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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period ended October 31, 2019

 

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________ to _____________

 

Commission file number: 000-55690

 

MIRAGE ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

 

NEVADA

 

33-1231170

(State or other jurisdiction of incorporation)

 

(IRS Employer Identification No.)

 

900 Isom Rd., Ste. 306, San Antonio, TX

 

78216

(Address of principal executive offices)

 

(Zip Code)

 

(210) 858-3970 

(Issuer’s telephone number, including area code)

 

____________________________________________________________

(Former name, former address and former fiscal year if changed since last report)

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange:

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

¨

Emerging growth company

x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act.) Yes ¨ No x

 

Securities registered pursuant to Section 12(b) of the Act: None 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: May 5, 2020 there were 428,806,640 shares of the Company’s common stock were issued and outstanding.

  

 

 

MIRAGE ENERGY CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2019

 

TABLE OF CONTENTS

 

 

PAGE

 

PART I - FINANCIAL INFORMATION

 

Item 1.

Unaudited Financial Statements.

 

3

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

14

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

16

 

Item 4.

Controls and Procedures.

 

17

 

PART II - OTHER INFORMATION

 

Item 1.

Legal Proceedings.

 

18

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

18

 

Item 3.

Defaults Upon Senior Securities.

 

18

 

Item 4.

Mine Safety Disclosures.

 

18

 

Item 5.

Other Information.

 

18

 

Item 6.

Exhibits.

 

19

 

SIGNATURES

 

20

 

 
2

Table of Contents

 

PART I – FINANCIAL INFORMATION

 

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.

 

 
3

 

 

MIRAGE ENERGY CORPORATION

 

INDEX TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

October 31, 2019

 

 

Page

 

Consolidated Balance Sheets as of October 31, 2019 (Unaudited) and July 31, 2019

 

5

 

Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended October 31, 2019 and 2018 (Unaudited)

 

6

 

Consolidated Statement of Stockholders’ (Deficit) for the Three Months Ended October 31, 2018 and 2019

 

7

 

Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2019 and 2018 (Unaudited)

 

8

 

Notes to the Consolidated Interim Financial Statements (Unaudited)

 

9

 

 
4

Table of Contents

    

MIRAGE ENERGY CORPORATION

Consolidated Balance Sheets

 

 

 

October 31,

 

 

July 31,

 

 

 

2019

 

 

2019

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 212,347

 

 

$ 70,456

 

Prepaid expenses

 

 

3,795

 

 

 

1,760

 

Total Current Assets

 

 

216,142

 

 

 

72,216

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

2,635

 

 

 

3,030

 

 

 

 

 

 

 

 

 

 

Other Assets

 

 

 

 

 

 

 

 

Deposits

 

 

6,921

 

 

 

6,921

 

Total Other Assets

 

 

6,921

 

 

 

6,921

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$ 225,698

 

 

$ 82,167

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$ 718,730

 

 

$ 660,352

 

Loan payable

 

 

127,844

 

 

 

127,844

 

Convertible debentures, net of unamortized discount

 

 

663,229

 

 

 

580,754

 

Accrued salaries and payroll taxes, related parties

 

 

1,852,875

 

 

 

1,861,936

 

Total Current Liabilities

 

 

3,362,678

 

 

 

3,230,886

 

 

 

 

 

 

 

 

 

 

Long-Term Liabilities

 

 

 

 

 

 

 

 

Loan payable

 

 

773

 

 

 

1,063

 

TOTAL LIABILITIES

 

 

3,363,451

 

 

 

3,230,886

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Preferred stock, par value $0.001, 10,000,000 shares authorized, 10,000,000 shares issued and outstanding as of October 31, 2019 and July 31, 2019

 

 

10,000

 

 

 

10,000

 

Common stock, par value $0.001, 900,000,000 shares authorized, 417,413,478 shares issued and outstanding as of October 31, 2019; 406,886,489 shares issued and outstanding as of July 31, 2019

 

 

417,413

 

 

 

406,886

 

Additional paid-in capital

 

 

3,414,839

 

 

