for audit fees, a decrease in legal fees and a decrease in tax preparation fees.
The executive compensation for the nine (9) months ending April 30, 2020 and April 30, 2019 was $276,000 and $349,500, respectively. The difference was due to a decrease in salaries because an executive left as of the year ended July 31, 2019.
Cash Flows
Operating Activities
For the nine (9) month period ended April 30, 2020, net cash used in operating activities was $688,039. The negative cash flow for the nine (9) months ended April 30, 2020 related to our net loss of $1,853,580, an increase in prepaid expenses of $6,578, an increase of $314,634 in convertible debt due to default, an increase of $16,611 in expenses paid by shareholder, adjusted for $35,947 in financing fees, adjusted for depreciation of $1,186, a change of $678,739 in convertible debt due to fair market value, an increase of $204,146 in accounts payable and accrued expenses and an decrease of $79,144 in accrued salaries and payroll taxes – related parties.
For the nine (9) month period ended April 30, 2019, net cash used in operating activities was $176,074. The negative cash flow for the nine (9) months ended April 30, 2019 related to our net loss of $2,098,017, an increase in prepaid expenses of $474, an increase of $267,250 in convertible debt due to default, an increase of $15,296 in expenses paid by shareholder, adjusted for $21,500 in financing fees, adjusted for depreciation of $1,186, a change of $1,058,798 in convertible debt due to fair market value, an increase of $174,725 in accounts payable and accrued expenses and an increase of $383,662 in accrued salaries and payroll taxes – related parties.
Investing Activities
For the nine (9) months ended April 30, 2020 net cash used in investing activities was nil.
For the nine (9) months ended April 30, 2019 net cash used in investing activities was nil.
Financing Activities
For the nine (9) months ended April 30, 2020, net cash provided by financing activities was $692,889. The positive cash flow from financing activities for such period was comprised of proceeds from sale of common stock, and proceeds from convertible debentures.
For the nine (9) months ended April 30, 2019, net cash provided by financing activities was $196,033. The positive cash flow from financing activities for such period was comprised of proceeds from sale of common stock, and proceeds from convertible debentures.
Liquidity
To date, we have funded our operations primarily with capital provided and loans provided by related parties, accruing of salaries and accounts payable. We do not currently have commitments regarding fixed costs.
As of April 30, 2020, Mirage Energy Corporation had $75,306 in cash on hand and prepaid expenses of $8,338. Since Mirage Energy Corporation was unable to reasonably project its future revenue, it must presume that it will not generate any revenue during the next twelve (12) to twenty-four (24) months. We therefore will need to obtain additional debt or equity funding in the next two (2) – three (3) months, but there can be no assurances that such funding will be available to us in sufficient amounts or on reasonable terms.
The Company’s audited financial statements for the year ended July 31, 2019 contain a “going concern” qualification. As discussed in Note 3 of the Notes to Financial Statements, the Company has incurred losses and has not demonstrated the ability to generate cash flows from operations to satisfy its liabilities and sustain operations. Because of these conditions, our independent auditors have raised substantial doubt about our ability to continue as a going concern.
Our financial objective is to make sure the Company has the cash and debt capacity to fund on-going operating activities, investments and growth. We intend to fund future capital needs through our current cash position, additional credit facilities, future operating cash flow and debt or equity financing. We are continually evaluating these options to make sure we have capital resources to meet our needs.
Existing capital resources are insufficient to support continuing operations of the Company over the next 12 months.
Management makes no assurances that adequate capital resources will be available to support continuing operations over the next 12 months. Management plans to pursue additional capital funding through multiple sources.
For the year ended July 31, 2019, the Company has funded operations with debt of $329,500 from convertible notes, proceeds from sale of $325,978 in common stock, while making loan repayments of $180,003 to related party and $83,250 to convertible notes. The Company plans to raise additional funds through various sources to support ongoing operations during 2019 and 2020.
While no assurances can be given regarding the achievement of future results as actual results may differ materially, management anticipates adequate capital resources to support continuing operations over the next 12 months through the combination of infused capital through exercised warrants, infused capital through non-public private placement and existing cash reserves.