 

2,986,180

 

Accumulated deficit

 

 

(6,979,905 )

 

 

(6,552,748 )

Accumulated other comprehensive loss

 

 

(100 )

 

 

(100 )

TOTAL STOCKHOLDERS’ (DEFICIT)

 

 

(3,137,753 )

 

 

(3,149,782 )

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT)

 

$ 225,698

 

 

$ 82,167

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
5

Table of Contents

    

MIRAGE ENERGY CORPORATION

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

 

 

 

Three Months Ended

 

 

 

October 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

General and administrative expenses

 

$ 262,975

 

 

$ 212,677

 

Professional fees

 

 

40,291

 

 

 

39,303

 

Total Operating Expenses

 

 

303,266

 

 

 

251,980

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(303,266 )

 

 

(251,980 )

 

 

 

 

 

 

 

 

 

OTHER EXPENSE

 

 

 

 

 

 

 

 

Interest expense

 

 

17,628

 

 

 

11,940

 

Change in fair value of convertible debt

 

 

106,263

 

 

 

142,976

 

Total Other Expense

 

 

123,891

 

 

 

154,916

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

 

(427,157 )

 

 

(406,896 )

 

 

 

 

 

 

 

 

 

NET LOSS

 

 

(427,157 )

 

 

(406,896 )

 

 

 

 

 

 

 

 

 

TOTAL COMPREHENSIVE LOSS

 

$ (427,157 )

 

$ (406,896 )

 

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Common Share

 

$ (0.00 )

 

$ (0.00 )

Basic and Diluted Weighted Average Common Shares Outstanding

 

 

411,501,009

 

 

 

349,799,576

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
6

Table of Contents

     

MIRAGE ENERGY CORPORATION

Statement of Stockholders’ (Deficit)

(Unaudited)

 

For the Three Months Ended October 31, 2018

 

 

 

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, 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 )

 

For the Three Months Ended October 31, 2019

 

 

 

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 )

.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
7

Table of Contents

   

MIRAGE ENERGY CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Three Months Ended

 

 

 

October 31,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$ (427,157 )

 

$ (406,896 )

Adjustments to reconcile net (loss) to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

395

 

 

 

395

 

Financing Fees

 

 

32,648

 

 

 

9,500

 

Loss on change in fair value of convertible debt

 

 

106,263

 

 

 

142,420

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

(2,035 )

 

 

(389 )

Accounts payable

 

 

66,663

 

 

 

84,411

 

Accrued expenses

 

 

5,250

 

 

 

2,580

 

Accrued salaries and payroll taxes, related parties

 

 

(9,061 )

 

 

127,608

 

Net cash (used) in operating activities

 

 

(227,034 )

 

 

(40,371 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from loan, related party

 

 

1,000

 

 

 

-

 

Repayments of loan, related party

 

 

(9,575 )

 

 

(53,183 )

Proceeds from sale of common stock

 

 

80,000

 

 

 

-

 

Proceeds from sale of convertible debt

 

 

297,500

 

 

 

91,500

 

Net cash provided by financing activities

 

 

368,925

 

 

 

38,317

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

141,891

 

 

 

(2,054 )

 

 

 

 

 

 

 

 

 

Cash and cash equivalents - beginning of period

 

 

70,456

 

 

 

13,480

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents - end of period

 

$ 212,347

 

 

$ 11,426

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Disclosures

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ 134

 

 

$ 2,539

 

 

 

 

 

 

 

 

 

 

Supplemental Non-Cash Activity Disclosures

 

 

 

 

 

 

 

 

Expenses paid by shareholder

 

$ 8,575

 

 

$ 3,977

 

Stock issued for convertible interest

 

$ 31,778

 

 

$ 5,215

 

Stock issued for convertible debt

 

$ 320,813

 

 

$ 217,503

 

Cashless exercise of warrants

 

$ 3,697

 

 

$ -

 

Proceeds from sale of convertible debt paid directly to vendor

 

$ -

 

 

$ 10,500

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 
8

Table of Contents

   

MIRAGE ENERGY CORPORATION

Notes to the Consolidated Interim Financial Statements

October 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.

 

Leases

 

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, 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 October 31, 2019, and July 31, 2019, the Company has convertible notes with a total base principal of $121,500 and $53,000, respectively, which become convertible in 180 days. There is a potential for 5,143,512 shares if the principal of $121,500 were converted at October 31, 2019. These notes will have a dilutive effect on common stock for the quarter ended October 31, 2019. 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 October 31, 2019, the Company has two common stock purchase warrants open and they have not been exercised. For each warrant, there are 164,062 warrant shares issued and outstanding which upon exercise could potentially be 8,706,442 common stock shares. 

 

 
9

Table of Contents

 

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 $427,157 and had net cash used in operations of $227,034 for the three months ended October 31, 2019 and had an accumulated deficit and working capital deficit of $6,979,905 and $3,146,536 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, 2019, the number of shares of common stock that can be issued for convertible debt as per Note 9 - Subsequent Events are 4,830,016. The other notes were not convertible at October 31, 2019. For the quarter ended October 31, 2019, there was a $106,263 loss on change in fair value of convertible debt.

 

 
10

Table of Contents

 

A summary of debt at October 31, 2019 and July 31, 2019 is as follows: 

 

 

 

 

October 31,

 

 

July 31,

 

 

 

2019

 

 

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 $23,093.

 

 

50,093

 

 

 

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.

 

 

35,000

 

 

 

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 became convertible on October 28, 2019. The convertible note had a net change in fair value of $103,583.

 

 

207,083

 

 

 

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 becomes convertible on December 24, 2019.

 

 

83,000

 

 

 

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 becomes convertible on February 8, 2020.

 

 

73,000

 

 

 

-

 

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 becomes convertible on March 22, 2020.

 

 

55,000

 

 

 

-

 

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 becomes convertible on March 10, 2020.

 

 

82,500

 

 

 

-

 

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 becomes convertible on March 10, 2020.

 

 

82,500

 

 

 

-

 

Remaining unpaid portion due AT&T regarding cell phone installments

 

 

773

 

 

 

1,063

 

Total Debt

 

 

796,793

 

 

 

709,661

 

Less: Current Maturities

 

 

796,020

 

 

 

708,598

 

Total Long-Term Debt

 

$ 773

 

 

$ 1,063

 

 

 
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NOTE 5 - RELATED PARTY TRANSACTIONS

 

As of October 31, 2019, the CEO and two other members of management and one other employee had earned accrued unpaid salary in the amount of $1,790,924. Accrued salaries of $1,790,924 combined with accrued payroll taxes of $61,951 for a total accrued related party salaries and payroll tax of $1,852,875 for the period from June 2015 until October 31, 2019.

 

Also, Mr. Michael Ward, President, provided $1,000 directly to the Company with an additional $8,575 owed for monies outlaid on behalf of the Company for a total loan amount of $9,575 which was netted for $9,575 in payments received leaving a net due Mr. Ward of $0 at October 31, 2019. 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 four (4) 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 $21,100 and $83,974 for the quarter ended October 31, 2019 and July 31, 2019, respectively. Below is the schedule of rent for the remaining Lease term as of October 31, 2019.

 

Year Ending

 

Amount

 

July 31, 2020

 

$ 56,520

 

July 31, 2021

 

 

84,906

 

July 31, 2022

 

 

84,906

 

 

 

 

 

 

Total Remaining Base Rent

 

$ 226,332

 

 

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, 2019. Interest will continue accruing after October 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.

 

 
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NOTE 8 – EQUITY

 

During the three months ended October 31, 2019, 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 3,696,973 shares of common stock as a cashless exercise of common stock warrants. On October 16, 2019, Crown Bridge Partners, LLC exercised the right to purchase 3,696,973 shares of common stock per the Common Stock Warrant that was issued with November 13, 2018 note.

 

On August 5, 2019, Crown Bridge Partners, LLC funded a third tranche of $35,000 and in addition the Company will have to provide 164,062 warrant shares for holder to purchase.

 

In the month of October 2019, the Company sold 2,000,000 shares of common stock to investors for cash proceeds of $80,000.

 

 NOTE 9 - SUBSEQUENT EVENTS

 

The Company evaluated events occurring subsequent to October 31, 2019, 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 January 2020, the Company offered and sold 4,200,000 shares of common stock at $0.035 per share for $147,000.

 

On February 10, 2020, Crown Bridge Partners, LLC exercised the right to purchase 4,109,828 shares of common stock per the Common Stock Warrant, adjusted for dilution, that was issued with November 13, 2018 note.

 

In March 2020, the Company offered and sold 3,083,334 shares of common stock at $0.06 per share for $185,000.

 

 
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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, 2018, as filed on December 24 , 2018. 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.

 

Discussion and Analysis of Financial Condition and Results of Operations

 

Revenues

 

Three-month period ended October 31, 2019

 

For the three (3) month period ended October 31, 2019, we generated no revenue and incurred a net loss of $427,157.

 

Our net loss of $427,157 for the three (3) month period ended October 31, 2019 was the result of operating expenses of $303,266 and other expense (comprised of interest expense and change in fair value of convertible debt) of $123,891. Our operating expenses consisted of $262,975 in general and administrative expenses, and $40,291 in professional fees.

 

 
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Three-month period ended October 31, 2018

 

For the three (3) month period ended October 31, 2018, we generated no revenue and incurred a net loss of $406,896.

 

Our net loss of $406,896 for the three (3) month period ended October 31, 2018 was the result of operating expenses of $251,980 and other expense (comprised of interest expense and change in fair value of convertible debt) of $154,916. Our operating expenses consisted of $212,677 in general and administrative expenses, and $39,303 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 October 31, 2019 and 2018

 

For the three (3) months ended October 31, 2019, we had $262,975 in general and administrative expenses compared to $212,677 in general and administrative expenses for the three (3) months ended October 31, 2018. The $50,298 increase in general and administrative expenses was primarily the result of spending related to consulting fees, financing fees, travel and entertainment and to a decrease in executive compensation during the three (3) months ended October 31, 2019.

 

The professional fees for the three (3) months ending October 31, 2019 and October 31, 2018 were $40,291 and $39,303, respectively. The $988 increase was primarily related to increases in audit fees and to decreases in legal fees.

 

The executive compensation for the three (3) months ending October 31, 2019 and October 31, 2018 was $92,000 and $116,500 respectively. The difference was due to decrease in salaries because one executive left as of yearend July 31, 2019.

 

Liquidity and Capital Resources

 

Cash Flows

 

Operating Activities

 

For the three (3) month period ended October 31, 2019, net cash used in operating activities was $227,034. The negative cash flow for the three (3) months ended October 31, 2019 related to our net loss of $427,157, a decrease in prepaid expenses of $2,035, adjusted for $32,648 in financing fees, adjusted for depreciation of $395, a change of $106,263 in convertible debt due to fair market value, an increase of $66,663 in accounts payable, an increase of $5,250 in accrued expenses and an decrease of $9,061 in accrued salaries and payroll taxes – related parties.

  

For the three (3) month period ended October 31, 2018, net cash used in operating activities was $40,371. The negative cash flow for the three (3) months ended October 31, 2019 related to our net loss of $406,896, a decrease in prepaid expenses of $389, adjusted for $9,500 in financing fees, adjusted for depreciation of $395, a change of $142,420 in convertible debt due to fair market value, an increase of $84,411 in accounts payable, an increase of $2,580 in accrued expenses and an increase of $127,608 in accrued salaries and payroll taxes – related parties.

    

Investing Activities

 

For the three (3) months ended October 31, 2019 net cash used in investing activities was nil.

 

For the three (3) months ended October 31, 2018 net cash used in investing activities was nil.

 

Financing Activities

 

For the three (3) months ended October 31, 2019, net cash provided from financing activities was $368,925. The positive cash flow from financing activities for such period was comprised of an increase in loans payable from related parties, proceeds from sale of common stock, and proceeds from sale of convertible debenture.

 

 
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For the three (3) months ended October 31, 2018, net cash provided from financing activities was $38,317. The positive cash flow from financing activities for such period was comprised of an increase in loans payable from related parties, proceeds from sale of common stock, and proceeds from a long-term loan and convertible debenture.

 

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 October 31, 2019, Mirage Energy Corporation had $212,347 in cash on hand and prepaid expenses of $3,795. 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.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As a “smaller reporting Company”, we are not required to provide the information required by this Item.

 

 
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Item 4. Controls and Procedures.

 

Management’s Report on Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.

 

As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report due to our limited member of officers and members of the Board of Directors.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended October 31, 2019, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

 

 
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Table of Contents

 

PART II-OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no material legal proceedings pending against the Company to the knowledge of management.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the quarter ending October 31, 2019, the Company sold 2,000,000 shares of common stock to nine (9) accredited investors for cash proceeds of $80,000.

 

The Shares were not registered under the Securities Act of 1933, as amended (the “Securities Act”), and were in each case offered, sold and issued in reliance upon the exemption from registration provided by Section 4 (a) (2) of the Securities Act, as a transaction by an issuer not involving a public offering, and Rule 506 of Regulation D promulgated thereunder and Regulation S.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

Debt Financing Matters:

 

On August 5, 2019, Crown Bridge Partners, LLC funded a third tranche of $35,000 and in addition the Company will have to provide 164,062 warrant shares for holder to purchase.

 

On August 12, 2019, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd. to issue a convertible note in the principal amount of $73,000, with unsecured, interest bearing at 12% per annum and a maturity date of May 30, 2020.On August 16, 2019, Crown Bridge Partners, LLC converted principal in the amount of $53,000 consisting of $52,500 of principal and $500 of fees plus interest of $5,250 for 4,830,016 shares of common stock on the second tranche of $35,000 of the note that was issued November 13, 2018 in the aggregate principal amount of $105,000 to be funded in three (3) tranches and the second tranche defaulted with a penalty of $17,500.

 

On September 12, 2019, the Company entered into a Securities Purchase Agreement with BHP Capital NY Inc. and Jefferson Street Capital, LLC, severally and not jointly, to issue convertible notes in the aggregate principal amount of $165,000, each in the principal amount of $82,500, with unsecured, interest bearing at 8% per annum and a maturity date of May 30, 2020.

 

 
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On September 24, 2019, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd. to issue an additional amount of convertible note in the amount of $55,000, with unsecured, interest bearing at 12% per annum and a maturity date of July 12, 2020.

 

On October 17, 2019, Crown Bridge Partners, LLC exercised the right to purchase 3,696,973 shares of common stock per Common Stock Warrant that was issued with November 13, 2018 note.

 

The Company’s repeated failures to timely file its SEC reports have triggered defaults on our convertible promissory notes which will subject the Company to financial penalties. See Financial Statement Footnote 4.

 

Press Release Disclosure Update:

 

On March 16, 2020, the Company issued a press release stating that it had signed an agreement with Northern Hemisphere Logistics (“NHL”) for a 30% participation interest in the development of the Isthmus Corridor Project, the “Project”. The agreement, which was an assignment agreement, has not been performed and legal consideration has not been exchanged. To date, NHL has not acquired any rights in this proposed Project, and therefore, the Company’s rights to participate have not matured into any material value. Effective May 4, 2020, the Assignment Agreement was rescinded.

 

ITEM 6. EXHIBITS

 

31.1

 

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32.1

 

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

101

 

The following financial information from our Quarterly Report on Form 10-Q for the quarter ended January 31, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) Condensed Notes to Interim Consolidated Financial Statements

 

 
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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 11, 2020

 

Mirage Energy Corporation

(Registrant)

 

By:

/s/ Michael R. Ward /s/ Michael R. Ward

 

Michael R. Ward

 

Michael R. Ward

 

Chief Executive Officer

(Principal Executive Officer)

 

Chief Financial Officer

(Principal Accounting Officer)

 

 

20

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